Gift Your Father a Term Insurance Plan This Father's Day. Here's Why

2024-08-01

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Being a dad is no easy job, and though the times have now changed, many are still the sole breadwinners and financial planners of their families. Combine this with needing to take out time to spend with their kids and families, and the job gets fairly demanding. One of the most pressing issues that dominate a father’s mind is the financial security of their family. In a time of such uncertainty, the thought of an event wherein something may happen to them can be a serious cause of concern to a father even if they aren't the sole breadwinner of the family as is the case with many families today.

The impact of such an occurrence on the quality of life enjoyed by their children today and in the future will likely be serious, and hence possessing a life insurance policy is one of the best ways to ensure that all your children’s needs are met, regardless of any unexpected calamities.

Life insurance policies provide financial coverage in the event of a policyholder’s death through either a lump sum after the event or in installments over a fixed period of time. The coverage is maintained by periodic payments made to insurance providers referred to as premiums over the course of the policy’s validity, referred to as its term or tenure. Traditional life insurance policies are valid for the entirety of the policyholder’s lifespan and some policies even often offer investment options that may aid in long term wealth creation. Term insurance plans on the other hand, offer more flexible tenures that can often range from 5 years to 20 or 30 years depending upon the policyholder’s needs. These offer varying levels of coverage as well as investment options. Term insurance plans are becoming increasingly popular nowadays due to their relatively lower premium amounts when compared to traditional life plans as well as the flexibility offered in their tenures and structure. Both life and term insurance also offer tax benefits.

Despite this, some young fathers may still feel that term insurance plans are an unnecessary expense, in addition to the high cost of raising and educating a child in today’s world and may delay taking out a policy until they are convinced otherwise. However, this belief may be mistaken as term insurance plans should not be seen as a reduction in wealth in the short term, but rather as investment in the future of their families. With Father’s day just around the corner, it may be worth gifting your father a term plan as a show of appreciation for the sacrifices he has made for you. This gesture tells your father that you are ready to help him in his responsibilities towards the family. You understand how much he worries for everyone’s future and want to make it easier for him so that he can stay relaxed.

To illustrate this, here are a few reasons why term insurance is useful and why you should consider gifting one to your father.

Securing Your Family’s Future: In the event of a parent’s death, a household will likely struggle to maintain their level of income and deal with expenses as they did previously, particularly in single income households where fathers are the primary breadwinners. All fathers should want to protect their children from such unfortunate circumstances and hence, taking out term insurance plans would provide this protection. When assessing the level of coverage required, you have to consider periodic expenses such as the cost of children’s education, which is fairly expensive nowadays while also accounting for day to day expenses and bill payments until they are able to fend for themselves.
Creating Savings For The Long Term: Term insurance plans with wealth creation options may provide an alternative means of generating long term savings, which may either be returned to the policyholder on the expiry of its tenure or paid out as part of the death benefit in the event of the policyholder’s death. You can also opt for a ULIP where returns on the policy investments may provide wealth creation over longer tenures, subject to terms and conditions and the movements of the market.
Avail Tax Benefits: Term insurance tax benefits on premiums are listed under Section 80C of the Income Tax Act and allow deductions of up to Rs. 1.5 lakhs every year. Term insurance tax benefits also extend to the death benefit, which is tax exempt under Section 10D when paid out after the policyholder’s demise, subject to certain conditions.

Conclusion:

While there are a lot of considerations to make before purchasing a policy, life insurance is an essential part of financial planning and is especially crucial for families with children who may be left vulnerable in the event of one or more parent’s passing. A good approach would involve carefully assessing your family’s financial needs and seeking out an insurance provider that is responsive to them, caters to your preferences and provides quality service and assistance in all situations.

Canara HSBC iSelect Smart360 Term Plan provides a variety of options such as whole life cover, premium return and short tenures of up to 5 years to ensure your family’s financial security in any situation.