Imagine, for a moment, the foundation of your family’s financial security suddenly vanishes. The paycheck keeping the lights on, sending children to school and taking care of healthcare disappears overnight.

In the critical moment, having financial safety net becomes non-negotiable. That’s where term insurance has traditionally stepped in, providing a lump-sum payout to safeguard family’s future in your absence.

However, managing a lump sum effectively can sometimes be a daunting task for your family during emotional distress, potentially leading to financial mismanagement. This is where Income Protection Term Plans come in.

These plans have redefined financial security. Rather than handing over a large sum of money that may overwhelm loved ones, these plans offer a steady monthly income mirroring the paycheck you provide today.

It’s a revolutionary concept in India’s insurance sector, designed to ensure the family maintains lifestyle, pays bills and continues dreams even in your absence. The plans guarantee a regular income replacing the salary they would have relied on if you were still around. At the core of Income Protection Term Plans is the promise of stability.

Stable monthly payout

This form of term insurance provides consistent monthly payments, ensuring your family continues to meet its financial needs, from household bills to children’s education, without any abrupt disruptions. The plans are specifically designed for salaried individuals who want their families to continue living with the same financial confidence.

An additional feature that makes the plans so powerful is the inflation-adjusted payouts. In today’s world, where the cost of living increases year after year, having a stagnant income is not enough. That’s why these plans come with an optional feature, which is equipped to account for inflation by increasing the payout by 5% annually, capped at 1.5 times the initial payout amount.

This means that as your family’s expenses grow, so does the income they receive, allowing them to sustain their lifestyle in the long term.

They also offer an unique variant designed specifically for those caring for ageing parents. By choosing this add-on, parents will receive a separate monthly income in the event of your untimely passing, providing them with financial independence and dignity.

Key benefits

The most striking advantage is the lifelong income they provide to nominees. The family will receive income upon the policyholder’s death until the end of the policy term. However, if the death occurs during the last 10 years, they will receive a minimum payout for 10 years.

Tax-Free payouts

These plans offer dual tax benefits. The premium you pay qualifies for deductions under Section 80C of the Income Tax Act, and the income your family receives is tax-free, making these plans even more financially advantageous.

Affordable premiums

Given the long-term security and inflation-adjusted payouts, these plans are surprisingly affordable. For example, a 30-year-old purchasing an Income Protection Term Plan that guarantees a tax-free annual income of ₹10 lakh would pay a premium of just ₹1,517 a month.

In the event of the policyholder’s death, the family would receive ₹10 lakh annually for 40 years — amounting to a total payout of ₹4 crore. By comparison, a standard term plan for a ₹1.2 crore lump sum would cost almost same in premium.

Many insurers are offering special incentives to make the plans more accessible. Salaried individuals, women policyholders and online buyers can benefit from exclusive discounts, further reducing the cost of the policies.

These plans are about ensuring continuity in everyday lives. They are designed to give holistic solutions for financial uncertainties following the loss of a breadwinner. Moreover, affordability makes them an attractive option for those wanting long-term peace of mind.

In a rapidly evolving financial landscape, where the cost of living continues to rise, having a policy that adapts to these changes is essential. As India moves forward, financial planning should move towards a more stable, secure, and protected future for those you hold dear.

The plans mark the beginning of a new era in life insurance. They offer not just coverage but confidence your family’s financial journey will continue uninterrupted, no matter what life throws your way.

(The writer is head of term insurance at Policybazaar.com)