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Planning for the future is always a smart choice, and term insurance is one such financial product that allows you to do so. We all want to provide our families with the best, and term insurance makes that possible. Term insurance provides your loved ones with financial security in case of any unfortunate events in your life. In this guide, you will explore what term insurance is, how it works, age limits and factors to consider before buying one.
Key Takeaways
Non-working spouses contribute significantly through caregiving and household duties, which would be costly to replace.
Term insurance offers financial stability in their absence, helping cover childcare, domestic help, and other essential needs.
Plans like iSelect Smart 360 by Canara HSBC Life Insurance allow joint coverage with riders and affordable premiums.
Income proof from the working partner is sufficient for purchasing a plan, and the coverage for the non-working spouse is typically capped.
Choosing the right plan involves evaluating financial needs, comparing policy features, and understanding claim settlement processes.
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In the intricate web of family life, the role of the non-working spouse often goes unnoticed. True that they do not make any financial contributions to the family, but their contribution is far more valuable, including childcare, managing the home, and offering emotional support. Thus, if you recognise this, you must consider a financial safeguard for your non-working spouse, too. Term insurance is a good choice and can protect your family’s future in your absence.
Sounds like an idea you never thought about? Let us delve into the whys and hows of getting term insurance for your spouse who does not earn a paycheque.
Understanding Term Plan for Non-Working Spouse
Term insurance is a life insurance policy that offers a lump sum to your nominees in the event of your sudden demise. Do you think term insurance is only for working people? Think again! Spouses at home have their own set of duties, and they deserve a term insurance plan, just like their partners.
So, when you sign up for a term plan for them, you and your family will receive death benefits in case of an unfortunate incident. This can come in handy to take care of various expenses, ensuring that your lifestyle does not get compromised.
Did You Know?
Many term policies are also “convertible,” as they can be converted into a permanent life insurance policy.
Here’s why you must buy a term plan for your non-working spouse:
Household Contributions
While your spouse might not be contributing financially to your home, they do a lot more than that. From household management to childcare and cooking to becoming the home-teacher for the kids, they work 24/7 without any holidays. In their absence, you will have to hire professional services to fulfil these roles, which will elevate your expenses. This can create a dent in your long-term financial planning. While their loss cannot be replaced, the lump sum you receive from term insurance will help you manage the unforeseen expenses.
Emotional and Psychological Stability
Do you know that your stay-at-home spouse is a silent presence in your life? They maintain a stable environment that is ideal for your children to grow and thrive. They are also your backbone in challenging situations. Once they are gone, you will need additional help to take care of your children. The payout you get from their term plan can help you hire someone to take care of your daily routine.
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Understanding the Features of Term Plans for Non-Working Spouse
Want to buy a term plan for your non-working spouse? Here’s what to expect:
Affordable Premium
Since your spouse does not have an income, the insurer will most often offer terms at low premiums. This makes it a cost-effective solution while also providing security for your family. Also, the earlier you sign up for the plan, the lower the premium amount.
Joint Coverage Options
Don’t want to buy separate term insurance policies for you and your spouse? Opt for one that allows you to integrate the term plan for both of you under one policy. For instance, the iSelect Smart 360 term insurance plan from Canara HSBC Life Insurance offers a provision to add your spouse to the policy within a year of your marriage. It also allows you to add riders like health insurance later.
Tax Advantages
Whether you buy a term plan for yourself or your spouse, you can avail of tax benefits. Under Section 80C of the Income Tax Act, 1961, the premium paid is eligible for standard deduction.
Eligibility and Considerations for Term Plan for Non-Working Spouse
When intending to insure your non-working spouse, here are some things you should know:
Submitting Income Proof
Since your spouse does not have an income, there is no proof of income to show. But this is a prerequisite when signing up for term insurance. As a working person, you can buy a term plan on behalf of your spouse and present your proof of income. Or, you can add your spouse to the existing term plan.
Coverage Limit
Including your non-working spouse in your existing term insurance works differently from buying a new term plan. How? When you add your spouse to the existing plan, the sum assured of the non-working spouse will be capped. For example, with the iSelect Smart 360 plan by Canara HSBC Life Insurance, the sum assured for your spouse will only be a percentage of your total sum assured.
Term Insurance for Your Non-Working Spouse: Factors to Consider
When selecting term insurance for your non-working spouse, consider the following factors:
Assess the Financial Needs
The contributions your non-working spouse makes around the house are invaluable. However, try to evaluate its monetary worth. This will give you an idea of the expenses you will have to incur if you have to replace these services.
Compare Policies
Most reputable insurance companies offer term insurance for non-working spouses. But don’t rush into signing up for one. Instead, take some time to understand the various policies and pick the one that suits you best. Also, check their claim settlement ratio to ensure your claim will be settled quickly when the need arises. Canara HSBC Life Insurance has a claim settlement ratio of 99.23%.
Understand Policy Terms
Planning to add your spouse to your existing term plan? Or are you buying new term insurance for them? Irrespective of your choice, educate yourself about the features of the policy. Understand the inclusions and exclusions, rider benefits, etc.
Conclusion
Just because your spouse does not bring home a pay cheque, dismissing their contributions is not right. They help in many ways around the house, and replacing these with professional services would cost a lot of money. So, ensure their life too with a term insurance plan, as this will come in handy during dire circumstances.
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
Absolutely! Medical underwriting is mandatory for all term plans, whether for you or your spouse. In fact, you need it even when you are adding them to your existing policy.
In order to purchase a term plan for a non-working spouse, you must submit:
Your income proof
Your identity proof
Spouse’s identity proof
Marriage certificate
Spouse's medical examination report
You can add riders like health insurance, critical illness benefits, and accidental benefits for your spouse in the joint insurance plan.
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.
