Should you depend on a term plan alone?

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Should you depend on a term plan alone?
While there is no doubt that term plans are extremely useful products, many people wonder whether it is a good idea to solely depend on them. Term plans have many advantages, two of the most prominent ones being low cost and comprehensive cover.

A term plan allows you to build up an insurance cover that would be paid out to your nominees if you were to die unexpectedly. While this is a huge advantage, it may not be the best idea to only depend on a term plan. You must build up your insurance portfolio with plans such as health care plans, child plans, etc, along with the term plan. This will cover you and your family against all the possible eventualities.

What a term plan covers?

A term plan, as the name suggests, covers your life for a specified term. You pay a premium for that particular term and if you outlive the plan, you do not get anything back. If however you happen to die, your family members get the death benefit. Term plans are popular because even without a return component, they are easy to maintain. A 35-year-old male has to pay only Rs.5000 a year for a cover of Rs.50lac. As a result it makes sense to have a term plan.

A term plan, however, doesn't have the return component, so if you survive the term, you don't get any benefits. As a result, you need to have some additional plans to cover for future needs and emergencies.
Plans you need additionally

As mentioned above, a term plan doesn't cover a whole lot of areas like health care and retirement. You need plans for these. The plans you most definitely must have are:


A mediclaim, or a health insurance plan, is of utmost importance. You cannot be living in the modern day world without a mediclaim. With soaring medical costs and vulnerable health situations, it is absolutely mandatory to have such a plan. A term plan won't pay if you have to be hospitalized following a heart attack. A health plan will.

Child plan 

Apart from medicare, education costs have also sky-rocketed in the recent years. As a result, you cannot alone depend on your income to provide the best education to your children. Again, your term plan won't help you in paying the college admission fee of your child.

Retirement plan

Term plans are short term plans that usually are bought by younger people. As a result, the plan proves to be of no help for a person who has recently retired. So a person who wants to build up a corpus for his/her retirement years should definitely not rely on a term plan alone.
Therefore it can safely be said that a term plan is not the sole solution to all your insurance needs. While it is always advisable to have a term plan, simply because it is so affordable, you must have some other kinds of insurance policies as well. That will comprehensively cover you and your family.

Written By: Deepak Yohannan
The author is the CEO of an online insurance price & features comparison portal

For more articles by Deepak Yohannan, please visit
You may contact him directly on Twitter: @dyohannan

Story first published: Thursday, September 26, 2013, 8:38 [IST]
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