Should Term Plans Cover Loan EMIs Automatically?

Why Have Term Plans for Your Loan EMIs?

Given the times we are living in, you can enjoy the luxury of a car, your own home, and much more with easy, accessible loans. However, this isn't where your responsibility ends, but actually begins. For instance, you might comfortably repay your loan EMIs while in service, just like Mehul did. But ever thought what happens in case anything unfortunate happens to you?

This is exactly why you should ensure your EMIs are paid timely even when you're no longer around. To ensure the same, you need an equivalent insurance coverage for the loan repayment. This is where term insurance comes in.

Term insurance is a type of life insurance that financially secures your family and loved ones in case something unfortunate happens to you. This means with a term insurance cover, your loan EMIs and other needs of your family are not compromised even when you're no longer around.

Here is How It Works.

A term insurance comes with two options for receiving the sum assured. This can be locked during your purchase of the policy. You can have the option of a lump-sum payout, where the beneficiary gets the entire benefit in one go. The other option can be in the form of regular income or payouts. In this case, the benefit is paid as regular income.

How Automatic EMI Coverage with Term Plans Can Help?

Here is how term plans with automatic EMI coverage can help.

Debt Relief for Families

Automatic coverage of loan EMIs means the loan EMIs get cleared seamlessly. Your family members need not run through the paperwork, hassle, and formalities in times of grief. The loan gets paid, ensuring your assets, such as your home and car, remain safe and with your family.

Simplicity and Less Confusion

Another prominent benefit of term plans covering EMIs automatically is the automatic protection. The straightforward and clean design of term plans ensures families do not need to keep on calculating how to adjust coverage or divide the lump sum amount. Instead, with automatic EMIs coverage, the confusion is reduced and so is the burden.

Wider Protection

When you buy a term insurance, it is not simply about clearing your debts in your absence, but much more than that. When compared to standalone loan-cover plans that are designed to exhaust once the loan settles, term plans offer wider protection. Its EMI automatic coverage ensures your loans are paid; however, the balance payout can still be used for other purposes, like a child's education, emergencies, managing day-to-day expenses, etc.

Affordable

For individuals with loan liabilities, having a term plan can be a smart choice. This way, you do not pay for two separate policies: loan protector plans and term insurance. Instead, you choose a term plan that offers loan protection. This way, you get affordable coverage and your family enjoys dual protection.

Tips to Manage Your Loan EMIs and Term Insurance

Here is how to manage your term insurance and loan EMIs.

1. To protect wife and children against such turmoil and fear, choosing an insurance policy protected under the Married Women’s Property Act can also help. This ensures the claimed benefits are only offered to the wife and children and not someone else. Plus, it comes in handy for asset protection against legal or creditors' threats.
2. Consider using online loan calculators to estimate how much coverage you may need to manage expenses and loan EMIs.
3. Make sure your liabilities and cover are aligned. Consider choosing a sum assured based on the same.
4. Review your policy every few years. This ensures your policy is updated as per your evolving life stages.
5. Inform your family members about your policies. Explain the policy benefits, claim processes, and other details to avoid any confusion in times of need.

Final Word

Your term insurance isn't simply about the numbers but much more. It offers financial security for your family even after you're gone. This way, automatic EMI coverage is a wise choice to add to your policy to ensure your family remains stress-free. While the automatic EMI payments may lead to an increase in premium payments, it'll be worth it.

However, you may still use EMI coverage as an optional rider to your policy. Also, before buying an investment plan, make sure to compare plans, their benefits and features. Jio Insurance Broking allows you to seamlessly do that. Here, you may choose from a variety of insurance providers. Plus, you get access to customisable options and professional support available to you before and even after your purchase. Thus, allowing you to choose what best suits your needs.