Who needs a Decreasing Term Plan?
Who needs a Decreasing Term Plan? Decreasing term life insurance is a kind of term insurance that is specifically taken to cover a mortgage. So anybody who has a mortgage or a large loan to repay would benefit from buy a decreasing term plan. A decreasing term plan is also quite inexpensively priced, making it affordable for everyone.
I have a personal loan and my house is mortgaged. Do I need a decreasing term plan?
If you have a loan and a mortgage, you most definitely need a decreasing term plan! Nobody thinks they will die suddenly, but this is a possibility everyone is vulnerable to. So can you imagine what will happen to your family members if you died with repaying the loans? Not only will the bank take away all the properties and leave your family members without a house and a car, it will also make a beeline for your other insurance claims. So to avoid this, make sure you have a decreasing term plan till the time you are debt-free.
I have health insurance and a life insurance plan. Do I need a decreasing term plan?
Even if you have other forms of insurance, if makes all the sense in the world to buy a decreasing term plan. This is because of a number of reasons. First of all, a decreasing term plan is very cheap and you can easily afford to have one. The next reason is even more logical. Let us look at the illustration to understand it better.
Mahesh has a life insurance cover of Rs. 20 lacs. He has a wife and a young daughter. He also has a house loan of Rs. 15 lacs. When Mahesh dies suddenly following a motorbike accident, his wife receives the sum assured of Rs. 20 lacs. However, the bank comes and collects 15 lacs from it as the loan had not been repaid. His wife is now only left with Rs. 5 lacs, which is tremendously insufficient. Had Mahesh taken a decreasing term plan, his life insurance fund would have remained untouched by the moneylenders and his wife and daughter would have sufficient money to live a comfortable life.
So as we can see, even if you have other forms of insurance, it is a very wise idea to buy a decreasing term plan as well when you have a loan to repay.
I do not have any loans or mortgages. Do I need a decreasing term plan?
Decreasing term plans are specifically designed for those people who have loans and mortgages. As a result, it is also known as mortgage life insurance. Therefore it is only suitable for those people who have loans and mortgages. A person who is debt free would not benefit from such a plan at all. So if you do not have a loan or a mortgage, you most definitely do not need a decreasing term plan.