Updated on: 28th August, 2023
When it comes to gifts, people often think of tangible items like gadgets, jewelry, or clothing. If you want to gift something that can actually benefit your loved ones in a true sense, then term insurance is what you need. While it might not be the first thing that comes to mind, gifting term insurance to your loved ones can profoundly express care and foresight.
Key Takeaways
- Term insurance can be a perfect gift for your family to show your financial preparedness and to provide them with a stable financial corpus in case of any unfortunate event.
- It can provide a monetary shield, regular income, and assurance of a safe future for your loved ones in case of your untimely demise.
- It has a long-lasting impact on the lives of your loved ones and is considered a unique gifting option.
- When choosing a term insurance plan for your family, it is important to consider the right coverage amount, policy, and process.
Ever thought of gifting a term insurance plan to your family? Yes, this is a new gifting trend that is all about empowering loved ones with financial stability and security. You have purchased loads of gifts for your family. Unfortunately, most have either been used and exhausted or lying safely in closet drawers. Why not gift something that will secure the future of your family members? This blog will discuss how gifting a term insurance policy to a loved one or a family member can be the best idea for a present.
Benefits of a Term Insurance Plan for Your Loved Ones
Gone are the days when we used to save for rainy days. In the post-pandemic world, savings must go for rejigging as a term insurance plan. The policyholder will be paying a reasonable premium for a certain sum assured that will go to his family - in case of his untimely demise. take a look at the following term insurance benefits:
Monetary Shield
One of the direct benefits of gifting a term plan is ensuring a fiscal shield for your family. In case of any unfortunate turn of events, their happiness will not be marred by loans or debts due to the absence of primary income.
Regular Monthly Income or Lump Sum Benefit
The regular income of the family’s sole earner is the family’s scaffold. A term plan will diffuse the brunt of losing primary income, and there will be regular income for the decided period (under a recurring payout) or a lump sum of money. This will provide great cushioning to bear day-to-day expenses and to maintain the living standards as usual.
Add-On Riders
Most of the insurance term plans offer riders that cover the critical illnesses and disabilities of the policyholders. A small escalation in premium can protect from many critical diseases without denting the savings. The selected insurance providers are even covering covid fatalities in their term plan policies.
Why Term Insurance Makes an Ideal Gift?
Whether it is your spouse, children, parents, or close friends, term insurance is a gift that will be appreciated for its thoughtfulness and lasting impact. Here are some benefits that make term insurance an ideal gift:
Long-Lasting Impact
Unlike material gifts that can wear out or become obsolete, term insurance provides lasting value by offering financial protection for a predetermined period. It is a gift that keeps adding value and provides financial security even after other presents may have lost their allure.
Protecting the Future
Gifting term insurance demonstrates your commitment to the future well-being of your loved ones. By securing their financial future, you are offering a lifeline that can support them in times of need, such as covering mortgage payments, education expenses, or medical bills.
Thoughtful and Unique
Term insurance is a unique and innovative gesture that showcases your consideration for the recipients’ long-term welfare. It is a testament to your desire to look out for their interests even when you are not physically present.
Choosing the Right Coverage Amount
Choose the gift of an insurance term plan that has a well-thought cover amount. Here are a few tips to help you decide on the right cover.
- The cover amount of the term insurance plan should be nearly 15 to 20 times of policyholder’s current annual income
- The projected coverage should be adequate to accommodate the family’s financial goals. The maintenance of loans, vehicles, education, and health would need ample finances.
- Inflation usually goes unnoticed while deciding the term cover. What deems to be an impressive cover amount may appear insufficient after long years. So, do not overlook inflationary trends
- Use Human Life Value (HLV) calculators that help you identify the right amount after considering your income, inflation, future liabilities, financial goals, etc.
Process of Gifting Term Insurance
By providing your family with financial security, you are giving them the tools to navigate life’s uncertainties confidently. Buying them term insurance offers assurance of a safe future, even in your absence. To gift term insurance policy, follow these steps:
Identify the Recipients
Consider the individuals in your life who could benefit from term insurance – it could be your spouse, children, parents, or even close friends. Think about their current financial situation and any potential future needs.
Assess Coverage Needs
Determine the coverage amount needed to protect your loved ones adequately. This might include expenses like debt repayment, children’s education, or daily living costs. Online insurance calculators can help you estimate an appropriate coverage amount.
Choose the Right Policy
Research various insurance providers and their term insurance offerings. Look for policies that align with the recipients’ needs and your budget. Compare features like coverage duration, riders (additional benefits), and premium affordability.
Complete the Application
Once you select a policy, you must complete the application process. This typically involves providing personal and health information about insured individuals. Some insurers might require a medical examination, while others offer no-medical-exam policies.
Pay the Premium
As the gift giver, you will be responsible for paying the insurance premium. Depending on your financial situation, you can pay it as a one-time lump sum or opt for regular premium payments.
Way Forward: Term Plan as a Perfect Gift for Your Family
Show your financial preparedness by gifting a term plan to your family. With so many benefits available, why delay gifting a term insurance plan for whom you care? Buy a suitable term plan while you are young to avail lower premiums and higher coverage. Pray this gift never gets used by your family. If a calamity strikes, this gift will prove to be the saviour and provide a stable financial corpus.
