You work hard during your lifetime to provide your family a secure future and fulfill their dreams. By purchasing a term insurance plan you ensure that your family’s future is taken care in case of an unforeseen event of your sudden demise.
It is important to make sure that the sum assured of the policy that you have taken meets the needs of your dependents. Another factor that is important is the payout option i.e. how the death benefits or sum assured would be paid to the nominee.
A lump sum amount may help your nominee however it may be a challenge to use it wisely. Hence, despite buying a policy that you think will protect your family, there could still be a case where the basic purpose of the plan is not met because your dependents would be perplexed as to how to make its optimum utilization.
This challenge can be avoided with a regular monthly payout option. These days, life insurance companies have started offering monthly payout that can easily cater to the periodic fund requirement for the dependents. A monthly income payout option is a good idea when it comes to term insurance. Monthly payout option is convenient and easy to manage as it clearly and simply replaces your income. The sum assured you choose during the time of purchase is divided into monthly installments over the years you wish to continue the income flow.
Alternatively, you can also choose the increasing income option where the regular monthly payout will increase annually by 5% p.a. (compounding). This payout option will help your dependents deal with inflation.
The monthly payout option is best for families that are not very savvy with investments and can’t manage the lump sum amount which they would receive on the unfortunate demise of the policyholder. Also, the loss of a loved one may not the best time to make a wise financial decision you’re your family will receive in case of 100% lump sum payout.
Money paid out to the nominee in periodic intervals will help dependents to meet their regular financial liabilities and fulfill their monthly monetary needs.