Being self-employed means being your own boss. At the same time, it also places on you the responsibility of building your own safety net, especially when it comes to life insurance policies. In this context, one important question that may confuse many is whether you should buy individual or family term insurance. The answer to this question lies in your preferences and financial goals.
Both types of term insurance have their own set of advantages. However, the most suitable option for you depends on your financial goals, income, necessity, and how you want to protect the financial interests of your family. So, to make this smart call, we will guide you through the process of choosing between family term insurance and individual term insurance.
What is Family Term Insurance?
A term insurance policy is a pure life insurance plan that provides a guaranteed sum assured to the nominee in case the life assured dies during the tenure. In the case of family term insurance, more than one life is covered, like a spouse. Here is a quick example:
Anita Raina, 35, and her husband Anurag, 34, weren’t just life partners; they were co-founders of a digital marketing start-up and proud parents of two young children. Understanding the importance of securing their family’s future, they opted for a joint term insurance policy with a sum assured of ₹25 lakh. Anita was 31 at the time, and the 25 lakh term plan had a tenure of 20 years.
Tragically, a decade later, Anita was diagnosed with brain cancer and passed away. As the family grieved the heartbreaking loss, the policy offered a vital lifeline. Anurag received the ₹25 lakh death benefit.
Although Anita’s husband was still the earning member of the family, the payout from the policy enabled him to honour Anita’s biggest dream. She wished her digital marketing start-up would grow and expand. Anurag used the funds to continue fulfilling her dreams!
Family Term Insurance Vs. Individual Insurance
As you can see in the case of Anita and Anurag, they purchased a family term insurance. Hence, both of them were covered under a single premium. In the event of the death of either, the nominee/family receives the death benefit. That’s just one benefit to mention. The table below will give you a detailed understanding of family term insurance vs individual Insurance:
| Family Term Insurance | Individual Term Insurance |
| Covers more than one life, for instance, a couple | Covers only a single life |
| One premium for multiple lives covered | Separate premium for each life covered |
| It has a single payout for the first death among the life assured individuals | It has only one death benefit for a single life assured individual |
| This policy is ideal for couples who share similar liabilities (as in the case of Anita and Anurag) | Thai policy is ideal when a single life insurance is required |
| The policy terminates when the first death benefit is disbursed | The policy is only meant for a single individual, and separate insurance is needed for different individuals |
Which is Better: Family Term or Multiple Term Insurance?
In a family term insurance, you have the ease of getting multiple lives covered under a single policy. A single premium is also paid. However, it provides the death benefit to only the first death among the life assured individuals, and after the payout, the policy terminates. On the other hand, if you go with individual term insurance, you need to purchase separate policies for different family members. However, it also ensures each one gets a separate life cover.
So, to choose the right one for your case, it is essential to evaluate your personal preferences, shared liabilities, and future financial goals. Someone who is single or does not want multiple life insurance can go with multiple-term insurance. However, people like Anita and David may go with a family term insurance.
Conclusion
A family term insurance is a hassle-free choice for many. Couples who are self-employed or have similar liabilities can opt for a family term insurance where, under one premium, multiple lives can be covered. If you are also looking for a similar policy or you are related to Anita and David, you may check out family term insurance. Before purchasing, make sure to understand the terms and exclusions of the policy to make an informed decision.
