What Is a Term Insurance Plan For Non-Working Spouse?

Term insurance for non-working spouse in India offers the benefit of life insurance cover to the individual’s family members. This means the working partner pays the policy premiums, and the non-working spouse is covered under the term insurance policy.

A term insurance policy for non-working spouse can be either a standalone policy with the life insured being the non-working spouse. Alternatively, a joint term plan may be opted where the earning individual is the primary life insured, while the non-working spouse is the secondary life-insured covered under the policy.

If you opt for the standalone insurance plan, it will ensure that in case the life insured i.e. the non-working spouse dies during the policy term, the nominee as per the insurance policy will get the sum assured.

On the other hand, in the case of joint plans, if either of the life insured passes away, a portion of the life cover will be paid out to the surviving spouse and all future premiums will be waived. If both life insured pass away during the policy term, the nominee, typically, the child will get the coverage amount as a lump sum payout or regular monthly payout.

Let's understand this better with this example. Anjali, a 40-year-old homemaker. Her husband is the only earning member of the family. They have two children. Anjali is responsible for children's welfare, home management, and education.

She selects a 1 crore term plan with tenure of 20 years and the premiums for this are paid by her husband. In a scenario where Anjali passes away during the policy term, her family will get the Rs. 1 crore payout from the insurer.

While this payout will not ease the pain of her passing, it may be able to somewhat ease the transition of her family to continue without her.

Apart from the financial security for your family members, there are several other benefits of purchasing a term insurance for non-working spouse in India.

• Comprehensive coverage: Term plan for non-working spouse provides financial protection to their loved ones. You can also avail optional add-ons and riders to enhance protection against eventualities such as accidental death/dismemberment, critical illness and disability, etc
• Financial protection for family: A non-working spouse term plan provides financial protection in the form of death benefit payout, if the life insured dies during the policy term. This can contribute significantly to the financial well-being of the surviving family members.
• Tax benefits: As per current tax rules, the premiums paid for the plan are eligible for tax deduction of up to ₹1.5 lakh under Section 80C, if one has opted for the old tax regime.
  Furthermore, the life cover payout made to the policy beneficiary is tax-exempt, subject to terms and conditions of Section 10(10D).
• Affordable premiums: Since term plans are purely protection oriented, these policies offer high life cover at a reasonable cost. This ensures that the non-working spouse receive a substantial life cover with affordable premiums.
• Waiver of premium: In case of joint term plans, future premiums are waived if either of the life insured individuals dies. This way, the surviving spouse can stay covered under the plan without interruptions.

It's an illusion that a spouse who doesn’t earn money has no impact on the family’s financial condition. The truth is that if the routine household tasks are not taken care of, it will be near impossible for other family members to continue with their assigned tasks.

As is the case in the majority of Indian households, it is likely that the working spouse in your household probably has term life insurance, but the non-working spouse has no life cover.

Term insurance policy for non-working spouse can provide peace of mind for the entire family, ensuring that the surviving partner is not left financially unprotected. Here are some top reasons why getting a term insurance plan for non-working spouse can be beneficial:

A working spouse can qualify for a term life insurance plan, and they play an important role in providing financial support for the family. While a non-working spouse may not earn an income, they contribute to the family in various ways, such as by caring for loved ones and ensuring everyone’s needs are met.

Generally, the term insurance coverage offered to a non-working spouse is based on the income of their working partner. If the working spouse meets the income eligibility criteria, you can purchase a term plan for non-working spouse.

Furthermore, depending upon the insurance provider and your current term insurance policy, you can either purchase a separate policy or add your partner to your existing policy.

You need to consider the following key factors when selecting term insurance plan for your non-working spouse:

Coverage amount: Determine how much your family would require to remain financially secure even if your spouse were to pass away. While selecting the right coverage amount, take into account future costs such as possible debt and child education.

Compare policies: There are many reputable insurance companies that offer term insurance for non-working spouse. However, do not sign up for the first one you come across. Rather, spend some time to understand features of various term plans and select the one that is ideally suited to your needs.

Understand policy terms and conditions: Before choosing a term plan for non-working spouse, educate yourself about the various terms and conditions of the policy. Understand the inclusions, exclusions, eligibility criteria, rider benefits, etc.

Premiums: You can use an online premium calculator to check the policy premiums for different plans that various insurers are offering. Keep in mind that a lower premium does not always lead to a better plan. Prefer a balance between affordable premium and sufficient cover benefit when making your choice of term plan for non-working spouse.

Check the insurer's track record: Select an insurer with a high claim settlement ratio or individual death claims paid ratio. This ratio indicates how many of claims were settled versus the number of claims received in a financial year. Axis Max Life Insurance has a claim settlement ratio of 99.70%, ensuring reliability and peace of mind.

Policy term: Choose a policy term that meets your goals and financial commitments. The time frame should ideally include your earning years and last until your children are able to support themselves.

Riders: For additional security, consider opting for optional riders such as critical illness rider, waiver of premium rider, and accidental death benefit. These can help augment the benefits and protection offered by the base term plan.

As part of ensuring sound financial planning to protect the future of your family when you are not around them. A term insurance for a non-working spouse is a good way for couples to ensure protection of loved ones. This is because such as term plan acts as a cost-effective financial safety net for the surviving spouse as well as financial dependents in the long term. A well-structured term plan for non-working spouse can provide peace of mind for the entire family, ensuring that they are not left financially unprotected.