Term Insurance for Parents

 

 What is Term Insurance For Parents?

A term insurance for parents provides life cover for a specific period, i.e., 10 to 30 years. During this period, if the insured expires, the nominee or the beneficiary receives a lump sum amount as a death benefit, which can be used to pay off mortgages, children’s education, living costs, etc. Since there is no cash accumulation component, the premiums are relatively lower than a term plan with return of premium or survival benefits. 

Benefits of Term Insurance For Parents

The term insurance for parents provides loads of benefits for you and your parents apart from providing financial security. The benefits of term insurance are:

1. Death benefits

As a parent if you have term insurance for your parents, it gives you a strong feeling of financial security. In the event of your death during the policy term, the nominee/beneficiary will receive a lump sum, which can take care of various financial requirements like paying off debts, saving for future goals, living costs, etc. 

2. Peace of mind

A parental term insurance will give you peace of mind that your family will not have financial instability in your absence. The death benefit will ensure that their economic status is not affected. If you have opted for term insurance with a return of premium you can be sure that your retirement life will be stress-free with the lump sum survival benefit you receive on maturity of the plan.

3. Tax benefits

The term insurance plan for parents not only ensures family financial security but also reduces your tax burden. The premiums paid towards the term plan in a financial year are eligible for deduction up to Rs. 1.50 lakhs¹ under section 80C from your taxable income. Further, the death benefit the nominee receives is also tax-free.

4. Flexibility to Add Riders

With the rise in medical treatment costs, providing for future medical costs is a concern. The term life insurance for parents offers the benefit of adding various riders, like critical illness riders, partial/permanent disability riders, accidental death riders, etc, to the base plan. You are permitted to add more than one rider to the base plan.

5. Affordability

In contrast to traditional life insurance cover that provides both death and well as survival benefits, term insurance is more affordable. Since term insurance for parents plans does not have cash accumulation, the premiums are comparatively lower. You can use a term insurance calculator to arrive at a premium that suits your pocket.

Why Should You Get Term Insurance For Your Parents?

With term insurance for your parents, you and your parents can take advantage of several term plan benefits. They are:

• It helps you manage your parents' debts and financial responsibilities

Your parents might have borrowed funds to fulfil your goals at different life stages. It could be a loan for your education, marriage, or for creating an asset. If they have opted for long repayment tenures, the loans may remain unpaid till their death. In such a case, the burden of debts will be transferred to you after their death. A death benefit of life insurance for parents will come in handy to clear the outstanding liabilities and will save you and your family from a financial crisis.

• Making it easier to handle parents' healthcare costs

As your parents age, the probability of them developing several medical conditions is higher. With the rising treatment costs, it may they may find it difficult to manage their healthcare costs. A term insurance plan for parents will be of great help to them. Add-on riders are one of the term plan benefits you can take advantage of. By opting for a critical illness cover and any other available rider relevant to their healthcare requirements wisely, you can increase the coverage range. Your parents will be financially secure and take care of their healthcare needs without stress in your absence.

• Your parents will feel independent

In most cases, the death of one of the parents makes the surviving parent financially insecure in the absence of prudent financial planning. With a lack of income, they may have to depend on you for their monetary requirements. The loss of a partner cannot be substituted. However, a term insurance plan for parents will prevent the financial misery the surviving parent has to face. The death benefit by way of lump sum and monthly payouts will give the much-needed financial independence and security for the surviving partner.

• Benefit for early buyers

Buying a term insurance plan for parents early in life has several benefits. You can get extensive coverage for a low premium. Considering the rising cost of living it is recommended to buy the term life insurance for parents at a young age. Later in life when you have added responsibilities the premiums toward these term plans will not pinch your pocket. You can also be confident that your parents are financially secure.

Further, if you opt for digital term plans, i.e., buy online term insurance, the premiums will be considerably lower, and the insurance processing time will be reduced. If you buy term insurance for parents offline, the insurance agent’s commission and other distribution costs will be added to the premium. Invest in a term plan for your parents, if you have not already, to reap the benefits. 

How Much Coverage Do They Need?

A discussion with your parents before buying term insurance for parents is vital to understanding the extent of coverage they need. Several term plan options are available in the market, and an insight into their specific requirements will enable the choice of an appropriate plan. Some plans also cover funeral expenses as well. Assess your parents’ existing and future needs accurately to understand the extent of coverage they need to keep them financially secure when you are not around.

Parents' Health Status

Your parents’ health status plays a vital role when investing in term insurance for parents. You should discuss your parents' existing health conditions and choose riders accordingly. More importantly, you should disclose pre-existing illnesses, if any, to the insurance provider while buying a plan. By doing so, the future healthcare needs that arise from these issues will be taken care of by the policy. Also, if any of your parents or both of them need any home care facilities, the monthly expenses or any other healthcare expenses will be covered depending on the terms of the policy purchased. Finally, it is important to know what medical conditions are covered under the plan for an informed decision.

Summary

Your priorities and financial responsibilities change with life stages. When you attain parenthood, securing the future of your children becomes a priority. At this juncture, term insurance for parents becomes necessary. You can buy this plan for yourself and your parents to ensure that in addition to the security of your spouse and children, your parents’ financial security is also taken care of. However, buying term insurance for your parents will benefit you and your parents in several ways. Research online for term plan options for an informed decision depending on your and your parent’s specific needs.  Buying an online term insurance plan is recommended to minimise the premium costs. Invest now if you haven’t yet reaped the benefits of the plan. 

FAQs on Term Insurance for Parents

Q. Can I take term insurance for my parents?

Yes, You can buy term insurance for your parents for guaranteed security. A term plan for parents gives financial independence to the surviving parent in the event of the death of one parent. Their healthcare expenses are also taken care of depending on the policy terms purchased. In addition, if your parents leave behind unpaid debts, the death benefit you receive will take care of the debts.

Q. Who cannot buy term insurance?

You can buy term insurance if you are between 18 years and 65 years old. Most insurance providers do not provide coverage for individuals over 65 years. However, you can buy term insurance at 65 years and get lifetime coverage. The premium calculation depends on the age of the subscriber.

Q. Can parents be nominees for term insurance?

Parents, spouses, children, or a distant relative can be nominees for term insurance. However, you will have to provide the insurance interest of distant relatives.

Q. What is the best age to buy term insurance?

Buying a term insurance plan early in life is suggested to get maximum coverage at lower premiums. 

Q. Which is better, life insurance or term insurance?

It is better to have at least one term insurance plan for higher coverage at lower premiums. The maturity payout in a life insurance plan is lower than the payout in term insurance. Also, the premiums for life insurance are much higher as both death and maturity benefits are provided.