What is a Passive Income? Why Should You Use It to Buy a Term Plan?
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Everybody today understands the importance of saving and investing for the future. However, very few talk about what we can do with the amount we earn on our savings and investments. Let’s look at how we can use our passive income to secure our family’s financial future.
What is Passive Income?
You can generate passive income without actively working for it. Your passive income refers to the money you earn as returns on your savings and investments. You can use these funds to look after your daily expenses, plan for future financial goals, and take care of your dependents. You can enhance your passive income with income-generating assets like equity funds, fixed-income instruments, pension plans and monthly income plans.
How Does Passive Income Benefit Me?
Crucially, passive income offers consistency. The amount does not directly depend on you working or completing any activity. It gets generated even if something unfortunate happens to you. The amount provides your family and dependents with financial stability when they most require it. You can enhance their financial situation by using your passive income to purchase a term plan.
What is a Term Plan?
Term plans provide life insurance coverage for a specific period. They are pure life insurance products that offer high sum assured amounts for an affordable premium. The beneficiary receives the sum assured if the policyholder passes away during the policy term.
Why Do I Need Term Insurance?
Many shy away from purchasing term insurance as they consider it unnecessary. People who are young and healthy think they do not need a term policy as it serves no purpose. However, an accident can occur suddenly and take us away from our loved ones. A term plan provides financial protection that assists in numerous ways.
How Does a Term Plan Benefit My Family?
Term plans offer the following benefits:
High Coverage at a Lower Cost
Term policies offer high sum assured amounts at pocket-friendly prices. You can benefit from low premiums if you purchase the plan when you’re young and healthy. Insurance companies will likely charge a higher premium for the same sum assured if you buy the policy later.
Enhanced Protection with Riders
You can get better coverage by opting for riders with your term policy. Riders like accidental death benefit offer your loved ones an additional payout in case of a fatal accident. The critical illness rider provides a payout on the diagnosis of a covered critical illness. The payout helps you with treatment costs and replaces your lost income.
Eases the Debt Burden
Most people today have a few loans or debts they need to repay. If something happens to you while you’re still repaying these dues, your family gets burdened by debt. The payout from the term plan provides your loved ones with the funds required to repay their debts.
Helps Meet Large Financial Goals
Most earning members put their money away in savings and investments. Often, you seek to save up enough to make a large purchase like a down payment on a home. Without your monthly income, your family might not have enough to fulfil their goal. The payout from the term plan helps your loved ones meet their financial goals and enjoy a secure future.
Covers Daily Expenses
You and your family could enjoy a stress-free financial life. You might have sufficient savings and investments to look after yourself. But if something happens to you while you’re still working and earning, your family could face some difficulty. Instead of them dipping into the savings you’ve accumulated over the years, the payout from the term plan can provide sufficient funds to cover their day-to-day expenses. You can opt for a staggered monthly or annual payout to your beneficiary to help them with everyday costs.
Your passive income provides you with more opportunities to save invest and grow your corpus for the future. Opting for a term plan provides your family with financial security at a nominal premium. Find a term plan that gives you the coverage you need at an affordable cost.
- What is Term Insurance?
- What Will Happen When a Term Life Insurance Policy Matures?
- 4 Simple Methods to Calculate : How Much Term Insurance You Need
- Types of Death Not Covered by Term Insurance
- 5 Reasons Self Employed People Should Buy Term Insurance
- 1 Crore Term Plan - Is this Sufficient for You?
- What Does Happen to Your Term Insurance Plan Post-Divorce?
- 8 Questions to Ask Before Buying Term Insurance
ARN – ED/11/22/30694
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