Who should buy term insurance?

Any person with financial or caregiving responsibilities towards their family should consider buying term insurance. 

Let’s understand with a few examples.

You should definitely buy term insurance if you are one of the following:

• An earning individual with people depending on them financially

• An individual with financial liabilities like loans

• A homemaker or stay-at-home parent who wants to take care of their family 

• Anyone with elderly parents to take care of

   

But you may skip buying term insurance if:

• You are financially dependent on someone 

• You never plan to marry or have kids and don’t have anyone financially dependent on you

If you belong to the latter category, remember you may change your mind in the future. In that case, it’s best to buy term insurance right away and lock in cheaper premiums. Find out in detail about the right time to buy term insurance.

You are eligible to apply for term insurance if:

• You are 18 years old and above*

• You are an Indian citizen - resident, PIO (person of Indian origin) or NRI (Non-Residential Indian)

• You have an active source of income and can provide income proof to your insurer

*varies from insurer to insurer

Even if you are a homemaker with no active income, you can still apply for term insurance, provided you meet the other eligibility criteria. Find out more about the eligibility criteria for buying term insurance for housewife.

Yes, as long as you have an insurable interest in them and you can prove it to the insurer. This means, you should be able to prove that you will be financially impacted by their unexpected demise.  

For example: You can buy a term plan for your:

• Spouse and kids

• Business partner

• Key employees

• Parents

• Siblings

   

and so on!

Remember, they have to be in the know and involved in the entire process. 

But you won’t be able to buy term insurance for your best friend, your live-in partner or a random acquaintance in the absence of insurable interest. 

Find out in detail if you can buy term insurance for someone else. 

It’s your life, your choice of when you want to get married. If you absolutely do not have anyone who is not dependent on you financially, then you may not require a term insurance policy. 

But, that said, you may have other people who are financially dependent on you such as your parents, siblings or even a business partner. In that case, you should buy a term insurance policy. 

P.S.: If you ever plan to marry in future, then you should buy a term insurance policy early on to save on premium. 

Unfortunately, it will be very difficult to buy a term insurance policy for your friend. See, your insurer will need to see your insurable interest in them, i.e. how you will be financially impacted by their sudden demise. 

It will be difficult to prove since you do not have a blood or legal relationship with your friend, even though you are financially dependent on them.

Yes, of course. Regardless of your marital status, your partner deserves to be financially secure in your absence, especially if they are dependent on your income. 

But remember this, you can’t name your partner as your nominee on your term insurance plan. That’s because to name someone your nominee, you need to inform the insurer about their insurable interest in you. 

This means they will be financially impacted by your unexpected death. 

In your case, it is difficult to prove in the absence of a blood or legal relationship like marriage. 

But there’s a way to ensure they still receive your life cover:

• Make a parent, sibling or child the nominee

• Create a Will

• Mention in your Will that your nominee is only a recipient of your life cover

• Clearly state your partner’s final and indisputable right to receive the money

   

Don’t forget to register the Will to avoid legal disputes later on. 

You can follow the same procedure if you have a same-sex partner whom you want to protect financially in your absence. 

Yes, you should. Here's why:

See, starting a business is full of unknown risks. Anything can have a negative impact on its growth, especially in the initial years. 

Your business partner may not be entirely dependent on you financially. But your unexpected death can cause a lot of financial harm to your business. 

Your partner may need time to find someone to replace you. They may have to take on additional responsibilities which can affect the quality of their work, and in turn, the business revenue. 

Buying a term insurance plan is a good contingency plan that will help out your partner, and your business, financially in your absence and safeguard them from the disastrous consequences of your unexpected death.

Of course, you should buy term insurance too. 

If both you and your spouse are earning, you must have planned your financial responsibilities accordingly, as any multi-income family would do. 

You may have taken home loans or have other debts. You may have more than one child and elderly parents and in-laws to care for. You have to manage household expenses, healthcare costs, the child's education and so on. 

As a result, your unexpected demise and the consequent loss of income will affect your family financially. 

Your term insurance life cover will help replace your income that they won't have access to in your absence. This amount will help them maintain the same standards of living as before and fulfil other financial responsibilities. 

Additionally, your family may not get the benefits from your spouse's term policy if there is any change of heart between you and your spouse (such as divorce). So, it helps to have separate term policy for yourself. 

Find out in detail why you should get term insurance even if your spouse has one.

Yes, you should buy term insurance. Here's why:

Financial contribution is not the most important thing one does for their family. As a homemaker, you are practically 24x7 in charge of looking after their needs, child's education, elderly care, running the household and other responsibilities. 

Besides emotional loss, your unexpected death can also create a financial crisis for your family: 

• Your spouse may have to cut back hours at work and be more involved in caregiving resulting in a pay cut. 

• They may need to hire professional help (like a full-time maid or nanny) to look after the children and elderly parents in the family. 

   

Your term plan life cover can really help your family out financially at this moment. 

So, to sum it up, it doesn't matter if you're a homemaker or an earning member of the family. If there are people depending on you financially or for caregiving, you need to buy term insurance. 

Yes, you should. See, even if your premiums are high, be assured that your term plan life cover can ensure your family is financially secure even if you're not around to take care of them. 

The peace of mind comes from the realisation is worth paying the high premiums for a term plan, right?

Besides, there are a lot of ways you can save money when buying a term plan. For instance:

• Stay covered only till retirement and don't pay extra premiums for an unnecessarily long policy tenure

• Choose a life cover that will only replace your income till you earn. Don’t overinsure. 

• Add only the riders you need 

• Choose a premium payment term as per your financial convenience. Use the KlarifyLife Term Guide to determine which premium payment term you should choose. 

• Buy online because term plans can be 5-10% cheaper when bought online

• Compare plans from different insurers for the best premium rate and policy benefits

Find out more about saving term plan premiums when you are in your 40s.

Good question. It's great that you have a solid financial plan to build a nest egg for your family. 

But you are forgetting one thing:

You need to be alive and well to grow your wealth through goal-oriented investments which are most likely to pay off in the long run. 

If something happens to you before you are able to fulfil your financial goals, your family will be left with an inadequate nest egg. And inflation will also reduce its value further. 

Result? A financial emergency. Your family may end up struggling with home loan repayment, child's education, healthcare costs, meeting household expenses and so on, all because you relied solely on your financial plan without having a contingency plan. 

Term insurance is that plan B that will help keep them financially secure in your absence, especially if you are the sole breadwinner. Along with your savings and investments, the term plan life cover will help them avert any financial crisis and meet all their financial responsibilities. 

Here's another point to consider:

You don't always know for sure that your investments will pay off. Why be uncertain when it comes to protecting your loved ones? 

Remember, term insurance is NOT an investment. It is a replacement of your income and it will come in handy when you are no longer there to protect your loved ones. Find out in detail about the true purpose of term insurance.

So keep growing your wealth but don’t forget to grab that Plan B!