4 Benefits of Term Plans: Ensuring Your Family’s Protection

Term insurance can be an effective way to prepare against life’s uncertainties. Read this post to know how a term plan can protect your family in your absence.

A term plan is a simple and affordable way to provide financial security to the loved ones of the policyholders in the event of their untimely demise. The death benefits received from a term plan can act as a safety net for the family’s future by ensuring they can manage their financial needs in the absence of the policyholder.

So, let’s explore the various benefits of term insurance and understand how it can protect your family from financial distress in difficult times.

1. It Helps to Cover Outstanding Debts

The death of an earning family member can immediately result in a financial crisis. The crisis can easily multiply if debts are to be paid off, such as home loans, personal loans, etc. So, paying off outstanding debt should be a top priority to achieve mental relief.

Fortunately, the death benefits of term insurance paid out as a lump-sum amount can be a lifeline in such a situation. This can also be a logical financial step as families can reduce their monthly expenses and free up funds to invest in safer instruments once the expensive debt is reduced.

2. It Secures Important Financial Goals

The death of the principal earning member can jeopardise the family’s future financial goals. Therefore, having a contingency plan is crucial. For example, premium payments toward savings plans for children’s education, retirement corpus, etc., should continue unhindered despite the challenges.

In these circumstances, the lump-sum benefit provided by a term life insurance plan can be a valuable resource to achieve financial goals.

3. Helps Maintain Regular Income

While investing and paying off debts can be done easily with a lump sum, generating a consistent income from a term plan’s lump sum payout can be challenging. Moreover, your family members may struggle to use the death benefits received prudently.

Therefore, many term insurance plans today provide a recurring payout option. If policyholders choose recurring payout, the nominees will not receive the entire death benefit at once in the event of their death. Instead, they will keep receiving a fixed sum annually for a pre-defined period as per the policy terms and conditions.

Such arrangements help the families of the policy owner receive a regular income in their absence and plan their finance accordingly. Additionally, the family members may have a better chance to preserve their financial standing and status by intelligently managing their finances.

4. Provides Additional Protection (Optional)

An accidental death benefit rider is an optional add-on feature to a term life insurance policy. It provides additional benefits to the beneficiary if the insured person dies due to an accident.

In the event of the policyholder’s death due to an accident, the accidental death benefit rider pays out an additional lump sum amount in addition to the base death benefit amount. The amount varies depending on the policy. However, it can be significant, thus providing additional financial protection for the deceased policyholder’s family.

Given the importance of safeguarding your family’s financial stability, consider investing in a term plan with an adequate assured amount. Finally, enjoy a stress-free life with the knowledge that your loved ones will not be in distress even in your absence.