Estate planning is something that you should put your mind to, with the onset of age and experience. After all, careful wealth management and financial planning is important to leave behind a substantial legacy or estate for your near and dear ones. 

Now, while there are several components involved in wealth management and estate planning, one of them clearly stands out in terms of overall dynamism. We’re talking of term plans, which offer pure life coverage for a predetermined tenure at a comparatively lower premium in comparison to many other life insurance products. They can play a vital role in shaping the contours of your future estate plan for your heirs and dependents. 

How Term Plans Boost Estate Planning 

Future estate planning should focus on leaving behind sufficient funds to meet all the needs of your loved ones in the future. This also means ensuring your family’s financial security even if you are not around down the line, owing to an unfortunate mishap. This is where term plans can come into play for ensuring a substantial legacy for your loved ones, enabling smooth asset transfer, and of course, helping safeguard wealth for the future. It can be nicely complementary to other wealth-creation and management plans such as mutual fund investments, ULIPs, retirement plans, pension plans, and more. 

Here’s how term plans are a natural fit for any estate planning endeavor: 

• Full financial protection is ensured for your loved ones in case you pass away within the policy tenure 
• You can choose the coverage amount as per your family’s future needs, accounting for inflation, your current debts, higher education costs, household costs, etc. 
• Your family can use this money to repay any liabilities that you leave behind without dipping into other savings and investments 
• The sum assured payout can be an income replacement tool for the family, helping them meet regular expenditure without compromising on their living standards 
• Term insurance comes with attractive tax benefits in the form of deductions on the premium amount (Section 80C) and exemptions on the sum assured amount (Section 10 (10D)). 
• Term plans are comparatively more affordable in comparison to many other life insurance plans, offering higher coverage without denting your pocket. 

Make Term Plans a Crucial Part of Your Estate Plan 

A term plan can be a long-term financial planning instrument which is simple and more affordable than many other options. It can complement other investments and selecting a high sum assured will ensure sufficient financial security/coverage for your near and dear ones. Of course, calculating this coverage amount strategically is important. A simple rule of thumb is to go for a sum that is 15-20 times of what you earn annually. 

If you have any liabilities and if the inflation rates are on the upswing, then you should opt for a higher sum assured amount. Deduct the full amount that you feel your family will require from your assets. The net resulting amount is the coverage that you will have to apply for. With term plans, you can rest assured about leaving behind a sizable estate for your family members, even if something happens to you.