By Kamal K Sharma – Author, The Piggy Bank Billionaire
Once you start a car journey that is long enough, you always double check that all tyers are in good shape and to be more sure and confident you always keep a backup in shape of extra tyre i.e stepney. Why you do this by the way, because you dont want a bad experience in your journey.
Life is a journey that passes through many milestones, some good, some very good, some extremely exciting but some milestones people are not able to see by themselves as their journey is cut short due to so many reasons, by the act of god or may be because of an accidental reason. In day today life, we experience this every day, every hour……pick up any newspaper or switch on any news channel, you will find many news items every day where you get to know about accidents happening, cars getting flooded away, people dying of cancer, heart attacks, firing on the border, industrial accidents, acts of terrorism and so on….who are these people by the way who loose their lives, they are the similar people like me & you but with different names. They polished their shoes in the morning, buttoned their shirts, had their breakfast, carried their lunch box, picked up their laptop and waived to their parents, wife and kids with a promise that they will be back in the evening.
Anil, one of my colleague aged 42 years had a decent family of 4, a wonderful wife, daughter in 12th standard and school going son aged 9 years, had recently build a house with a bank loan of 25 lakh. He was very passionate about dogs and his family included two German Shepherds. Anil was a very caring father and had great plans for his children. Few years back, this was 13th day of March….we had telephonic discussion at about 11 am, this was a routine call which normally we used to have once in a day. At about 5.15 pm I received a call from his number, it was an unknown voice at the other end, I was informed that wagnor he was driving has been badly hit by a truck…….since I was sitting about 200 kms away from that location, I asked him if everything is alright and requested to rush him to the nearest hospital so that I can manage to send someone from same location to attend him. Caller’s voice went further down as he said “Its not required sir, since Anil had already died”.
Next morning, I reached his place….there were many people from neighborhood as well as his other friends, everyone had all praise for Anil. His two German Shepherds could be seen in visible mourning, his wife & two children were just uncontrollable. Upon checking on 6th day, I was told by one of my staff members that Anil had no Term Insurance except the company provided 20 Lakh Accidental Insurance.
There are too many of us, who actually commit this mistake of taking life easy and not giving too much of serious thought to a Term Insurance Cover. That’s actually not a good decision. The way earning for present day is important, planning for tomorrow or you can say planning for unplanned is even more important. Off late you might have observed that as a father, you feel yourself duty bound to give everything best to your family. Be it a decent house to live (that too on bank loan), A spacious car for the family (here too people normally depend on bank finance), good gadgets, decent life style, best of school, excellent coaching, dream holidays and lot many other good things….actually you as a father remain quite emotional about everything good for your lovely children and caring wife……close your eyes and thing for a while, what if you are not around? Will your family be able to sustain same lifestyle that you very proudly worked hard enough to provide them with, in most cases answer is a big NO.
To be a complete man and a real hero for your family, you need to make sure that an adequate Term Plan should be first thing you buy with your first salary or at the best within first year of your earning….even if you are not married don’t worry, your parents also need that backup plan. Actually if you look at Term Plan pricing, its works better in early years of your career. The older you grow, you have to pay more premium for every birthday added to your age, thumb rule should be earlier the better. Term Plan pricing is very attractive between 24-35 years of age. What is available for Rs. 10000 at 24 yrs, will cost Rs. 18000 at 35 Yrs and you will have to pay Rs. 30000 for same at the age of 45 years, the doors stand closed for you by the time you reach at the age of 50 years.
Normally a Term Plan gets ignored because you give priority to weekend movies, buying an expensive phone, picking up 1+1 jacket in that woodland sale or may be getting packed 2 pairs of Adidas shoes just for the reason you got 25% discount……your wasteful spending on brands, expensive watches and other online shopping on Amazon or Flipkart stuff that gets pushed in your cupboards every month actually keeps you away from buying a Term Plan. Count the number of shirts that are lying in your cupboard, you will be certainly surprised that many shirts you have not used for ages but you are still looking for buying something new. Your term plan will not actually cost you more than Rs. 50/Day if bought it at right age.
How much should be your Term Plan – Start with min of Rs. 1 Crore if you are a bachelor and then keep adding 50 Lakh every member. If you plan to have a family of 4 (You two + 2 Children) would mean you should think of buying a term plan worth about 2 Crores. However there is a scientific way of calculating your Human Life Value (This is a calculations based on your Earnings, Assets, Libilities as well as Future financial needs). You must take Professional help to establish your Human Life Value (The way every thing has a price tag, same way HLV calculation puts a price tag on your life by ways of calculating your net worth).
There is another thumb rule to calculate how much term insurance you require, that says your annualized income multiplied by 10 should be your your Term Cover. This means if your annual income is 15 Lakh from all sources, you should buy a term cover worth Rs. 1.50 Crore
What should be duration of your plan – Depending upon your present age, you should ask for a plan with max term or till the age of 75 Years. While working with Army/BSF/CRPF/Air Force/Navy/SSB/ITBP/CISF, govt provides adequate risk cover till one is serving. But, in such a case its important to note that given retirement age between 35 – 55 years everyone should buy a parallel cover that runs even after retirement, because that is the time when your family actually needs a cover since you are at peak of your expense cycle.
Dont hide anything – While companies have very stringent rules of underwriting when it comes to offering a term plan. Its advised not to hold back any information related to your nature of job, place of posting, drinking, smoking habits or any medical history of past. Don’t ignore medical tests or look for any short cut in submitting required information. Treat your Term Plan as a most valuable as well as an emotional gift for your family, be very true and transparent in giving required information. Your Term Plan can prove to be a game changer for the family, god forbid if something goes wrong with you any time during the plan term.
Share all details with family – Once your Term Plan is approved by the company and you have received the necessary documents over email, sit with all family members and explain the plan in detail. This will work as a silent confidence booster for all family. We Indians are very emotional for relations, but when it comes to financial arrangements for future needs, everyone wants to be double sure. As a head of the family, you are duty bound to give this silent satisfaction to the family that yes, you have necessary arrangements in place.
Once you have bought your Term Plan, close your doors to buy any further Life Insurance of any form. If still someone asks you…..ARE YOU SURE?, say with complete confidence….YES I AM
(Kamal K Sharma is Author, Blogger and motivational speaker. For any details on Term Plan or to know your human value, write to us at savefirstmail@gmail.com or call at 9501017769)
