How to protect your family financially with Term Insurance Policy?
With the recent COVID-19 pandemic, life has taken a sudden and drastic turn for all. It has hit many families very hard, with some losing their jobs, while some others have lost their loved ones in the fight against the virus, bringing more financial and emotional strain onto them. Therefore, the need for a term insurance policy becomes more critical during such times as it helps protect your family’s financial future even in your absence.
Ritesh Kumar, a 30-year-old HR professional with a private firm, recently married Seema a financial advisor. Soon after the marriage, Ritesh, on his wife’s advice, bought a term plan for the family for a sum assured of Rs 1 crore. The term plan also gave him an option to add his wife under the same policy with 50% coverage which continues even if he is no more. To create a monthly income stream after his demise for his family, he chose the monthly income benefit option available in the plan so that their expenses can be managed easily. Not only this, he chooses the increasing sum assured option which increases his sum assured by 5% every year, keeping his kids’ education and future family needs in mind.
Furthermore, for enhanced protection, he added the Accidental Death Benefit Rider and Critical Illness rider to provide an additional amount in case of accidental death and to bear the treatment costs if he is diagnosed with any critical illness. By purchasing one term plan, Ritesh has made sure everyone in his family is cared for well by utilizing all the features offered in a term insurance policy.
Having decided to buy term insurance, it is always best to keep the family in mind because it is for them and provides a better financial future. So start the search for the right plan that suits your family’s future needs and opt for a suitable sum assured with an affordable premium amount.
Why Term Insurance?
This is a common question asked by many, and the most obvious answer is the death benefit receivable by the family, which will help them take care of their financial requirements. But there are more reasons why you need a term policy to protect your family financially.
5 Reasons why you need term insurance to protect your family financially
A Secure Future
If you are the sole earning person for your family, what will your partner and kids do after your demise? Term life insurance plans assure a secured future for your partner and family, enabling them to manage household expenses. Likewise, it shall help the kids pursue their dreams and reach their goals without worrying about the financial limitation in your absence.
Choice of Benefit Payout
A term plan typically pays the benefits as a lump sum amount to the policyholder’s nominee. But if required, you may look for term insurance plans that allow you to receive the benefits as monthly income or 50% as a lump sum and the remaining as monthly installments for a specific period, which will act as a regular income for your family over the years. The standard benefit payout options are:
- Lump-Sum: Death benefit is paid out in entirety as a one-time lump sum to the insured’s nominee.
- Lump-Sum + Monthly Income: Fifty percent of the benefit amount is paid out immediately, while the rest is paid in equal monthly installments over 120 months.
- Monthly Income for a fixed term: The entire benefit amount is paid out in equal monthly installments over 120 months. No lump sum is payable.
- Monthly Income till the end of policy term: Entire benefit amount is paid out in equal monthly installments till the end of the policy term.
Help Handle Liabilities
In case you had taken any loan to buy a house, car, or funding education, then it will add more stress on your family members after your absence, especially your spouse could find this very tough. But when you buy term insurance, the repayment of these liabilities is taken care of, thereby protecting your assets while offering the same lifestyle they have always lived.
Adding your partner to the existing term insurance policy has multiple advantages such as affordable premium for joint coverage, life cover of your spouse will continue to remain in force even if you pass away, enabling a safe and secure future for them. Moreover, it makes sense to have a single-term plan for the couple, as it creates a lot more transparency and builds confidence in the relationship.
Riders are add-ons to enhance the protection benefits offered by the term insurance plan. It is designed to fulfill the policyholder’s specific requirements and can also benefit the entire family. For example, Accidental Death rider, Accidental Disability rider, Premium Waiver rider, Critical Illness rider, Income benefit rider, Terminal Illness rider, etc., are some commonly preferred riders.
Let’s say you have opted for an income benefit rider and meet with an untimely demise during the policy term. In such a scenario, your family will be entitled to receive an additional income every year, for the next five or ten years or whichever specific period you choose, apart from the sum assured promised in the term plan. Similarly, in the waiver of premium rider, if the policyholder cannot pay premiums due to income loss arising from permanent disability, the insurer waives off the future premiums while keeping the policy active, which is very useful during such adverse situations.
Therefore, considering all the benefits and features of term insurance, buying one for your family’s future security is necessary. First, however, you should go through and analyze the features as per your requirements and then opt for the one that is more suitable for you and your family. To know more about an appropriate term insurance plan, visit iiflinsurance.com and make the right choice.