A term plan pays a fixed sum to your nominee if you die during the policy term. If you outlive the term, a standard term plan pays nothing, which is why its premium is far lower than savings-linked policies.
Who needs it#
Anyone whose income supports others: a spouse, children, parents, or a home loan that the family would have to repay.
Working out the cover#
- Add up the loans your family would need to close.
- Add the cost of major goals you want protected, such as children's education.
- Add enough to replace your income for the years your family would depend on it.
- Subtract existing savings and investments that would be available.
A multiple of annual income is often used as a quick check, but the step-by-step method above reflects your actual situation.