Term Insurance and Estate Planning: Ensuring Smooth Transitions

Term Insurance and Estate Planning: Ensuring Smooth Transitions

We all plan for our future in different ways. Estate planning is one such financial strategy often considered a practice amongst the wealthy. However, it is an effective practice for all individuals at any income level. The end goal of estate planning is to distribute all your valuable assets well amongst your family members or friends after your demise.

Term insurance, a type of life insurance, can be highly valuable regarding estate planning. It extends protection to your family members and ensures a smooth transition of your wealth into the next generation in your absence.

You can choose and buy a term plan online based on the premium charged using a term insurance calculator. Let us discuss the correlation between term insurance and estate planning.

Why Choose Term Insurance?

Term insurance is a life insurance policy that provides you with life cover to protect your family in your absence with financial stability. It is affordable and can be customised as per your requirement by adding different rider options available with the insurers.

These ride options can be critical in less cover, loan cover, accidental death cover, etc., all making it a better financial tool for investment for a better future. Some term plans also offer maturity benefits wherein you receive the lump sum paid as premiums if you survive the tenure. Only some term plans offer this Return on Premium option, so research before finalising.

How Can Term Insurance Help with Estate Planning?

Unlike popular belief, estate planning is not a privilege for the wealthy. It is, in fact, a sensible decision for a smoother distribution and management of your liabilities and assets in case of your untimely demise.

If you do not spend time with estate planning, your absence can leave your family members with higher tax payments, disputes, legal fees, and so much more.

Here are the top ways term insurance can help with estate planning.

  1. Liquidity Support

Term insurance offers death benefits to the family members of the policyholder. In the case of estate planning, the tax-free claim settlement received by the beneficiaries can be used to cover expenses and debts that require urgent attention. This is because the claim settlement is quick, and the money can be used easily.

  1. Financial Back-Up

Given that you are the family’s breadwinner, your absence would also require income replacement for your family members to lead a normal life. With the help of a term plan, you can give your family financial backup, which can help them with their financial goals while also adding value to your business, if any.

  1. Better Division of Assets

If you are struggling to divide your family business or real estate purchases equally, you can nominate one of the family members as a beneficiary to a term plan to give them claim amount benefits.

  1. Business Succession

The death benefit given to the beneficiary can also help them purchase the business shares to control the family business and resolve any dispute without much hassle. Additionally, the financial commitment to resolve the challenges within the business can also be resolved with the help of a term plan.


There is more to estate planning than just the distribution of wealth. It also ensures your loved ones are always taken care of per their requirements in your absence. Term insurance is a valuable financial tool that can help smooth transitions of your wealth and offer support via immediate liquidity, asset protection and business succession. Integrating estate planning with a term insurance plan will guarantee better continuation of your financial and business legacy.