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Make Your Online Term Plan Your Family's Monthly Pay Cheque

Make your Term Plan Family's Monthly Pay Cheque
August 16, 2023


Life being entirely unpredictable, it’s always crucial to stay prepared for crises like untimely deaths caused by accidents or diseases. Ensuring the financial security of your loved ones in your absence is thus a prime concern. Term insurance is a smart choice here offering a life cover for the policyholder that acts as a solid financial support to the family if he dies within the policy term.

But did you know that term insurance benefits can turn into a monthly pay cheque for the family?

Term plan with a monthly income

Term insurance is designed to protect your family from the financial struggles caused by the unforeseen. Typically, it provides the policyholder’s nominee with a pre-defined lump sum amount as the death benefit. Term insurance plans with monthly income option allows the beneficiary to receive the sum assured in regular monthly payouts.

This empowers the family to maintain the same lifestyle by meeting the daily needs or taking care of life goals when the policyholder is no more. To achieve these, simply calculate the life cover needed to adequately support your family in your absence, based on your premium-paying capacity. The term insurance calculator can be of great help.

Benefits of going the monthly income way

Financial security: Imagine the life of your loved ones in your absence. Running the household has everyday financial needs to buy groceries and clothes, pay bills, spend on education, medical requirements etc., and repay outstanding debts, if any. A steady monthly income will take care of these and help maintain the same lifestyle.

No compromise with life goals: Everyone has life goals like buying a property, children’s education or marriage, starting a business etc. To ensure they are fulfilled even when you are not there, the monthly income term plan can be a good bet to help them with savings. This is particularly useful for people who are financially novices and clueless about how to manage the lump sum death benefit.  

The flexibility of payouts: To ensure a smooth life for your loved ones, you can choose the amount and duration of the monthly payouts of your term plan. You can opt for a payout span of 5, 10, 15 or 20 years, keeping in mind the financial needs of your family. Also, you can pick either a fixed or an increasing amount for the payouts.

Coping with inflation: The increasing payout option in your term plan is aimed to fight inflation. The increasing monthly incomes in this schedule are designed to match the price hike and rising cost of living in future.

Low premiums: Term insurances offer no maturity benefit and have no investment element. The premiums, therefore, are low and cost-effective.

Tax benefits: Term insurance premium payments are eligible for tax deductions under section 80C1 of the Income Tax Act 1961, while the monthly payouts are tax-free under section 10(10D)2.

To sum up, choosing a term insurance plan with a monthly income option will help provide your loved ones with a reliable monthly pay cheque, ensuring their financial security and the ability to maintain their lifestyle and life goals in your absence. It offers flexibility, inflation protection, low premiums, and tax benefits3, making it a smart and thoughtful choice for securing your family's future.

Related Articles:

ARN - ED/08/23/3729

1. Subject to conditions specified u/s 80C of the Income tax Act, 1961.

2. Subject to conditions specified u/s 10(10D) of the Income tax Act, 1961.

3. Tax benefits are subject to conditions under Sections 80C, 80D, Section 10(10D) and other provisions of the Income Tax Act, 1961.

The afore stated views are based on the current Income-tax law. Also, the customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law. Tax Laws are subject to change from time to time.