Death is an inevitable part of our lives. The loss of the breadwinner of the family impacts us financially as well as emotionally. If not managed efficiently, one can experience a permanent financial downfall. One of the most popular life insurance products like term insurance plan provides financial protection to the family members in the absence of the policyholder. The nominees can choose to receive the pay-out either every month or in a lump sum depending on the conditions mentioned under the policy.

Before opting for a term policy, one must understand the basics of the plan. Studying the policy carefully helps an individual to make informed decisions.

Importance of term insurance plans:

The purpose of Term plans is to provide risk cover. The idea behind a term policy is the financial security of the family members in case of the sudden demise of the policyholder which would lead to loss of income. With term plans, you can safeguard the financial needs as well as meet the life goals of your family. It ensures protection, security, and peace of mind of the entire family.

Under a term policy, the nominees receive a death benefit on the demise of the policyholder. This amount can help the family to meet their financial requirements despite the absence of the policyholder’s income. The beneficiaries can collect the death benefit either in a lump sum or in monthly instalments as per the conditions mentioned under the plan.

Benefits of monthly payouts if opted for as per the availability in the plan:

1. Fulfils periodic fund requirement

When you opt for monthly payouts, you can plan for the funds to meet your daily expenses. For some plans, on the death of the policyholder, the beneficiaries have the option to receive the benefit amount partly or in lump sum as per the plan opted for. The insurance company would then pay the rest of the death benefit amount on a monthly basis if the plan allows. With monthly payouts, the nominees can meet their routine financial requirements like medical expenses, daily expenditure, etc.

2. Allows customization of the payout options

Under term policies, certain insurance companies will enable the policyholder to customize their payout options as per their needs.

a. Lump-sum with monthly income

On the death of the policyholder, the nominees might receive the benefit partly or as a lump sum depending on the option opted for as per the payout options available within the plan.  The rest is paid in instalments every month to of your family.

b. Lump-sum with increasing monthly income

Under this option, the monthly payout gradually increases over time. This can be beneficial over time as the cost of living also goes up with time.

3. Helps families not savvy with investments

The monthly option of payout in a term plan is an excellent choice for those families, who might not be well-versed with investments. Such families could be unable to manage the lump sum amount during an unfortunate event like the death of the policyholder.

To sum up, the term insurance policies help dependents survive financial crisis without the bread earner of the family. Also, you opt for an online term plan, which is usually cheaper than a regular offline term plan. The affordability and convenience are the key benefits of these online term plans. Be smart while choosing the payout options as it directly impacts the financial well-being of your loved ones.