Exploring the Family Term Insurance concept
Ensure your family's financial security with term insurance. Here's what you need to know
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When you start planning for your family's future, be sure to add a life insurance policy to your financial portfolio. With a Term Insurance policy, you and your family will be financially covered for the duration of the policy. If you pass away unexpectedly, your family will receive an amount known as the death benefit. This is also known as Family Term Insurance as the family benefits from the coverage. Read ahead to learn more about this concept.
What is Family Term Insurance?
A Family Term Insurance policy is a concept where the policy protects your family financially in case you pass away. It offers you affordable premium payments and enables you to customise your policy with add-ons/riders. Certain riders offer benefits including maternity coverage, long-term illness, or accidental death.
With a Family Term Life Insurance Plan, you can ensure peace of mind knowing that your family is financially protected in case of your sudden death. Term Insurance offers coverage for a set number of years. You can opt to migrate to a Whole Life Insurance policy at a later date, or extend your Term Insurance policy when it finishes. Note that Family Term Insurance is also known as Family Term Life Insurance.
6 Key Features of Family Term Insurance
A Family Term Insurance policy offers you and your family valuable features from affordability to life cover. The following are a few of its features.
Life cover
A Family Term Life Insurance policy provides your family with a pure life coverage feature. This means that your family is guaranteed financial coverage from your death benefit to help them get back on their feet and keep your home running long after you're gone.
Affordability
Family Term Life Insurance Plans offer your family pure life coverage and are easy to buy as they are active for a few years at a time. Lower premiums mean lower costs, making this policy a great starting point for first-time insurance seekers.
Flexible term
A Family Term Life Insurance plan provides you with a range of years in coverage that suits you and your family. You can always renew the policy before it ends or choose to move over to a Whole Life Insurance policy. You can also choose add on benefits with Term Life Insurance riders. The flexibility this plan offers is suitable for most families' needs and requirements.
Riders
In Term Insurance, a rider is an add-on that you can buy separately. You can customise your Family Term Life Insurance policy with riders suitable for you and your family's lifestyle and requirements. There are riders such as maternity coverage, to cover illnesses, accidental death, disability and more.
Tax Advantages
A term plan offers tax benefits under Section 80C and Section 10(10D) of the Income Tax Act. It means that premiums are eligible for deduction. Additionally, the death benefit received from this plan is tax-free.
Flexible Payout Options
A family term insurance plan offers various payout options to choose from. Whether it's a lump sum or instalments, you can select how your family receives the sum assured. This flexibility ensures that the plan caters to your family's specific needs.
Top 4 Benefits of Family Term Insurance
Read on to find out more about the useful benefits of buying Family Term Insurance.
Financial security
A Family Term Insurance policy guarantees your family's financial security in case you pass away. Your family will receive an assured amount either in a lump sum payout, or in regular instalments. You can choose how your family will receive this sum assured, according to their needs. Since a Family Term Life Insurance policy offers affordable premium rates, you will be able to get a higher value sum assured for your family.
Contingency plan
Family Term Life Insurance policies cover you if you can't work due to medical reasons. There are several riders to extend the terms of your policy's coverage, such as having to face a long-term illness or if you suddenly become permanently disabled. If you can no longer work, your policy can step in for your family.
Tax benefits
You can receive applicable tax benefits regarding payment of life insurance premiums. These benefits are as per Section 80C of the Income Tax Act and allow benefits up to one and a half lakh rupees per financial year as per the corresponding terms and conditions.
Peace of mind
Your family will feel your loss everyday, but taking finance matters off their mind will help remove one worry off their plate. Family Term Life Insurance policy will go a long way to keep your family safe and financially secure after you're gone.
Types of Term Insurance Plans for a Family
There exist a variety of family term insurance plans. Each plan has its unique features and benefits. Let's explore and find the one that best suits your requirements.
TYPES OF FAMILY TERM INSURANCE | FEATURES |
Level Term Plans | Fixed premiums Fixed sum assured (life coverage) throughout the policy term. |
Return of Premium Term Insurance | Life coverage Maturity benefit: Receive all premiums back if you survive the policy term. |
Convertible Term Insurance | Highly Flexible Can convert the basic term plan to a comprehensive life insurance policy, like an endowment or whole life plan, as per your requirements. |
Increasing Term Insurance | Takes inflation into account Your life coverage amount (sum assured) increases yearly by a certain percentage. |
Decreasing Term Insurance | Your life coverage amount (sum assured) decreases yearly by a certain percentage. Perfect for individuals with debts such as a home loan. As you pay off your debts, your coverage decreases to match your reduced financial obligations. |
How To Choose the Best Family Term Insurance
Several factors come into play when choosing the best family term insurance to protect your family financially. Familiarising yourself with these critical elements empowers you to pinpoint the most suitable plan.
Life Coverage Amount
The coverage amount required to provide safety to financial dependents/your family is one of the factors. It is the amount your family will receive from the policy in case of your death.
Consider your financial situation and your family's requirements when determining the ideal life coverage amount. However, it is essential to understand that higher coverage means higher premiums. You can use the ACKO Term Insurance Calculator to determine how much insurance you need and how much it will cost.
Additional Riders
Insurance companies provide different riders for policyholders to customise their family term insurance plans depending on their needs. Riders are optional add-ons. They're budget-friendly, meaning you pay an extra small amount to enhance your basic family term plan coverage.
Let’s say your term plan offers a death benefit and maturity benefit. But riders expand what your policy can do for you. They provide extra financial protection, like accidental death benefit, and even income support if you become permanently disabled.
Policy Duration
Policy duration refers to the span during which your insurance coverage remains active. When selecting the right family term insurance, consider factors such as age, financial goals, and the length of time your family will depend on your income.
Claim Settlement Ratio
Claim Settlement Ratio or CSR is the percentage of claims the insurance company settles each year relative to the total number of claims received. The higher the CSR percentage, the higher the company's reliability in promptly and effectively settling your claims. Thus, review the claim settlement record of the insurance company and the claim settlement process before buying a term plan.
Policy exclusions
Before purchasing a policy, reading and understanding its terms is crucial. Take a close look at what is covered and what isn't. For example, hazardous activities like adventure sports and accidents caused by driving under the influence of alcohol or drugs are generally not included in the broad range.
Compare Different Policies
It is vital to compare various plans from different insurance companies before purchasing. This step helps you clarify which family term insurance plan suits you best.
Why Choose ACKO Life Flexi Term Plan?
Pure and non-linked ACKO Life Flexi Term Plan is a unique plan. It offers all-inclusive coverage for you and a financial safety net for your family. Whether you've bought a new home or started a family, adjust your coverage up or down anytime to fit your needs.
Extensive life coverage at an affordable premium | Customise the sum assured to suit your financial dependents, obligations, or more. |
Customise policy duration, payment frequency, and payment options | Add or change nominees and create a free will to specify asset distribution. |
Easily buy or make claims on your term insurance policy. | Enhance your coverage and safeguard your family with additional ACKO life insurance riders. |
Let’s look at ACKO Life Insurance Riders:
Accidental Death Benefit Rider is purely designed to protect your family with an additional amount of money if your death occurs due to an accident.
Accidental Total Permanent Disability Rider is designed to protect yourself and your family’s financial well-being in case a major accident leaves you unable to work or care for yourself.
ACKO Life Critical Illness Benefit Rider is an extra layer of protection for your term insurance. It covers 21 critical illnesses, including life-threatening common illnesses among women, such as breast cancer, cervical cancer, fallopian cancer and ovarian cancer.
How does a term life insurance plan work at ACKO?
The working of a term life insurance is quite simple. Let’s break it down for you.
You Buy a Term Insurance Plan
You start by choosing a term insurance plan from an insurance company in India. You pay a regular premium for this plan, which is like a small amount of money you give to the insurance company.
Coverage Period (Term)
You also pick a "term" for your insurance plan. This is like a time frame during which the insurance will be active. It could be 10, 20, 30 years, or more. Depending upon the terms and conditions of the insurance company.
What Happens if Something Happens to You?
Now, let's say something unfortunate happens to you during the term you chose. It could be an accident, illness, or anything that leads to your passing away. Your family, who you mentioned as beneficiaries when you bought the plan, will receive a lump sum amount from the insurance company. This is called the "death benefit." It's financial help to your family during a tough time. They can use this money to cover expenses like paying off loans, daily living costs, your children's education, and more.
Who Should Buy a Term Plan?
Buying a term insurance plan is practical for everyone, especially those with financial dependents. Here’s a list:
Family Dependents: Term insurance is crucial if your loved ones rely on your income, be it your spouse, children, or elderly parents. It ensures financial protection in your absence.
Breadwinners: A family term plan is indispensable for those who provide for their families. It guarantees financial stability.
Debt Holders: If you have outstanding loans like a car loan, home loan, etc., term life insurance can cover those debts, preventing your family from being burdened financially.
Single Parent: As a single parent, your children depend entirely on you. Term life insurance ensures your kids have financial security if anything happens to you.
How to Buy ACKO Life Flexi Term Plan?
The process of buying the ACKO Life Flexi Term Plan is simple.
Step 1: Initiate the purchase journey via the widget on the website/app.
Step 2: Select the plan
Step 3: Answer the questions to determine eligibility and premium.
Step 4: Pay the premium online.
Step 5: Receive the policy via email or download it from the app.
Note: This is a generic process; the exact steps can vary depending on the chosen plan and other details.
Frequently Asked Questions
Here’s a list of common questions and answers related to Family Term Insurance.
Can I purchase Family Term Life Insurance for my family?
Yes, you can buy a Family Term Life Insurance policy to cover you and your family's financial needs as it offers pure life coverage (death benefit).
How can my family use the Family Term Life Insurance policy?
Your Family Term Life Insurance offers a sum assured to your family in case of your death during the policy term. Your family can use the payout to pay for needs such as education fees, to cover expenses, pay for your burial and last rites, among other payments.
How much should my Family Term Life Insurance policy's sum assured be?
Your family's financial requirements and standard of living along with debts such as loans will determine how much your policy’s sum assured should be.
What is family term life insurance?
It is a term life insurance plan where the policy provides financial protection for your family in case you pass away. It offers coverage for a term, such as 10, 20, 30 years or more.
Is there any term insurance for a family?
Yes, family term insurance plans are available, covering either an individual or multiple family members.
Can a person take 2 term insurance policies?
Yes! Insurance providers allow customers to purchase multiple term insurance plans based on their needs.
Is there a salary limit for term insurance?
There's no specific minimum income requirement. However, insurance companies may ask for bank statements and salary slips to assess coverage eligibility and the ability to pay premiums.
What is 5 year term life insurance?
A 5-year term life insurance policy provides life coverage for five years.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
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