How Does My Family Get Term Insurance Payout?

If you buy a term insurance policy, your family will receive the life cover aka insurance money if you die unexpectedly during the policy duration. 

But how should they receive the term insurance payout? Before choosing that, let’s look at the various available term insurance payout options: 

• Lumpsum payout - The entire life cover gets paid to your nominee as a lump sum payment
  
  
• Lumpsum + fixed monthly - Your nominee receives a chunk of the payout now and the rest in fixed monthly instalments
  
  
• Lumpsum + increasing monthly instalments - Your nominee receives a chunk of the payout now and the rest in monthly  instalments that increase every year
  
  
• Monthly income - Your nominee receives the payout as monthly income for years

That depends entirely on your family’s financial requirements and money management skills. Think about your nominees. If they receive a lump sum amount of money, will they pay off their debts or just go on a shopping spree? 

Let’s look at each option closely. 

• If your nominee has huge loan payments or debts to take care of or needs to make a one-time large payment you can opt for a lump sum life cover payout. It’s suitable for families that can manage a large amount of money
   

• If your nominee has small loans to repay or needs to make a one-time payment, post which they want fixed monthly income, choose the lumpsum + fixed monthly payments
   

• If your nominee has small loans to repay or needs to make a one-time payment, post which they want monthly income that increases with inflation, choose the lumpsum + increasing monthly payments
   

• If you feel your nominee cannot manage a large amount of money or can get easily swindled, then choose the monthly payments option

Irrespective of what payment method you opt for, ensure that your nominees are educated enough in finance so that they make good use of the life cover. 

After all, with great power comes great responsibility! You can also compare the premium of term insurance through our premium comparer.

Choose the monthly payment option as it will provide the cover amount in monthly payouts, enough for them to meet their monthly financial requirements.

Choose the monthly payment option as it will provide the cover amount in monthly payouts, enough for them to meet their monthly financial requirements.

You should choose the one-time payment option as it can help your dependents cover your home loan.

This option helps meet the rising costs of living due to inflation. It also helps in managing new and additional costs that your family may not have at the time of your demise but may start incurring at a later date. Example: College fees for your kids in the future or medical bills of your ageing parents that may increase with time.