Can One Gift a Term Insurance Plan to Their Parents?

Written by : Knowledge Centre Team

2021-02-18

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When times are uncertain, a person would undoubtedly seek and welcome the possibility of having the future of their loved ones secure, should an unfortunate event occur. This is where term insurance plans come to the rescue.

In this day and age, the occurrence of accidents and health issues due to lifestyle habits is as prevalent as ever, but luckily health care advancements have made the chances of survival for the sufferers much better than they used to be.

Advanced health care, however, often comes bearing costs that can further add to the suffering of the common man simultaneously as it helps. Especially impacting senior citizens without or with meagre pensions, as they are a particularly financially vulnerable group while also being the most affected by health issues. This is why it is wise to see not only retirement and pension plans but insurance plans as an investment to secure your future.

What is term insurance?

A term insurance policy is a kind of insurance policy, the benefits of which are subject to a limited period of time or a specific term. It provides the promised coverage but only within the term that is clearly mentioned in the policy beforehand and is agreed to by the policyholder at the time of purchase.

This means that if the insurance carrier passes away during the active term period, their nominee can claim a payout. This also means that depending on the policy terms and any riders purchased additionally, like for motor accidents or chronic diseases, claims can also be made if the accident or diagnosis falls within the active policy term.

What do online term plans cover?

A typical term insurance policy covers deaths due to most health-related problems unless specifically mentioned as being life-threatening sexually transmitted diseases. Even the treatment charges incurred prior to the death can be reimbursed; deaths due to accidents are also typically covered in term insurance policies. However, deaths due to suicide or as a result of self-inflicted injuries, even though the intent was not suicidal, are not covered by most policies.

There are also extra riders that can be purchased to go with the pre-written online term plan. These riders can help you customise your policy according to personal needs while keeping the basic terms the same for all.

Common riders include

Accidental death riders: Ensures an additional payout in case of accidental death.
Long-term care rider: Provides monthly payments to the insured; this rider is great for elderly people who need to stay long term at nursing homes or confined to their own homes.

Can term insurance plans be purchased as a gift?

Indeed, it is possible to give a term insurance policy as a gift. Although most policies can only be given as gifts to immediate family or people whom you are related to, there are also a few which allow gifting to friends and extended families. It all comes down to the specific plan you choose, but most plans can be purchased as a gift of immediate family members like spouses, parents, and children.

In fact, giving your beloved family members insurance policies as gifts was a popular gifting trend in the year 2020 when an unprecedented global pandemic caused the whole world to suffer and brought to the forefront how unpredictable and uncertain life is. The impact of the last year has been such that it is safe to say that this trend will continue well into 2021, as well.

Especially for the groups that are more vulnerable to financial trouble like underage children, senior citizens, and unemployed women, it is imperative that measures be taken to ensure financial stability in times of crises.

Out of this, the elderly have the hardest time coping with being dependent and having to struggle with health as well as financial issues. You can help ensure that your parents spend the final segment of their lives in a comfortable way by giving them a term insurance plan as a gift.

The main steps to keep in mind while selecting and purchasing term insurance as a gift for your parents are:

Parents' consent
Most policies, especially when purchased for adults, require the signed consent of the policyholders as well as the purchaser. Some people may find it difficult to broach the subject of insurance because this discussion can get too emotional and hard.

However, it is necessary to have a detailed discussion with your parents before you purchase a policy for them, not only to have their consent for it but also so that you thoroughly understand their needs and choose accordingly.
How much coverage they need
Discussing the matter with your parents will give you an insight into what their needs and aspirations for the future are, which will enable you to make an informed decision.

You can opt for additional riders to go with the base policy you choose like the accelerated death benefit rider which will help the insured person get an early payout in case they are diagnosed with a terminal illness. These coverage needs can also include the cost of funeral services and the subsequent needs of the surviving parent in case something happens to one.
Overall medical condition and other needs
Most policies ask for the insured person or people's medical history, and recent check-up details in full, as some pre-existing medical conditions can disqualify the person for an online term plan.

Future medical needs of the insured for issues diagnosed within the policy term, will, of course, be covered under the policy. In case the person needs long-term care at home or in a nursing home, monthly payments for medical and other expenses can also be arranged according to the policy purchased.
Best payout mode for them
The mode of payout can vary for different policies according to the needs of the insured and the terms of the insurance policy. The death benefit payout can be given to the beneficiary as a lump sum or as regular monthly payments for a set period of time.

Similarly, benefits for medical bills can be paid as a lump sum or in the form of regular payments if continued care is required. At the time of purchasing the policy, you need to bear this in mind and choose the terms of the policy accordingly.
Why a term insurance plan the best gift for parents?
Parents spend the better part of their lives taking care of their children and often forget to do the same for themselves. Mostly, when they think of investments that will secure their future, they look at their children and spend on their education and well-being in the hopes that this is an investment that will be enough for a secure future for themselves.

Having a pension plan or term insurance for the medical needs that inevitably come with old age is necessary for the middle class that makes up the majority of our society. It is an excellent idea to give your parents a term insurance plan as a gift for. Here's why.
Fulfilling retirement goals
After making so many sacrifices, it is no less than what your parents deserve to spend their retirement years in a comfortable and secure environment without having to worry about medical bills and living expenses. They deserve to have a sense of security and peace of mind in their retirement years that online term plans provide.
Ensuring the best medical facilities
Your parents deserve nothing short of the best. The best medical facilities can be at their disposal with a well-planned term policy. Such a policy will enable them to fight the health complications that come with old age, ensure regular check-ups and timely diagnosis, as well as the right treatment. With the right riders, according to individual needs, a term insurance policy is the best health investment.
Saying thank you
No better way to thank your parents for always thinking about your future than to think about theirs and ensure that they live a life of comfort and stability. Through a term policy, you will be able to protect your parents in a way that will be the best expression of gratitude from your side while ensuring they do not feel dependent and can maintain their dignity.
Providing a security blanket and financial stability
Old age makes people vulnerable to health as well as financial issues, especially in the absence of the security net of a pension or retirement plan. Online term plans can provide this security net to fall back on in the times of crises for your parents in their vulnerable times. The financial stability that they once enjoyed can continue seamlessly through your ensuring their comfortable future with the right insurance policy and riders.

Platforms like the one provided by Canara HSBC Life Insurance make it easier than ever for you to educate yourself about all the different plans that are there and make an informed online term plan purchase.