Before we answer this question, you need to know about the different modes of term insurance payouts available:Your family or nominees can receive the term insurance payout in the following ways:Lump sum - The entire life cover gets paid to your nominee in one go. This would be the best option if your nominee has a huge loan or debt to take care of or needs to make a one-time large payment. However, choose this option only if your nominee is well equipped to manage such a huge sum of money.Lump sum + Fixed monthly - Your nominee receives a chunk of the payout now and the rest in fixed monthly instalments. This would work if your nominee has small loans to repay or needs to make a one-time payment, post which they want fixed monthly income.Lump sum + Increasing monthly instalments - Your nominee receives a chunk of the payout now and the rest in monthly instalments that increase every year. This option is for someone who has small loans to repay or needs to make a one-time payment, and wants monthly income that increases with inflation thereafter.Monthly income - Your nominee receives the payout as monthly income for years. This option works best if you want to provide your nominee with a steady income to meet their expenses, but feel they cannot manage a large amount of money or can get easily swindled.