Family Term Insurance: A Safety Net for Your Loved Ones

A family term insurance plan is such an insurance product that has been specifically created to ensure the financial protection of your family members despite your absence. It offers affordable premium payout rates and allows you to customize your chosen plan with additional riders. Certain typical riders allow maternity coverage, accidental death benefits, critical illness coverage, disability coverage, etc.

Key Features of The Term Plans:

Some of the most highlighting features of family term plans include:

1. Pure life protection: A family term insurance plan allows your family to enjoy pure life coverage protection. It ensures financial security despite your absence. It helps your family to maintain their normal standard of living even after your demise.
2. Flexible payout options: A family term plan offers you a wide range of coverage years, suiting your family’s requirements the best. You can easily renew your plan before ending or opt for a whole life insurance plan, as required.
3. Affordability: Family term plans allow your family pure life cover protection. These are very easy to purchase. If bought early, these plans attract lower premium costs, making it all the more affordable, and ideal for first-time insurance ventures.
4. Riders: You can enhance the overall coverage protection for your family with a term plan by adding befitting riders to it. These additional riders are essentially added according to the requirements of your family. Otherwise, they will eventually result in unnecessary financial drainage.

Advantages of Family Term Plans

Some of the most significant advantages of family term plans include the following:

1. Financial security: A family term plan ensures the economic security of your dependent family members despite your absence, provided you are the insured and the term insurance holder. Your family will receive the assured sum either in a regular payout or in a lump sum. The payout frequency can be chosen based on your requirements. As a family term plan is comparatively more affordable than other insurance products, you can ensure higher sum assured coverage.
2. Contingency plan: Family term plans also allow coverage if you become incapable of working due to medical reasons. Multiple rider options are extending the plan coverage limit like permanent disability coverage.
3. Tax benefits: You can enjoy applicable tax benefits depending on the life insurance premium payment. These benefits are decided according to the provisions of Section 80C of the IT Act. Usually, the limit is INR 1.5 lakhs/annum.
4. Peace of mind: The loss of a family member cannot be substituted in terms of finances. However, financial tensions add up the difficulties during such tough times. A family-term plan will help your family go a long way despite your absence.

Types of Term Insurance for Family

Various types of family term insurance plans are available. You can choose according to your convenience. Each plan is unique and proves to be beneficial in some way or the other:

1. Level term plans: These plans have fixed premiums and pre-determined sum assured i.e., life coverage throughout the entire plan tenure.
2. Return of premium term insurance: These plans ensure life coverage and maturity benefits. Since most term plans offer death benefits, in this case, you will receive all the term insurance premiums paid so far, if you outlive the plan term.
3. Convertible term insurance: These are very flexible term insurance plans. Here, a basic term plan can be converted to a comprehensive life insurance plan, like a whole life plan or an endowment, based on your requirements.
4. Increasing term insurance: These plans consider the inflation factor. Your sum assured amount increases every year by a certain pre-determined percentage.
5. Decreasing term insurance: This is simply the reverse of increasing term plans. The sum assured amount gradually decreases every year by a certain pre-defined percentage. These plans prove to be ideal for individuals with outstanding debts like home loans. As you keep paying off your dues, your coverage amount gradually decreases to align with your reduced financial requirements.

How to Choose the Best Family Term Insurance?

You need to consider multiple essential factors while choosing the best family term plans:

1. Life coverage amount: This is very crucial to ensure sufficient financial protection for your family members. This is the amount that your family will receive as the death benefit. Critically assess your requirements before finalizing. Ample coverage ensures ample protection. Ideally, you can consider maintaining a 1.5 Crore term insurance plan if you have outstanding loans and multiple dependent family members.
2. Riders: Choose only the most befitting riders as required. Otherwise, it will cause financial drainage as you need to pay for each rider you choose. Customize your chosen plan according to your needs to ensure optimum protection.
3. Tenure: This refers to the span up to which your plan will remain active. Consider your age, targets, tenure up to which your family will remain dependent on your income, etc.
4. Claim settlement ratio: Ideally, your chosen insurer must maintain a high claim settlement ratio. This is the ratio of the number of claims filed and the number of claims settled. A higher CSR ensures higher credibility of the insurer.
5. Exclusions: Consider all the inclusions and exclusions of the chosen term to avoid any future misunderstandings.
6. Compare: Compare several competent plans to grab the best deal.

Conclusion

Family term insurance plans are ideal for debt holders, single parents, breadwinners, and family dependents. Considering your situation and objectives well, proceed to finalize your plan.