Life insurance policies generally offer two kinds of payouts to the policyholder or their beneficiaries. If the insured person passes away during the tenure of the policy, life insurance payouts typically include death benefits paid to the specified nominee. On the other hand, if the policyholder survives the tenure of the plan, the insurer pays out maturity benefits and bonuses, if applicable, to the insured.
The amount of funds payable as death benefits or as maturity benefits are generally specified upfront, so the policyholder is aware of the minimum amount they’re eligible to receive at a later date. However, many insured people remain unaware of the process involved in raising a claim and obtaining life insurance payouts when the time comes. To understand this process better, here’s a closer look at how a life insurance policy payout works.
The first step to obtaining a life insurance payout is to file a claim with the insurer. You can do this in any one of three ways, as explained here.
If you’re the beneficiary of the deceased policyholder, you may need the following documents to substantiate your claim.
Maturity benefits are paid out when the tenure of the policy has been completed. Generally, as the term of the plan is coming to an end, the insurance company intimates the policyholder two or three months in advance. A discharge voucher is sent to the insured person. To initiate the life insurance payout, this voucher needs to be signed by the policyholder and sent to the insurer, along with a copy of the insurance policy document.
Most insurance providers offer two kinds of life insurance payout options. Here are the details about these alternatives.
Lump sum payouts
In this case, the sum assured as death or maturity benefits is paid out to the policyholder or their beneficiary as a single payment. This lump sum life insurance payout may also include loyalty additions and bonuses, if any. Single payments ensure that the insured or their nominee receives a significant sum of money in one transaction, so they can choose to invest it in other instruments or use it to take care of sizable expenses like college fees, repayment of debts, or down payments on housing loans.
In some cases, insurers may also offer the option of periodic life insurance payouts. Here, one portion of the benefits is paid out as a lump sum amount, while the rest of the benefits may be converted into annuities or instalments, which are paid by the insurer over the course of a predetermined period. This way, the recipient enjoys a steady stream of income that can be useful for meeting regular periodic expenses like rent, utility bills, or EMI payments involved in repaying a loan.
In case there’s no dispute or default related to your insurance claim, the process is generally smooth and hassle-free. For straightforward claims that do not violate any terms or clauses, insurers tend to settle the payments quickly, within 30 to 60 days, or even earlier in some cases.
With the life insurance plans offered by Canara HSBC Oriental Bank of Commerce, you can enjoy a quick and hassle-free process right from claims to settlement. With options like Invest 4G Plan and the iSelect Term Plan, you can be eligible for death or maturity benefits that can help you deal with any financial crisis in the future. With only 3 simple steps, the claims process at Canara HSBC Oriental Bank of Commerce is simple and straightforward. All you need to do is intimate the claim, register it, and submit the necessary documentation. The terms of the life insurance payouts are also transparent and made available to you even before you purchase the plan.
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