Does Your Term Insurance Have These Three Benefits?

Buying a term insurance plan is one of the most responsible financial decisions you can make. It offers your loved ones a safety net in case of your untimely demise, ensuring that they don’t struggle financially in your absence. However, simply choosing a term plan that promises a lump sum payout is no longer enough.

Life is unpredictable, and so are the events that can put your family’s financial stability at risk. Accidents, disabilities, or even the death of a homemaker spouse can cause significant disruptions. That’s why modern term plans have evolved beyond just offering a death benefit. Today, you can access features that provide monthly income to your family, insure your homemaker spouse, and even offer financial assistance in case of disability.

Let’s explore three essential benefits your term insurance plan must have to provide holistic protection.

1. Secure Monthly Income for the Family

A family has two types of financial needs: one for regular living expenses and another for larger life goals in the future. While you are there to provide for both, you give part of your income towards the regular household budget and save the rest for the future.

Even if you have an income that is defined annually, you will need some money every month for your regular expenses. In the absence of your better judgment, your family members may find it difficult to use the large life insurance money for running the household.

Thus, you need your term insurance plan to provide not only a lump sum amount but also a regular sum of money paid every month in the case of your untimely demise. Term plans come with an option for regular monthly payout and a lump sum payout. Choose the mode of payout according to your requirements.

Why Monthly Income Matters?

A structured monthly payout acts as a replacement for your regular salary. It gives your family peace of mind and predictability, which is crucial when adjusting to life without your support.

Leading term insurance plans like iSelect Smart360 Term Plan from Canara HSBC Life Insurance offer a split benefit structure. You can choose to divide your total coverage into:

• A lump sum payout at the time of death
• A monthly income payout for a defined period

Ensure Inflation-Adjusted Income

Discounting inflation in your regular expenses would either mean a diminishing lifestyle or deflating costs. Both situations are undesirable and the opposite of the normal trend. Thus, it’s better to have an inflation-adjusted income instead of a fixed one.

The best term insurance plans, including iSelect Smart360 Term Plan, allow you to ensure such an income to your family after your untimely demise. All you need to do is divide your total policy sum assured into:

• Payable in a lump sum amount
• Payable as a regular income amount

For example, if you are buying a term cover of ₹2 crores, you can divide the sum assured in a 50:50 ratio between the two. Thus, your family will receive:

• ₹1 crore as a lump sum payment
• Approximately ₹71,000 per month as regular income, which will grow at a 10% simple rate every year.

Thus, you can relieve your dependents from the burden of investing a large sum of money for their regular financial needs. With the inflation-adjusted income, you also ensure that they don’t have to compromise on their lifestyle in the future.

2. Life Cover for Homemaker Spouse

Can homemakers who may not have a direct income have term insurance cover? Or the larger question, ‘should they have a life insurance cover?’ The short answer is yes, and the reason for that is that their contribution to the family does have strong financial backing. Consider the table below:

The table shows a sample budget for a family with a couple and a child. The family will need to spend additional money on looking after the children and household chores. This number can be used to indicate the direct financial impact of a homemaker’s presence in the family.

The homemaker in the example above should have a term life cover of about ₹40 lakhs. This amount will enable the family to meet the additional expenses in her absence.

iSelect Smart360 Term Plan by Canara HSBC Life Insurance lets you hold the term policy jointly with your homemaker spouse. The best part about the joint-life cover is that if either spouse passes early, the life cover of the surviving spouse continues without the need for additional premiums. This feature will be very useful in case your spouse is a homemaker.

3. Premium Waiver in case of Accidental Disability

While the untimely death of the primary breadwinner is a serious cause of financial distress to families, it’s not the only one. Critical illnesses like cancer have been notoriously famous for pushing well-to-do families below the line of poverty line. Similarly, loss of ability to perform your normal tasks and earn an income can also pose a serious threat to your family’s well-being.

Thus, your term insurance plan should have the option for you to have some financial assistance in case of severe permanent disability. iSelect Smart360 Term Plan offers two benefits in case of permanent severe disabilities:

• Waiver of premium for the life cover
• An additional sum is payable to you to help you continue supporting your family

The iSelect Smart360 Plan has a critical illness cover as an automatic benefit. So, you do not need to add a critical illness cover. However, you can add these three critical covers for a nominal premium cost. These three benefits will add more value to your term life cover and provide enhanced financial security to you.

Conclusion

Buying term insurance is about protecting your family’s future, but the depth of that protection depends on how well the plan is structured. A policy that only covers death may fall short in real-life situations where disability, income loss, or the loss of a homemaker also result in financial strain.

To make your term plan truly comprehensive, look beyond just the sum assured. Ensure your policy:

• Offers a monthly income payout
• Covers your homemaker spouse
• Waives premiums and pays a benefit in case of accidental disability

Canara HSBC Life Insurance term insurance plan combine all of these features into one well-rounded solution, so your family stays protected no matter what life brings.