The COVID-19 outbreak has changed how all of us view the world. Every part of people’s lives in India has been affected, along with the economy, politics, culture, and society. The official data released by the National Statistics Office (NSO) says that India’s gross domestic product (GDP) contracted 23.9 per cent in the April-June quarter of 2020-21 from that in the same quarter last financial year.
This was mainly on account of limited economic activity in the country during the quarter amid lockdowns to control the spread of the coronavirus pandemic. This was the first reported instance of decline in the economy in India in at least four decades. Moreover, this was the first ever GDP contraction reported since India began to publish quarterly numbers in the year 1996.
About 400 million people, which is 90% of India’s workforce, work in the informal sector in India and face deep job insecurity. The people working in informal sectors have been generally excluded from debates on the economic impact of the COVID-19 pandemic. As per figures released by the Centre for Monitoring the Indian Economy (CMIE), over 45 million businesspersons are estimated to have lost employment (or enterprise loss) during the various phases of lockdown.
For people who are self-employed, chances are quite high that they carry a heavy financial burden; be it in the form of working capital loans or other loans to manage the expansion of the business or sometimes even personal loans. Due to this, self-employed individuals often end up compromising on savings and investments in the short run and don’t ever think what if an untimely emergency strikes them. This pandemic has been an eye-opener in terms of telling us that future planning is a necessity. The COVID-19 crisis is not going to go away anytime soon, and thus, we must be prepared for the future.
In order to make sure your family is financially protected against any outstanding dues or any other financial payments during uncertain times like death of the bread winner, you need to opt for solution that promises overall protection. This is where a term life insurance plan comes into action as it plays a major role in securing your family’s financial future in case of an unfortunate event like the sudden demise of the breadwinner. The self-employed working population of India and their families are exposed to higher financial risks than salaried individuals and, hence, they urgently need to consider term insurance. However, as per a recent report, self-employed individuals merely account for 20 per cent of the people who buy term insurance every year in India. Most self-employed individuals have an uneven source of income and they often compromise with savings and investments in the short run for big earnings in the long run.
Apart from household liabilities, a self-employed individual is often personally liable to debts and liabilities with respect to his business also known as business liabilities. A business can have different liabilities at various stages. This is why it is crucial that you have adequate financial insurance-backed protection for your family through a term life insurance plan.
A self-employed individual faces a plethora of more challenges than a salaried individual and this is why it is all the more important for a self-employed person to invest in term plan. A term plan provides coverage to the dependents in case tragedy befalls the life insured during the policy tenure. The monthly premium for a term plan is quite low. The premium depends on one’s age, gender, and medical history.
A 30-year-old individual can buy Rs 1 crore sum assured term insurance for as low as Rs 1,000 per month. Term life insurance plans are perfect for self-employed individuals, as the plans are cost-effective and hassle-free. Moreover, a few plans even promise the return of the ‘investment’ through Term Return of Premium plans. In addition, it covers the policyholder against uncertainties and sufficiently addresses the needs of the dependents.
The shorter premium payment term is especially beneficial for self-employed individuals with variable incomes. While your income is on the rise, you can pay off all premiums and enjoy risk protection until an advanced age. Moreover, as a self-employed person, you may continue earning beyond the usual retirement age of salaried people, i.e. 60 years. Thus, a longer risk coverage will be appropriate as an income replacement in your case. If you are 32 years old now, and pick a premium paying term of 10 years with a policy tenure of 38 years, your payments will be over by the time you become 42 years old. However, you will still enjoy life coverage till you turn 70.
In a limited pay plan, the premium payment term is complete within a few years. As a result, you can enjoy an extended coverage even if you lack the surplus income for servicing the policy later in life. This plan is useful if doubts about your capacity to pay the premiums to the full policy term are holding you back from buying term insurance. The payments end within a short duration, freeing you from the burden of premiums at an older age.
