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Taking a Term Life Insurance Plan in your Wife's name

    IndianMoney.com Research Team | Monday, July 07,2014, 12:34 PM
 

A newly married couple or a couple with young children needs a term life insurance plan. This term policy is normally taken in the name of the husband (the breadwinner of the family). This is a custom followed for many years and very few people if any take a life insurance policy in the name of their spouse/wife.

Should you take a term life insurance plan in the name of your working wife?

A working wife contributes to the up keep of the family leading to a better quality of life. The double income contributes to a better education for your children and better facilities/quality of living at home.

In case of the death of your spouse/wife this income is lost. You will have to manage all the extra expenses without the monetary/financial contributions of your wife. Your children’s education might suffer and marriage/college education can cost a lot of money. This added burden of expenses can be resolved by taking a term life insurance policy in the name of your wife.

Should you analyze family needs before taking a life insurance policy?

The need :

  • Your wife may have individual needs which she services by taking a personal loan in her name.
  • Elderly parents have huge medical expenses and you might have a high financial burden to bear. You and your wife might be taking care of your and her elderly parents sharing the financial burden.

In case of the untimely demise of your spouse/wife you would have to bear her elderly parents expense as well as her personal loan/any other loan liabilities taken in her name.

A term life insurance plan taken in the name of your spouse/by your spouse helps to support you in these difficult times.

Taking a home loan

If you and your spouse have taken a home loan jointly (Both your names) then it is a good idea to take a term life insurance in the name of your spouse. If your spouse/wife dies the tax free lump sum you get can be used to pay off the EMI on the home loan or you can pay off the whole amount (Clear all pending dues) on the home loan. If your spouse/wife and you both die in an accident then your children can claim a lump sum from two life insurance policies (Yours and your wife’s).Any outstanding loan (home/personal/credit card) can be paid off and your children can use the excess money for their livelihood/education.

What if you and your wife do not have children?

If you and your wife have no children the tendency is to skip the life insurance or at least not take a life insurance policy in the name of your spouse/wife as financial obligations are less.

Both you and your spouse might be taking care of elderly parents and a term life insurance policy proves useful in this case. With elderly people living longer due to better medical facilities a term life policy in the name of your spouse is a must. If something untoward were to happen to your spouse/wife this money can be used to take care of her parents.

Taking a rider in the term policy for your wife

  • Taking a term life insurance policy in the name of your wife is a good idea but a better idea is to take a rider particularly a critical illness rider her name along with the term plan.
  • A rider is an added benefit which can be obtained by paying a slightly higher premium. A critical illness rider pays a lump sum in case of a critical illness such as a heart attack or cancer.
  • A term policy pays a lump sum only on death of the insured but a critical illness rider pays up in case of a life threatening illness and saves you from financial burden in case your spouse/wife were to contract a critical illness.

Should you take a term life policy in the name of your non working wife?

A non working wife popularly called a home maker does the house work (cooking and cleaning) and taking care of the children.

If she were to die then along with the emotional loss you would incur these expenses as you would have to hire a full time maid to do these jobs.

IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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