Term Insurance Vs Car Insurance

Buying a new car is an exciting prospect, as it is on the aspiration list of many. And being able to fulfill one of your aspirations or dreams does mean a lot for individuals. During your visits to car showrooms for finalizing your dream car, it is only natural that you will ask for the car quotes. And in the quote, you will find a column or placeholder dedicated to insurance.

There is a reason for that. The presence of a few laws makes it mandatory for car owners to buy insurance for their cars. And that is the same reason why car dealers provide insurance with cars. Since it is mandatory, we do not hesitate a bit before deciding to buy car insurance. Car buyers do not ponder much before renewing their car insurance policy as well.

Life Insurance

It does come as a bit paradoxical that we care so much for our vehicles but very little for ourselves. Car insurance ensures that we have our cars covered against the government mandate and at the same time against unforeseen events. What about you? A working individual usually has a lot of responsibilities on his or her shoulders. Should anything unfortunate happen to them, it might leave their loved ones under a lot of financial strain.

One of the easier ways of handling such situations is to buy a term life insurance. The sole earner of a family must look after the financials and future for their loved ones. Buying a term insurance plan will provide much-needed financial coverage for the worst-case scenario. Consider this, buying a car insurance plan for a car worth INR 8 lakhs would be approximately INR 25,000 to INR 30,000 annually. Wouldn’t it be great if you could secure your life for half that price?

Adequate Life Insurance

It is no secret that the head of a family or bread earner must take care of the financials of the family. This means, that they must consider the good times as well as an emergency before taking any decisions. In your absence, your loved ones must find a way to continue with their lives without compromising on any of the long term goals. A term insurance plan is an ideal tool to take care of the future financials without straining your current financials.

Unlike a lot of other insurance plans, a term insurance plan does not have any components for savings or investments. This allows the insurance companies to keep the premium prices for a term insurance plan low. At the same time, you can buy a plan with large enough sum assured without burning a hole in your pockets.

As a bread earner of the family, one must assess and estimate the future financial needs of the family before deciding on the sum assured. You must take into consideration factors such as existing debts, a sustainable lifestyle, future events such as children’s education or even marriage, etc. You can then come up with an amount that meets and ideally exceeds all these requirements. Such an amount would be adequate for a term life insurance.

Coverage and Cost

The insurance premium for a car predominantly depends on the IDV or the Insured Declared Value. Considering that the IDV of a car is INR 8 Lakh, you might end up paying premiums of INR 25,000 to INR 30,000 per year. And the IDV of the car reduces every year, thereby bringing down the insurance premium. One must remember that you cannot get car insurance for an amount higher than the IDV of the car.On the other hand, a term life insurance will cost you much lesser and provide better coverage. For an applicant in his early 30s, the policy premium for an INR 1 Crore term plan would cost them less than INR 15,000 annually. Since there is no cap on human life, you can go ahead and buy a policy with higher coverage as well.

Better Coverage at Lower Premiums

A term insurance plan is a pure insurance plan, where you pay premiums to the insurer in exchange for life cover. Should anything happen to the policyholder, the insurer will pay the sum assured to the nominees of the policy. During the purchase of the plan, you are required to mention the duration of the plan and the sum assured.

I am Tanuja Koshy working with one of the leading online insurance aggregators as a General Manager. I manage and drive online investments, short term and long term insurance like home insurance, travel insurance, health insurance, term insurance.