Why do salaried parents need Term Insurance?

Salaried parents need Term Insurance because their child's school fees, college costs, and other goals are funded by one predictable monthly income, and that income stops if they are not there. A Term Plan pays a fixed sum to your family if you pass away during the policy term, so those goals and your household expenses do not depend on a salary that has ended.

It is a protection product, not a savings or investment product. You pay a premium for cover, and nothing is paid if you outlive the term.

Why do salaried parents need Term Insurance?

• Income protection: If you pass away during the policy term, your family receives the claim amount. They can use it for education, everyday expenses, or repaying loans, whichever matters most at the time.
• Education goals: School fees, college tuition, or a course abroad are usually planned around your future salary. The payout can help fund them if that salary is no longer there.
• A stable household: If you are the main earner, a Term Plan helps your family keep their standard of living while they adjust financially.
• Pending loans: A Home Loan, Car Loan, or Personal Loan does not end with you. Without cover, repayment falls on your family. The claim payout can be used to clear these debts.

Term Insurance is also among the more affordable types of Life Insurance, since it has no savings component, and you can tailor the cover amount, premium payment frequency, and premium payment duration to your budget.

Is your employer's cover enough for a salaried parent?

Usually not on its own. Employer-provided group cover is typically a fixed multiple of your salary, and it generally ends when you leave the job, whether by choice or not. An individual Term Plan stays with you across jobs and can be sized to your actual family needs. Our guide on individual term insurance versus employer cover explains the difference in detail.

How do you choose the right Term Olan as a salaried parent?

• Work out the right cover: Estimate what your family would need: living expenses, big goals like education and weddings, and outstanding Loans. Then subtract what you already have, such as savings, Fixed Deposits, and existing life cover, adjusted for how easily each can be turned into cash. The remaining gap is roughly the cover you need.
• Allow for inflation: Responsibilities grow over time, and so does the cost of living. Some planners multiply the calculated cover by roughly 2.5-3x as a buffer. Another way is an increasing cover option, where your sum assured rises periodically up to a set limit.
• Pick a suitable policy term: Estimate the age by which your obligations will be met and you will have built enough wealth for the rest of your life, usually your planned retirement age. Cover yourself until then, with a few extra years as a buffer.
• Choose your premium payment term: Regular Pay spreads premiums across the policy term. Limited Pay (for example 5, 10, or 15 years) clears them faster with larger instalments. Single Pay is one lumpsum at purchase.
• Choose your payment frequency: You can pay monthly, quarterly, half-yearly, or yearly. Whichever you choose, set up an auto-debit or standing instruction so a premium is never missed.
• Consider the Married Women's Property (MWP) Act: If you are a married man, buying the policy under the MWP Act keeps the claim amount for your wife and children. Otherwise, creditors could have a claim on it first if you leave loans unpaid, and succession laws may give other legal heirs a claim. You do this by signing an additional addendum. Read more in our guide to buying life insurance under the MWP Act.
• Choose how the claim is paid: A lumpsum suits families with debts to clear. Monthly income suits day-to-day expenses. A combination gives you both.
• Consider riders: Riders are optional add-ons, available for an extra premium, that cover specific events. Examples include the Waiver of Premium Rider, Critical Illness Rider, Accidental Death and Disability Rider, and Surgical Care Rider.
• Do your research: Before deciding, review each plan's features, limitations, and terms, along with the insurer's customer service and claims track record.

How can ABSLI help salaried parents?

ABSLI Salaried Term Plan is designed for salaried individuals, with 4 plan options, life cover up to age 70, a choice of lumpsum or monthly income death benefit, and a built-in terminal illness benefit.  Check the current policy prospectus for eligibility, exact terms, and current premium rates before deciding.

Also read

• How Much Term Insurance Do I Need?
• When Should Salaried People Buy Term Insurance?
• What Makes Individual Term Insurance Different From Employer Cover?
• How to Buy Term Insurance Online in India