Not many can admit it, but it is true in most cases that the intensity and nature of work of non-working spouses are higher than those of their counterparts who are the sole earners of the family. In many cases, their contribution is not acknowledged tangibly. However, their absence makes their value felt and impacts the family, even financially. Term insurance for non-working spouses makes eminent sense, as it provides financial security for the surviving family members. Even if one spouse does not earn an income, the earning member can pay the premium to protect the family. To know more about the spouse term insurance plan and its benefits, continue reading this blog.
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Term insurance for non-working spouses is a policy that provides financial protection for the family in the event of the spouse's untimely death. If you opt for this insurance, your family will receive a death benefit; it could be in a lump sum or periodic payments. This coverage ensures that, in the event of the non-working spouse's unexpected death, the family can meet expenses such as school or college fees, groceries, and other financial obligations like mortgages or debts.
Mrs Nidhi, a 34-year-old Indian homemaker, lives in Patna. Her husband, a corporate employee, is the sole provider in her family. They have two children, ages 10 and 6. Mrs Nidhi is responsible for the children’s welfare, education, and home management.
Mrs Nidhi examines her family's financial requirements, considering expenses related to maintaining the home, raising children, and other financial obligations. She selected a 20-year plan that provides ₹1 crore of coverage amount for which she pays ₹10,000 per year as a premium. The premium amount for the plan is reasonable for her family.
In a scenario where Mrs Nidhi passes away unexpectedly during the policy term, her family will get ₹1 crore paid to them by the insurance provider. This death benefit amount will serve as a safety net. It will ensure that her husband and children are assisted as much as possible after the crisis and continue living the way they were. The assured amount will help them shoulder financial liability without selling family assets.
A housewife or a non-working spouse provides care for the household and the family, cleaning, cooking, making plans, and keeping the entire household organised. In purely economic terms, without a housewife, a family must spend considerable amounts on various professionals to keep the household running. Here are some of the reasons you should obtain term insurance for your non-working spouse:
Term insurance ensures financial security on untimely death. The sum assured can help pay off unpaid debts, children’s education, and more.
Term insurance is relatively less expensive than whole life insurance; therefore, it is considered a wise option to cover potential gaps in finances due to the loss of a non-working spouse.
Term insurance for non-working spouses allows you to include add-ons to meet your unique needs. Moreover, you can pay your policy premiums in a lump sum or on a regular frequency. These customisation options let you manage your finances more efficiently. However, the specifics of customisation can vary by insurer and policy.
Under Section 80C of the Income Tax Act, all premiums you pay for your spouse's term insurance are tax-deductible. As per the applicable terms and conditions, a tax deduction of ₹1.5 lakh is allowed annually. A policyholder and her family can benefit from these tax benefits and enjoy greater ease in financial management.
In a term insurance plan for the non-working spouse, a health test is usually required for the person being covered, who, in this case, would be the non-working spouse. The insurance firm must evaluate the health risks involved in the person being covered to establish the policy terms and its premiums. While potentially involved in the application process, the working spouse generally does not need a health examination.
Below are some key factors to consider when choosing a term insurance plan for your spouse:
Ascertain how much your family would require if your spouse were to pass away. To determine an appropriate level of coverage, take into account future costs such as child care and possible debt.
Select an insurance term that corresponds to your financial obligations and aspirations. The duration should ideally include your earning years and continue until your kids are self-sufficient.
Examine the premiums that various insurers are offering. Recall that a better plan isn't necessarily equal to a cheaper premium. Before choosing, take into account the features and benefits of the coverage.
Choose an insurer with a good claim settlement ratio, which indicates its efficiency in settling claims.
For extra security, consider including riders, such as a waiver of premium rider, critical illness coverage, and accidental death benefit.
Term insurance for non-working spouses is designed to provide essential financial protection to families by recognising their valuable contributions. Investing in this plan offers essential financial security, which ensures the household's continuity and stability. This coverage not only provides peace of mind but also supports the family in maintaining their lifestyle and meeting financial obligations without financial strain.
Here are some of the frequently asked questions about term insurance for spouses:
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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Reviewed by Vaibhav Kumar Kaushik 
Acko Technology & Services Private Limited
#36/5, Hustlehub One East, Somasandrapalya, 27th Main Rd, Sector 2, HSR Layout, Bengaluru, Karnataka 560102
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