Is Term Insurance the Right Choice for Your Family?

2025-09-11

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The term insurance is a financial tool to ensure a monetarily secure time for the family. The accumulation of funds in the early years of life allows one to be stress-free during the later years. It covers the unfortunate events such as sudden demise, disability, critical illness, and the fortunate event of living through the insurance. Wondering how both events are a plus for your family? That’s exactly what we are going to talk about. Read on.

Key Takeaways

Term insurance offers financial protection to your family in the event of your death, disability, or critical illness.
New-age term plans come with survival benefits like Return of Premium (TROP).
Riders such as accidental death, disability, and critical illness cover enhance the scope of protection for your loved ones.
Policyholders also enjoy tax benefits under Section 80C and Section 10(10D) of the Income Tax Act.
Family term insurance plans generally provide flexible premium payment options. Claim settlement is subject to policy terms, conditions, and regulatory guidelines.
To choose the right plan, assess your financial needs, check flexibility, compare plans, and evaluate the insurer’s Claim Settlement Ratio (CSR).

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How Does Term Insurance Offer Lifetime Financial Protection for Family?

Term insurance plans are well known to serve the families of the policyholders. Their previously available structure has developed the conception among people that these are suited only for the death of policyholders with dependents. However, while they are best fit for individuals with family members, the new ones are now being designed to suit both single and family individuals. It is through the provision of survival benefits. So, here’s what a term insurance plan encompasses that makes it the right choice for both types of individuals:

Maturity/Survival Benefits

Beneficial for both individuals and the family

Generally, the term insurance plan lacks any benefits to be provided on maturity. However, new policies offer other options as well. Some term insurance plans may include a Return of Premium (TROP) feature, under which the policyholder can receive the total premiums paid if they outlive the policy term. Such benefits, where available, are subject to plan-specific terms and conditions. The amount disbursal takes place after completion of the policy period and hence also serves as the post-retirement plan for the investor. It also makes term insurance plans a suitable option for meeting long-term financial goals.

Calamity Protection

Beneficial for both individuals and family (depending on the situation)

Unfortunate events in life, such as accidental death, permanent and temporary disability, and critical illnesses such as cancer, are possible at any time. Term insurance is designed to offer financial assistance in such scenarios. The stated protection can be a part of the term insurance you opt for or may come along with the flexibility to opt for as rider benefits.

Tax Benefits

Beneficial for the individual

Premiums paid for term insurance may qualify for tax deductions under Section 80C of the Income Tax Act, 1961, up to prescribed limits. Death benefits may also be exempt under Section 10(10D), subject to prevailing tax laws. Tax treatment is subject to change and depends on individual circumstances.

Features of Family Term Insurance

The term insurance plans for families come along with the following features:

Versatile protection plan: As discussed previously, they are designed to fit into every type of individual and dependent needs
Affordability: The term insurance plans are comparatively more affordable, as per the coverage, compared to other life insurance policies
Add-on riders: They offer the flexibility to include additional riders in the plan to customise the plans for changing requirements or other lifestyle needs
Risk management: These are among the widely chosen options to avert the challenging situations that may come in the way of life
Flexible payments: Premium payments are available at a frequency suitable for individuals. The periodic payments can be single, monthly, quarterly, half-yearly or annually.

Did You Know?

Many term policies are also “convertible,” as they can be converted into a permanent life insurance policy.

Investopedia

Reasons to Opt For Term Family Insurance

Choosing the term family insurance is easier and effective due to the following reasons:

Presence of a variety of term plans and riders to choose from ensures meeting the specific needs of individuals at different life stages
Offers financial security and hence the peace of mind to live without stress in scenarios of the occurrence of unforeseen events
Acts as the source of income during retirement, with flexibility in payouts for the policyholder
Contributes to maintaining the existing lifestyle of the family
Offers tax-free death benefits to ensure that the entire amount is utilised in meeting the family's needs
Allows welcoming a new family member to be a satisfying feeling without worrying about the additional expenses
Term insurance claim settlement is governed by IRDAI regulations. Generally, after two years, insurers cannot repudiate a claim on grounds of misstatement, except in cases of fraud, as per Section 45 of the Insurance Act.

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Points to Consider When Opting for Term Insurance for the Family

Term insurance policies do not accumulate any cash value, and the insurer uses the premiums paid to cover the cost of the insurance. Thus, throughout the duration of the policy term, there are no savings or investments made to build a fund. It focuses only on giving you life coverage at a low premium and does not offer any other financial features.

Reasons Term Insurance Plan Does Not Offer Cash Value

Making the choice of term insurance for the family such that it meets both the individual and family needs requires consideration of the following points:

Assess your Financial Needs

Identify the monthly expenses, future prospects, annual income, dependents' age and financial situation, debts/loans, and other significant cash flows. Keep the inflation rate and other factors in consideration to find a suitable solution. Further, we encourage the use of the human life value calculator to estimate the appropriate life coverage.

Flexibility

Check the flexibility of adding new family members to the policy, as and when required. Check the associated premiums and other key points that you should know about. Moreover, the flexibility in terms of renewability and the number of years it covers should be assessed.

Claim Settlement Ratio (CSR)

The CSR is the percentage of claims settled by the insurer compared to the received claims in a year. The high Claim Settlement Ratio indicates the insurance company's high efficiency in claim settlement. It smoothens the task for the policyholder's family.

Policy Documents

Necessarily check the policy documents to be aware of the terms and conditions. It helps you make an informed decision while being mindful of what to expect in a specific situation. It also eliminates the need to pay for something you don’t want.

Comparison

This is one of the key acts to perform when looking for term insurance. Comparison helps you gain clarity on what to expect. It also helps to select the plan that best fits your lifestyle, expenses, and family.

Conclusion

Term insurance policy is an effective approach to safeguard oneself and one's family’s future. The new available options act as retirement plans for policyholders if they live through the policy. In case of sudden demise, accidental disability, or critical illness, the policy offers the sum assured. In addition, rider benefits exist to choose from for additional financial security. So, looking forward to the financial protection of the family? Visit the link for suggestions.

Glossary

Sum Assured: The guaranteed amount paid to the nominee in case of the policyholder’s demise.
Rider: An additional benefit that enhances a term insurance plan, like critical illness coverage.
Term Insurance: Term insurance is a type of life insurance that offers financial protection for a set period.
Mutual fund: A mutual fund is a pool of money that is invested in stocks, bonds, and other securities.
Financial Dependents: Family members who rely on the policyholder’s income for their financial well-being.

FAQs

The sum assured of the policy can be calculated by finding the product of the current annual income and the number of years left in retirement.

Yes, it is now possible to compare, get your queries resolved, and buy the term insurance plans online.

The different types of term insurance plans in India are standard term insurance plans, whole life term insurance, increasing and decreasing term insurance plans, joint life term insurance plans, convertible term insurance plans, and group term insurance plans.

Disclaimer - This article is issued in the general public interest and meant for general information purposes only. The views expressed in this blog are solely those of the writer and do not necessarily reflect the official policy or position of Canara HSBC Life Insurance Company Limited or any affiliated entity. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the blog or the information, products, services, or related graphics contained in the blog for any purpose. Any reliance you place on such information is therefore strictly at your own risk. You should consult with a qualified professional regarding your specific circumstances before taking any action based on the content provided herein.