Individual vs Family Term Plan: Key Differences

Individual vs Family Term Plan: Key Differences

The way to secure one’s future is can be undertaken through insurance and investments made to financially support people in unforeseen situations. A term plan is one of the most common and accessible insurance plans that can be used by a policyholder to secure their own future along with their dependents.

What is Life Insurance?

Term Insurance plans are types of insurance plans that value the importance of coverage and the financial security of one’s dependents in their absence. Keep reading to find out the fundamentals of term insurance plans and how to use a term insurance premium calculator, and the differences between an individual plan and family term plan.

A life insurance plan is an insurance instrument that enables the coverage of the needs of the insured and their dependents through an assured benefit sum in the event of the policyholder’s demise.

Now that you understand what is life insurance, let us read through the features that are to be expected in a family and individual plan alike, in detail:

1. Premiums: A feature that is recurrent in most life insurance and term plans in India, it is the nominal payment that is paid to the insurance provider by the policyholder on a regular basis throughout the policy tenure. This payment maintains the coverage provided by the insurance provider and adds to the payout that is assured to the beneficiary at the end of the policy term. One can use a term insurance premium calculator.

2. Policy Tenure: it is the tenure of coverage determined and decided upon by the policyholder after consultation with the insurance provider. The policy tenure for a term plan is usually longer than most standard insurance plans. The duration for a standard term plan as projected by a term plan premium calculator in India may range somewhere between 25-30 years. The plan reaches maturity once the tenure is completed.

3. Death Benefit Sum Assured: It is the promised payout amount promised to the beneficiary of the policy in the event of the insured person’s passing. This amount is usually a financial resource for the beneficiary to maintain their financial obligations after a disturbance in the income patterns. One should use a term insurance premium calculator to find their projected sum assured a well.

4. Policyholder: The person who signs the insurance documents and maintains the recurrent premium payments and any additional policy costs is the policyholder.

5. Insured: The individual whose life is insured under the term plan is called the insured. It is in the event of this person that the insurance provider is liable to process the assured payout amount to their dependent beneficiaries.

6. Beneficiary/Nominee: The individual who is designated as the person to receive the assured sum payout in the event of the insured person’s passing is called the beneficiary or nominee. These are usually spouses, children or other family members who may be financially dependent on the insured.

A standard term insurance policy in India is considered to be one of the most affordable means of securing one’s future where premiums are low and one can customise their coverage and payout methods as per their convenience. Since term plans are designed to cater to various necessities, insurance providers have the option for potential policyholder to choose from family, individual and joint term plans. One can also use a term insurance premium calculator to help them make the more suitable choice.

Let us look at the basic differences between a family plan and individual term plan:

FeatureFamily Term PlanIndividual Term Plan
Scope of CoverageMore than one under one policy.Only one insured under the policy.
Sum AssuredSum assured is measure according to the income of the policyholders, human life value of the insured parties, expenses and liabilities duly calculated.Determined on the basis of the income of the individual insured, their human life value and their expenses and liabilities calculated.
Death BenefitThe full sum assured promised along with any rider benefits are processed to the nominees as stipulated by the policy documents. The policy remains for the remaining covered under the same plan, but in the event the plan terminates after the death of one of the insured, the surviving insured can renew the policy of buy a new plan with an increased premium.The full sum assured is processed with any rider benefits is processed to the nominees as stipulated by the policy documents. The other family members and their insurance is not effected as their plans are separate.
Death of all InsuredA single sum insured processed to the beneficiaries stipulated under the policy documents.Sum assured as stipulated processed to the beneficiary. If every member has an individual plan then each plan yield one sum assured independent from each other.

The purchase of insurance plans is more or less a simple and intuitive process today with the benefits of online resources like a term plan premium calculator as well. To explore further, you can reach out to financial advisors who will provide assistance through every decision and feature before you commit towards safeguarding your future.

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