In a world where death is the biggest certainty, securing the financial future of your family is crucial, more so if you are the primary breadwinner. 

Besides, with the ever-rising inflation, it has become necessary to constantly evaluate and upgrade your insurance cover as per your financial stage. Thus, a term plan with high sum assured can be a shield against such unpredictability of life.

Comprehensive coverage of a 5 Crore term insurance not only ensures a substantial financial cushion for your family but also implies a well-planned financial strategy. As we delve into the intricacies of this policy, unravel the layers of protection it offers and understand why it stands as a cornerstone in safeguarding your family's well-being.

A 5 Crore term insurance policy has a sum assured of 5 crores and provides that death benefit to the beneficiary in case of the policyholder’s unfortunate demise during the policy term.

Besides, a term plan of 5 Crore offers significant financial protection to the insured’s beneficiaries, ensuring a sizeable payout to help cover expenses and maintain their financial well-being.

Term insurance is the most basic and cost-effective way to secure a high coverage amount; however, it doesn’t provide any maturity value.

Here is how a 5 Crore term insurance plan works: 

• Sum Assured: A 5 crore term insurance policy provides a coverage of 5 crore rupees to the beneficiary in case of the policyholder’s unfortunate demise during the policy term.
• Policy Term: The policy has a specified term, chosen when buying the policy during which the coverage is active.
• Premium Payments: Policyholders pay regular premiums, as per their chosen frequency, to keep the policy in force. Term insurance is generally cheaper than other life insurance types since it provides only life coverage. Thus, we can buy a high coverage amount for a lower premium.
• Death Benefit: In case of the policyholder’s unfortunate demise during the policy term, the beneficiaries receive the entire sum assured that is 5 crores, as a death benefit.
• No Maturity Benefit: If the policyholder survives the policy term, there is no maturity benefit since this is a term plan.
• Financial Coverage: Being a high coverage term plan, it serves as a well-built financial safety net, ensuring significant support for the family’s financial needs in case of the insured’s death.

While a figure of 5 crore might look extremely high and overwhelming, the reality is that in today's time, an annual salary of 50 lacs to 1 crore has become quite common. 

Going by the thumb rule, the required coverage is 10 times. Hence, a 5-crore term insurance for anyone earning around 50 lacs per annum is the perfect financial protection.

Here are other major benefits that a 5-crore term insurance can provide: 

• High Coverage at Affordable Premium: A 5-crore term insurance policy provides a considerably high coverage amount at a relatively lower premium as compared to the traditional plans with a savings component. 
• Peace of Mind with Financial Security: A high coverage ensures complete financial security for the insured's family in case of their untimely death during the policy term. It takes care of debts and liabilities so that the family doesn't have to deal with this financial crisis after losing a loved one. 
• Tax Benefits: Premium paid towards the term insurance and the death benefit received is eligible for tax benefits under Section 80C and 10(10D) of the Income Tax Act as per the prevailing income tax laws.    

Illustration:

To understand why a 5-crore term plan is needed, let’s take an example.

Aditya is a professional in his late 40s, earns 70 lakhs annually. He is married and has a child in class 10th. His wife is a housemaker and Aditya is the sole earning member of the family. He has a term plan cover of 1 crore, and he never considered it necessary to evaluate and upgrade his coverage.

Unfortunately, he meets an accident that leads to his demise. Following this, his family receives a death benefit of 1 crore.

Aditya has left behind a liability of home loan of 80 lacs, a car loan of 12 lacs. The family needs income replacement and in two years his son would require a lumpsum amount of at least 1 crore for his higher studies abroad that Aditya had planned.

Aditya’s expenses, lifestyle and liabilities grew with time, but he never considered a necessity to increase his coverage.

Thus, he was underinsured. The sum assured must be decided as per the individual life stage and liabilities. Roughly, at least 10 times of the annual income. In Aditya’s case, the ideal sum assured should have been at least 5 crores to 7 crores. 

Opting for a 5-crore term insurance policy is a prudent choice for safeguarding your family's financial future. This substantial coverage ensures that your loved ones are protected in the face of unforeseen circumstances, offering peace of mind and financial protection.

As you navigate through life, making progress and growing, make sure to keep a check on your coverage. Upgrade if its insufficient as per your income, thus providing your families with a practical financial security and a resilient foundation for your future goals.