What Is Family Term Insurance?
It is a type of policy covering multiple members of a household under a single plan. Family term insurance provides a death benefit to the beneficiaries if the insured person passes away during the policy term. It is designed to offer financial security to your family, ensuring that their needs are taken care of even when you are not around.
A single term life insurance policy covers multiple family members, making it convenient and cost-effective. It offers coverage for the primary earner, spouse, and children, ensuring financial protection for the entire family.
Choose the right sum assured for your family, so they are not left without adequate financial support. Click here to know about our ₹5 crore term insurance plans.
Benefits of Term Insurance for Family
Consider a household where everyone contributes significantly, and therefore requires coverage for almost all members so that no one suffers in their absence. This is a good reason to consider term insurance for family.
Here are some of the benefits it offers.
The primary benefit of term insurance for family is that it ensures financial security for your loved ones. In the event of the policyholder's death, the insurance payout can help cover daily expenses, pay off loans, and fund future goals such as education or marriage.
Term insurance policies tend to be relatively more affordable compared to some other type of life insurance plans, making it easier for families to secure substantial coverage without straining their budget.
Premiums paid towards family term insurance plans are eligible for tax deductions under applicable tax laws, providing additional savings.
You can choose the coverage amount and policy term based on your family's needs, ensuring the policy aligns with your financial goals.
Knowing your family is financially protected gives you peace of mind, allowing you to focus on other aspects of life without worrying about their future.
What are the Types of Term Insurance Plans for a Family?
Even when buying a term insurance plan covering multiple members of the family, there is a range of sub-types of plans you may have to choose from. This depends mainly on the options available with your insurance provider.
It offers a fixed sum assured throughout the policy term. It is ideal for families preferring stable and predictable coverage.
Increasing Term Insurance
In this type of plan, the sum assured increases annually, making it suitable for families with growing financial responsibilities.
Decreasing Term Insurance
The sum assured decreases over time, typically used to cover liabilities such as a home loan that reduces as you repay it. It can be useful for families with significant debt.
Group Term Life Insurance for Family
Typically offered by employers, this type of plan covers the employee’s family under a group insurance policy. Buying group term life insurance for family can provide basic coverage and can be supplemented with individual policies.
Return of Premium Term Insurance
This plan returns the premiums paid if the policyholder survives the policy term. It can be appealing to families looking for a savings aspect in their insurance plan.
Choose the Best Term Life Insurance for Your Family
The following steps that can help you choose the best term life insurance for your family, be it only your spouse or a few other members.
Assess your family's financial needs
Estimate your family’s financial needs, including daily expenses, education costs, and long-term goals. It helps determine the appropriate sum assured.
Online term insurance calculators can help you determine the premium based on your desired coverage amount, policy term, and other factors.
Look at various family term insurance plans to find one offering the best combination of coverage, premium, and benefits.
Add-on covers such as critical illness, accidental death, and waiver of premium riders can enhance the coverage of your family term insurance plan.
Claim Settlement Ratio and Customer Service
Choose an insurer with a high claim settlement ratio and positive customer reviews to ensure reliability.
Why Choose a Family Term Insurance Plan?
Check out some of the reasons why you may find a family term insurance plan to be the right match for your household.
A family term insurance plan offers comprehensive coverage under a single policy, making it easier to manage and ensuring all family members are protected.
Instead of purchasing separate policies for each family member, a family term insurance plan provides coverage at a lower cost.
Managing one policy instead of multiple individual policies simplifies premium payments and policy-tracking.
These plans offer the flexibility to adjust coverage amounts and add riders as your family’s needs evolve over time.
Why Should the Primary Earner Consider Purchasing Family Term Insurance?
The primary earner of the household is the one who is considered to the provider. The key financial requirements of the household usually hinge on their shoulders, even if there are other contributing members.
Here’s why a primary earner should consider buying a suitable term life insurance policy for the family.
Protecting the family’s financial future
As the primary earner, your income supports your family's lifestyle, education, and future goals. Family term insurance ensures these goals are not compromised in your absence.
Many families rely on loans for major purchases such as homes or cars. In case of the primary earner's demise, the insurance payout can be used to repay these debts, preventing financial strain on the family.
Premiums paid towards family term insurance policies may qualify for tax deductions, reducing your overall tax liability.
Flexibility in policy term
You can choose a policy term aligning with your financial responsibilities, such as covering your children’s education or ensuring your spouse’s financial security.
Can a Homemaker Purchase Term Insurance for the Family?
There are various circumstances where a housewife or homemaker may seek to buy a term life plan to get coverage for her family. This may not be a conventional option. However, subject to the approval of the underwriting team and the fulfilment of other requirements, it may be possible. Let’s look at some of the key considerations in such situations.
While a housewife may not earn a traditional income, her role in managing the household is invaluable. Some insurers offer term insurance policies specifically for homemakers, recognising their contribution to the family's well-being.
A housewife can purchase a family term insurance plan to supplement her husband’s coverage, ensuring that the family’s financial needs are met even if she is not around.
In the absence of the housewife, the insurance payout can help the family cover additional expenses such as childcare or domestic help, maintaining the family's standard of living.
Want to know how much your policy will cost if you choose a higher coverage, such as a ₹1 crore term insurance plan? Click here to get premium estimates with our online term insurance calculator.
Purchase a Term Insurance for your Family Online
Purchasing family term insurance online is usually a hassle-free process. Here are the steps you may be required to follow.
Use online platforms to compare different family term insurance plans based on coverage, premium, and additional benefits.
Use an online term insurance calculator. Enter details such as your age, desired sum assured, and policy term, to estimate the premium.
Once you’ve selected a plan, fill out the online application form with your personal and family details.
Upload necessary documents such as identity proof, address proof, and income proof.
Choose your preferred payment method and pay the premium online.
After verification, the insurer will issue the policy, and you can download it from their website or app.
Frequently Asked Questions (FAQs)
Which is the best life insurance policy for a family?
The best life insurance policy for a family depends on your specific needs, financial goals, and budget. It's important to compare different life insurance plans and choose one offering comprehensive coverage and fitting within your financial plan.
Can term insurance be purchased for an individual or a family?
Term insurance can be purchased for both individuals and families. Family term insurance covers multiple members under a single policy, while individual term insurance covers just one person.
Can you cash out a term policy?
Typically, term insurance policies do not have a cash value component, so they cannot be cashed out. The primary purpose of term insurance is to provide a death benefit.
Can term insurance be purchased for a senior citizen?
Yes, term insurance can be purchased for senior citizens. Check with your insurer for the different plan options.
Can I take a loan against term insurance for my family?
Term insurance policies generally do not offer loan facilities as they do not accumulate cash value. Loans can typically be taken against whole life or endowment policies.
How much coverage is required for a family of four members?
The required coverage depends on your family's financial needs, current income, and future goals. It’s recommended to use a term insurance calculator to determine the appropriate sum assured.
Can a husband and wife get coverage under a single-term insurance policy?
Yes, some family term insurance plans allow coverage for both husband and wife under a single policy, providing a joint death benefit.
What should be the policy tenure for my family term insurance plan?
The policy tenure should align with your financial responsibilities, such as the duration until your children are financially independent or until your mortgage is fully paid off.
Can a term insurance plan be revived?
Yes, many insurers allow revival of a lapsed term insurance policy within a specific period, usually by paying the outstanding premiums and any applicable penalties.
What should be the minimum sum assured value for my family?
The sum assured should be enough to cover your family’s living expenses, debts, and future financial goals. It’s often recommended to choose coverage 10-15 times your annual income.
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