Should You Buy Term Life Insurance With Staggered Payout Option In Case Of Death?

Usually, we invest a large sum of money through term life insurance plans, in hopes of ensuring the financial security and stability of our loved ones, in our absence. However, the choice of nominee and payout options are important factors to be mulled over. This is because if your nominee is not a careful spender, they may easily end up squandering your money, putting all efforts to waste.

What is a Staggered Payout Option?

In a staggered payout option, the nominee receives the invested money in instalments instead of in lump sum, except an initial amount. This is hugely beneficial especially if the nominee is young or not equipped or suited to handle large sums of money all at once. It helps in planning a budget and also set priorities in terms of financial needs. Plus, since the pay is divided equally into parts, it is also sustainable.

How Should the Payout Option be Divided?

There is much consideration to be done when it comes to creating the divisions in your staggered payout option. Go over factors such as the age and income of your beneficiaries. If they are young and unemployed, it is better to span the payouts over a longer period of time.

On the other hand, if there are illnesses or other financially burdening issues involved, you may have to increase the amount of money per payout. It is also advisable to discuss these with your family members to gain insight into their thoughts and needs. You must also go over what your term life insurance plan company is offering.

Types of Staggered Payout Options

Under staggered payout options, there are again two types usually available:

• Monthly Income

If you choose this option, the sum remaining after the lump sum is paid out, is given in instalments. The beneficiary receives a fixed sum, monthly, for a predetermined period of time.

• Increasing Monthly Income

This is a clever option that helps you support your family even in case of future inflations. The monthly payout amount increases periodically under this option which is also very useful if you have growing children or young adults because as they grow up, expenses rise.

Endnotes

A staggered payout option is a valuable choice worth considering. You should definitely think about buying a term insurance plan with this option to ensure judicious and wise expenditure of the money that you leave behind. 

Also read 

When is the Right Time to Buy Life Insurance?

How Easy Is It to Buy Life Insurance?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.