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Features
Ref. No. KLI/22-23/E-BB/492
Scared of life’s uncertainty and looking for a plan to safeguard your family’s future? Read ahead to learn how to take 100% responsibility for your family.
Family is the most important part of life for anyone. In order to protect their family, people tend to plan the future in advance. This helps ensure that their loved ones are provided for, both financially and emotionally. Knowing that they have taken the necessary steps to protect and support their family, people can rest assured. Buying term insurance is a step toward this objective.
When you buy a family term insurance plan, you take a step to provide for the financial stability of your loved ones in your absence. Life is uncertain, and the best way to handle it is by considering how you want your loved ones to live after you are no longer around to care for them. You may be reasonably fit and are leading a healthy lifestyle; however, it is always better to take the right steps at the right time. Investing in term life insurance for family plans will help ensure that the future of your loved ones is secure.
This blog will shed light on the significance of a term plan for family and help you pick a plan which aligns with your needs.
Primarily, you need to understand how family term insurance work. A term insurance policy is a basic plan covering the risk of death. It is a simple plan with no frills. In this plan, the insurance company will pay an agreed life cover amount on the insured’s death. In return, you agree to pay a certain amount in the form of a premium each year for the coverage. If you survive the policy term, no survival benefit is paid to you. One of the most significant benefits of term life insurance for families is coverage for life at a low premium amount.
Term insurance is the assurance of security in the event of the demise of the policyholder. Here are different ways in which term life insurance for family helps you.
In a family term insurance plan, the insured enjoys a high amount of life cover. This amount will be paid as a death benefit on the demise of the sole breadwinner of the family, and it acts as an income replacement source. It helps your loved ones maintain their lifestyle without falling into a debt trap.
The amount paid at the time of death benefit will be a tool for the repayment of liabilities in case of an untimely death of the income earner. Hence, if you have any outstanding loans and you have to pay them off, your family will be able to do so from the sum they receive.
The simple and straightforward features of term insurance make it an ideal investment option. The premium is cost-effective; hence, you will not feel that it is a burden. Additionally, it provides a specific coverage amount for a designated period, ensuring that your family’s financial needs are met during tough times.
If you decide that you want to have permanent life insurance, you can convert your term life insurance policy to a permanent policy. This will allow you to keep the death benefit from your term life insurance policy, and you will also be able to accumulate cash value over time.
Conventional term plans offer protection cover in the case of the policyholder’s death for a certain amount of time, making them the purest kind of life insurance. Term plan durations can range from 5 to 40 years or even more depending on the policyholder’s and the insurance company’s ages. For insurance firms to evaluate the risk they assume with each policyholder, with respect to any pre-existing medical issues and their general lifestyle, they typically demand a medical check-up before their issuance. Comparing family term insurance to conventional Life Insurance Plans, the premium payments are typically lower while the coverage amounts are comparable or higher.
Term life insurance for family policies provides financial security for the policyholder’s family by paying out death benefits in the event of their passing. In such circumstances, they protect dependents from having to shoulder the financial obligations of the deceased, such as the policyholder’s spouse, children, or elderly parents. This benefit is especially important for newlyweds, new parents, and business owners with large debt loads or other financial commitments. The payments may be made regularly or all at once after making a claim. The deceased’s relatives can use this cash to take care of their basic necessities and invest in things like a child’s education.
Term insurance policies offer comparable coverage amounts to regular life insurance policies at a fraction of the premium costs, making it one of the most cost-effective types of life insurance available today. This is mostly because such programs have shorter terms and can only be renewed periodically.
In circumstances where the policyholder has incurred debt in some way, such as loans, some term plans may let the level of coverage decline throughout the duration of the tenure. As debts gradually pay off throughout this period, the coverage reduces with time. As an alternative, family term insurance policies may raise the payout amounts to reflect inflation or, as a maturity benefit, repay the premiums paid when the tenure expires. Last but not least, certain plans might also provide investing alternatives that produce income over the course of the tenure and raise the final payment amount at expiration. The most typical requirement for such adjustments is paying marginally higher premiums.
Under Section 80C of the Income Tax Act of 1961, premiums paid for term insurance are tax deductible up to a maximum of ₹1.5 lakhs annually. However, depending on several variables, Section 10D may also totally exempt death payments in some circumstances. Before expiration, policies must be renewed because tax deductions for premiums paid on lapsed policies may not always be available.
Policyholders may be able to obtain coverage for additional risks, such as genetic or critical illnesses or even accidental disabilities, by paying a small sum over and above the monthly payment. At pivotal points in their lives, such as marriage and children, they may also consent to top-ups that broaden the scope of the policy coverage.
Choosing a term life insurance can be confusing with a variety of options available in the market, but there are certain points that can be considered. These points can help you purchase the best plan that aligns with your budget and needs:
Determine the amount of coverage you need based on your financial obligations, such as a mortgage, debts, and future expenses like education or income replacement for your family.
While choosing a term policy, decide on the duration of the policy that aligns with your specific needs. Consider the time period during which your dependents will require financial protection.
Compare premium rates from different insurers. Premiums can differ based on your age, health, lifestyle, and coverage amount. Select a policy with premiums that fit within your budget.
Check if the policy offers the option to convert to a permanent life insurance policy in the future. This can be beneficial if your needs change or if you want to extend coverage beyond the initial term.
Explore additional riders that can be added to the policy, such as accelerated death benefit rider, waiver of premium rider, or child term rider. Riders provide extra benefits or flexibility but may increase the premium.
Understand the policy’s exclusions and limitations, such as suicide clauses or specific activities that may void the coverage. Read the policy papers carefully to avoid surprises in the future.
Evaluate the ease and convenience of the application process. Some insurers may require medical examinations, while others offer simplified underwriting or no medical exam options.
Consider the customer service and support provided by the insurance company. Prompt and reliable assistance in policy management, claims, and general inquiries is important.
Utilize online resources and platforms to compare different policies, read customer reviews, and gather insights from experts. This can help you make the right decision.
By considering these points, you can navigate the term life insurance market more confidently and choose a policy that best meets your financial protection needs.
The uncertainties of life can pose significant challenges, but by securing term life insurance, you can provide your loved ones with a powerful safety net. With the best life insurance policy for family, you offer them the gift of financial security, ensuring that even in your absence, their dreams, aspirations, and future are safeguarded.
By taking this proactive step, you show unwavering commitment and love for your family, guaranteeing that they can continue to pursue their goals, irrespective of life’s unexpected twists and turns. Embrace the power of term life insurance and the peace of mind that comes with knowing your family’s future is secure. Remember, your family’s happiness and well-being are priceless, and your decision to take responsibility with term life insurance is the ultimate testament to your love and devotion.
1
The maximum age for term insurance plans is 60 years old, and the term insurance plan length is specified against the premium (75 for individuals who are 60 years old)
2
In their 50s and 60s, people can acquire a variety of term insurance plans. Additionally, these term insurance policies offer insurance protection for ages 75 to 80.
3
One could get a term insurance plan for their parents for various reasons, like financial security and tax benefits on the term insurance. Here are the elements that influence senior citizen term insurance:
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
