The most crucial financial choice for someone who is the only earner in the family is to buy term insurance. This is the most basic type of life insurance, providing death benefits if the insured person passes away.
To protect the goals of loved ones, one must consider several financial planning characteristics. The family term plan significantly influences the security of the family. The following are a few things you should know regarding family term insurance:
Overview of term insurance for families:
Even though no one may know what the future holds, they can ensure their family’s future is secure by smart financial planning and getting life insurance. A person must buy term insurance for the family if they are the only household income source.
Who is covered by term insurance?
A term insurance policy can be purchased for a low cost with a high level of coverage. The buyer must pay a term insurance premium at the agreed intervals to be eligible for the coverage. The sum assured for the plan should be based on your responsibilities and income. At the very least, the term plan needs to be 15–20 times your annual income. When selecting a policy, you should also consider the loan amount if you already have debt, such as a home loan.
The death benefit can be delivered to your beneficiary as a lump sum in the event of your passing. They can use the money for annual costs, pay the mortgage, or invest in your kids’ future educational needs. Term insurance protects your family and loved ones in your absence in this manner.
Your beneficiary may also claim some term insurance tax benefit in the form of tax exemption against the death benefit amount.
Term insurance for families protects the family of the person covered by providing coverage for their lives during the term of the policy. The beneficiary or nominee of the life insured receives a lump sum payment or monthly payouts if the life insured passes away within the policy term. Some providers offer maturity advantages through the TROP option on family term plans.
Features of family term plans:
When the life insured passes away, if they have paid the term insurance premiums on time, the insurer pays a death benefit to the beneficiary. The policy’s term is the only time the coverage is in effect; if it expires, the insured loses the benefits.
Some insurance companies provide family term insurance with maturity advantages. These policies are called “term insurance with return of premiums” (TROP) because when the policy matures, the policyholder gets a full refund of all premiums paid.
Other noteworthy characteristics of term insurance for families are:
- It offers affordable premiums.
- The ability to terminate the policy quickly
- The term insurance tax benefits provided to the life insured under Section 80C of the Income Tax Act (for taxpayers under the old tax regime)
For term insurance they want to buy, a person also has the choice of paying the premiums over various payment schedules and, if applicable, selecting a rider for extra security.
Advantages of a family term plan:
Different insurance companies offer distinct advantages to each family term insurance policy. These benefits may or may not be the same. For instance, one insurer may offer a higher number of add-ons than the other while another may have a higher claim settlement ratio. The buyer must ultimately assess the advantages and disadvantages of term insurance before selecting the plan that ideally matches their needs and those of their family.
Plans for term insurance give the family members enough resources to get through difficult times. They are also good ways to invest for long-term financial goals like retirement and college. If you still need a family term plan, now is the time to buy one.
Before you buy term insurance for your family, it is important to have a conversation with them about their coverage needs. Understand their coverage requirements before finalising a term plan. It is also advisable to consult a financial expert before going ahead with the same.
Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.