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Can One Buy Term Insurance Plan for a Family?

dateKnowledge Centre Team dateAugust 19, 2021 views314 Views
Term Insurance Plan for Family | Best Term Plan Online | iSelect Star Term Plan

Life does not come with guarantees. For most of us, family is our priority. You should have plans to protect (financially) them under all circumstances. When you do financial planning, you create goals for yourself to give the best life to your loved ones.

You have to take care of your parents, children's education, marriage and create a retirement corpus for yourself and your spouse. In case you die, your family will not only go through mental stress but also financial stress.

Term insurance is the simplest form of life insurance that financially protects your family if you die during the policy tenure. It ensures the dreams you have seen for your loved ones get fulfilled whether you are with them or not.

Who does Term Insurance Cover?

You can buy a term insurance plan at an affordable price and get high coverage under the plan. You can buy a term insurance plan as per your liabilities and your annual income. The term plan should be at least 15 to 20 times your annual income. If you have an existing loan like a home loan, you should factor in the loan amount while choosing a cover.

For example, you have a Rs 50 lakh home, and your annual expenses are Rs 6 lakh. In this case, you should opt for a cover of Rs 1.5 crore. In case of your death, the death coverage will be given to your beneficiary as a lump sum amount.

Your spouse receives the benefit amount that they can use for:

a) Paying off the home loan
b) Use for annual expenses
c) Invest in the future education needs of your children.

In this way, term insurance covers your family and loved ones in your absence.

Do You Need a Term Cover for Other Family Members?

The time has changed, and now the male is not the only breadwinner of the family. More and more women are working, and the household now is dependent on the income of both the members.

Let us take an example of Mr Shah's family. Mr Shah has taken a home loan, and a large part of his salary goes into paying the EMIs, and the rest he saves for future financial goals. Mrs Shah is also working, and she takes care of household expenses.

In the above example, both are equally important in running the household and achieving future goals. In such cases, you must take a term to cover your spouse also. If something happens to either of you, your partner and other family members can maintain the same living standard. You can either opt for a joint insurance term plan or buy separate term plans for yourself and your spouse.

Can Term Insurance Benefit Buyer?

Yes, a term plan can benefit a buyer. To understand how let us understand the types of term insurance plan you can opt for:

a) General Term Insurance cover

A simple term plan gives a lumpsum amount to the beneficiary in case of your death, and the policy terminates. In case you continue to live till the maturity date, no benefits are received.

b) Term Insurance with Return of Premium

In this option, if you pay your premium regularly then at maturity of the policy, you get back the premium you have paid. You get the survival benefits also.

For example, you buy a 30 years term plan with a return of premium option with a cover of Rs 50 lakh and a yearly premium of Rs 12,000. After 30 years, when the policy matures, you will receive Rs 3,60,000. In case of your unfortunate death, the beneficiary will receive Rs 50 lakh.

Five Term Insurance Features for the Benefit of Your Family

If you want to provide the best term insurance cover to your family, you need to look for a few features in the plan. For example, Canara HSBC Oriental Bank of Commerce Life Insurance iSelect Star term plan offers multiple benefits to your family in a single term plan:

1. Add Your Homemaker Spouse to the Plan

The plan offers you the option to add your spouse to the same policy with the discounted premium. Instead of buying two separate policies and pay a double premium, you have an option to add your spouse and pay a combined lower premium.

2. Increase Life Cover As Per Need

If you just got married, you may feel coverage of Rs 50 lakh is sufficient. However, when you have children, the cover may feel small. Instead of buying a new term plan, you can increase the coverage of your existing plan.

3. Receive Payment As Per Choice

While buying the term plan, you have the option to choose how your beneficiary will receive the cover amount. They can either take the coverage amount as a lump sum amount, as monthly income, or as a combination of both. In the combination of both, you have the flexibility to choose the per cent you want as lumpsum.

Depending on your need, you can decide on a lumpsum per cent - 25%, 50%, or 75%. For example, if the cover amount is Rs 1 crore and you have a home loan of Rs 50 lakh, 50% can be taken as a lump sum and the remaining as monthly.

4. Additional Benefits

With the iSelect Star Term plan you can add benefits and covers like Accidental Death Benefit, Accidental Total & Permanent Disability Benefit (ATPD). Riders like these protect your family from more than one hazard.

5. You Get Built-In Riders

iSelect Star Term plan is one of those term plans which offer terminal illness insurance cover as a default option with the life cover. Thus, if you face a terminal illness the plan will release the funds to support your treatment costs.

When you buy a term plan, it is for your family and their secured future. You give them financial security by paying a small premium amount. Most people wait for the right age to buy a term plan - first, they wait to get married, then wait for children. There is no right age for term insurance, there is only a right time, and that time is NOW.

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Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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