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Can one gift a term insurance plan to their parents?

dateKnowledge Centre Team dateFebruary 18, 2021 views183 Views
Can one gift a term insurance plan to their parents?

When times are uncertain, a person would undoubtedly seek and welcome the possibility of having the future of their loved ones secure, should an unfortunate event occur. This is where term insurance plans come to the rescue.

In this day and age, the occurrence of accidents and health issues due to lifestyle habits is as prevalent as ever, but luckily health care advancements have made the chances of survival for the sufferers much better than they used to be.

Advanced health care, however, often comes bearing costs that can further add to the suffering of the common man simultaneously as it helps. Especially impacting senior citizens without or with meagre pensions, as they are a particularly financially vulnerable group while also being the most affected by health issues. This is why it is wise to see not only retirement and pension plans but insurance plans as an investment to secure your future.

What is term insurance?

A term insurance policy is a kind of insurance policy, the benefits of which are subject to a limited period of time or a specific term. It provides the promised coverage but only within the term that is clearly mentioned in the policy beforehand and is agreed to by the policyholder at the time of purchase.

This means that if the insurance carrier passes away during the active term period, their nominee can claim a payout. This also means that depending on the policy terms and any riders purchased additionally, like for motor accidents or chronic diseases, claims can also be made if the accident or diagnosis falls within the active policy term.

What do online term plans cover?

A typical term insurance policy covers deaths due to most health-related problems unless specifically mentioned as being life-threatening sexually transmitted diseases. Even the treatment charges incurred prior to the death can be reimbursed; deaths due to accidents are also typically covered in term insurance policies. However, deaths due to suicide or as a result of self-inflicted injuries, even though the intent was not suicidal, are not covered by most policies.

There are also extra riders that can be purchased to go with the pre-written online term plan. These riders can help you customise your policy according to personal needs while keeping the basic terms the same for all.

Common riders include,

  • Accidental death riders: Ensures an additional payout in case of accidental death.
  • Long-term care rider: Provides monthly payments to the insured; this rider is great for elderly people who need to stay long term at nursing homes or confined to their own homes.

Can term insurance plans be purchased as a gift?

Indeed, it is possible to give a term insurance policy as a gift. Although most policies can only be given as gifts to immediate family or people whom you are related to, there are also a few which allow gifting to friends and extended families. It all comes down to the specific plan you choose, but most plans can be purchased as a gift of immediate family members like spouses, parents, and children.

In fact, giving your beloved family members insurance policies as gifts was a popular gifting trend in the year 2020 when an unprecedented global pandemic caused the whole world to suffer and brought to the forefront how unpredictable and uncertain life is. The impact of the last year has been such that it is safe to say that this trend will continue well into 2021, as well.

Especially for the groups that are more vulnerable to financial trouble like underage children, senior citizens, and unemployed women, it is imperative that measures be taken to ensure financial stability in times of crises.

Out of this, the elderly have the hardest time coping with being dependent and having to struggle with health as well as financial issues. You can help ensure that your parents spend the final segment of their lives in a comfortable way by giving them a term insurance plan as a gift.

The main steps to keep in mind while selecting and purchasing term insurance as a gift for your parents are:

  • Parents' consent

    Most policies, especially when purchased for adults, require the signed consent of the policyholders as well as the purchaser. Some people may find it difficult to broach the subject of insurance because this discussion can get too emotional and hard.

    However, it is necessary to have a detailed discussion with your parents before you purchase a policy for them, not only to have their consent for it but also so that you thoroughly understand their needs and choose accordingly.

  • How much coverage they need

    Discussing the matter with your parents will give you an insight into what their needs and aspirations for the future are, which will enable you to make an informed decision.

    You can opt for additional riders to go with the base policy you choose like the accelerated death benefit rider which will help the insured person get an early payout in case they are diagnosed with a terminal illness. These coverage needs can also include the cost of funeral services and the subsequent needs of the surviving parent in case something happens to one.

  • Overall medical condition and other needs

    Most policies ask for the insured person or people's medical history, and recent check-up details in full, as some pre-existing medical conditions can disqualify the person for an online term plan.

    Future medical needs of the insured for issues diagnosed within the policy term, will, of course, be covered under the policy. In case the person needs long-term care at home or in a nursing home, monthly payments for medical and other expenses can also be arranged according to the policy purchased.

  • Best payout mode for them

    The mode of payout can vary for different policies according to the needs of the insured and the terms of the insurance policy. The death benefit payout can be given to the beneficiary as a lump sum or as regular monthly payments for a set period of time.

    Similarly, benefits for medical bills can be paid as a lump sum or in the form of regular payments if continued care is required. At the time of purchasing the policy, you need to bear this in mind and choose the terms of the policy accordingly.

  • Why a term insurance plan the best gift for parents?

    Parents spend the better part of their lives taking care of their children and often forget to do the same for themselves. Mostly, when they think of investments that will secure their future, they look at their children and spend on their education and well-being in the hopes that this is an investment that will be enough for a secure future for themselves.

    Having a pension plan or term insurance for the medical needs that inevitably come with old age is necessary for the middle class that makes up the majority of our society. It is an excellent idea to give your parents a term insurance plan as a gift for. Here's why.

  • Fulfilling retirement goals

    After making so many sacrifices, it is no less than what your parents deserve to spend their retirement years in a comfortable and secure environment without having to worry about medical bills and living expenses. They deserve to have a sense of security and peace of mind in their retirement years that online term plans provide.

  • Ensuring the best medical facilities

    Your parents deserve nothing short of the best. The best medical facilities can be at their disposal with a well-planned term policy. Such a policy will enable them to fight the health complications that come with old age, ensure regular check-ups and timely diagnosis, as well as the right treatment. With the right riders, according to individual needs, a term insurance policy is the best health investment.

  • Saying thank you

    No better way to thank your parents for always thinking about your future than to think about theirs and ensure that they live a life of comfort and stability. Through a term policy, you will be able to protect your parents in a way that will be the best expression of gratitude from your side while ensuring they do not feel dependent and can maintain their dignity.

  • Providing a security blanket and financial stability

    Old age makes people vulnerable to health as well as financial issues, especially in the absence of the security net of a pension or retirement plan. Online term plans can provide this security net to fall back on in the times of crises for your parents in their vulnerable times. The financial stability that they once enjoyed can continue seamlessly through your ensuring their comfortable future with the right insurance policy and riders.

Platforms like the one provided by Canara HSBC Oriental Bank Of Commerce Life Insurance make it easier than ever for you to educate yourself about all the different plans that are there and make an informed online term plan purchase.

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Frequently Asked Questions (FAQs) for Term Insurance

This being a term 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 70 years of age.

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.

If your key purpose is to give your Family financial protection, go for the term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan.

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, a term plan pays a part of the sum insured to treat your disease.

Term insurance 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 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 policy remains active until the expiration date.
  • Income Rider: The rider 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 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 Term Insurance?

  1. 1. Amount of premium you have to pay based on your age, habits, education, and monthly income
  2. 2. The total number of benefits covered in the term plan. Do they include benefits that you care about the most?
  3. 3. How to save money on tax if you pay for the term plan?
  4. 4. Do they offer regular income options?
  5. 5. Can you change the coverage and premium in the future?
  6. 6. Does the claim consider valid if death occurs outside India?
  7. 7. Which kind of death is not covered by insurance?
  8. 8. Can NRIs take term insurance? If yes, what are the conditions?
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