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Benefits Of Income Replacement Term Insurance Plans

Benefits Of Income Replacement Term Insurance Plans

Income Replacement Term Insurance

Imagine if your income miraculously continues for your family, even after your untimely demise. Can there be better financial security for your loved ones? Perhaps not, and you can create this safety for your family with online term insurance plans.

What is Income Replacement Term Insurance?

Income replacement term insurance refers to a benefit pay-out option some of the best term insurance plans offer. You can choose the regular income pay-out option for your family along with lump-sum payment. Canara HSBC OBC Life’s i-Select Star term plan lets you define the percentage of sum assured to allocate for regular income.

For example, if you buy a term insurance cover of Rs 2 crores, you can divide the total benefit between lump sum pay-out and regular income. If you choose a 50:50 ratio for both your family will receive a lump-sum payment of Rs. 1 crore while the remaining Rs 1 crore will be converted to a monthly income.

You can choose a term of up to 40 years for the monthly income to continue for the family under i-Select Star term plan.

Here’s how income replacement term insurance benefits you and your family:

Zero Stress for Family

Before the income replacement concept, term insurance benefits were only paid in lump-sum. Although it would seem like a welcome development for the grieving families, the family would soon start facing difficulty with the money.

The amount, although, seemingly large for the moment, needs to suffice for the family for more than 4 to 5 decades.

Benefits of monthly income term plan for your family

Most families would have never managed such a large sum of money. Few wrong decisions can derail their financial future. One of the biggest challenges was to invest the large sum of money towards a regular and safe income for the family.

The simplest solution to this problem was annuity plans from the life insurers. Meaning, the money received from the insurer will need to be deposited back with them to generate a safe and steady income.

Regular income feature in the term insurance plan removes all these hurdles from the path of your family. They can focus on their goals and life while the term insurance plan takes care of their monthly income.

Take Care of Monthly Household Budget

So far as you are there with a steady income, you provide your family with a fixed monthly budget for the household. In the absence of an income, the family would consistently worry either they are spending more or spending too little.

However, with a regular income in place, the household budget can remain steady and family can focus more on long-term goals. The best term plans with regular income feature, including i-Select Star term plan, have the option to provide an increasing income to your family.

You can choose the percentage increase at the time of buying the policy. The income increases at this fixed percentage every year.

Inflation-Adjusted Income

Income replacement term insurance plans also provide the option to give the family an increasing income. Increasing income would be a better option for the family, especially when they will depend on this income for a long time.

The same amount of income over a long time means the family will have a declining lifestyle due to inflation. But an increasing income gives them a chance to maintain their lifestyle over time.

Additional Benefits of Online Term Insurance Plans

Online term insurance plans offer far more benefits, other than an income replacement option. Some of the most important benefits are:

1) Adequate Life Cover

With online term insurance plans, you can buy term insurance cover 10 to 20 times of your annual income. This amount is usually enough to account for all the future financial needs and goals of your family.

2) Pocket-Friendly Cost

The premiums of online term plans are low. Plus, you get the option of limiting the premium payment till your retirement, in case you are getting a long-term cover. The low price of life cover also enables you to add more benefits to your plan.

For example, you can add critical illness, accidental death and disability, and premium waiver benefits to your policy and enhance the family’s financial protection.

3) Tax Exemption

The premium you pay for term insurance cover is deductible from your gross total income of the year. The deduction is available under section 80C of the Income Tax Act.

4) Very Little Paperwork

Another great feature of the online term plan is that you can avoid all the paperwork. You can submit the detailed application form from anywhere you are comfortable at and any time of the day.

5) Quick Claim Settlement

The best online term insurance plans, including the iSelect Star term plan from Canara HSBC OBC Life, offer relatively short claim settlement periods.

For example, i-Select Star term plan offers one-day claim settlement for eligible policies if the sum assured is up to Rs 1 crore. Policies with higher sum assured too get a fast settlement within just five working days.

Income replacement is a useful addition to the online term plans. Just make sure to select the best option for your family while buying the plan, as you cannot change the option later.

Speak to an insurance specialist now!

Frequently Asked Questions (FAQs) for Term Insurance Plans

A person can only purchase a term insurance plan till the age of 65 years, and they can choose the risk coverage for up to 99 years of age. One can easily buy the best online term plan between the age of 18 to 65 years.

This being a term insurance plan doesn't offer any payout after maturity or expiration date

Each insurance company has its own term insurance premium calculator. If you want to check out the premium quote, go for the iSelect Star term plan calculator. It gives a premium amount based on your age, gender, habits, education, and annual income.

You can purchase an iSelect Star term plan anytime between 18 to 65 years of age. This is a term plan with return of premium option – that means all the premiums paid throughout the tenure will be paid back to you if you outlive the policy.

It depends on your needs. For example, if you want to cover a child's education or wedding expenses, you have to include them in your coverage. Your premium will be calculated accordingly when you buy the best term plan in India.

If your key purpose is to give your Family financial protection, go for the best term insurance plan. And if you want some savings, in the end, go for a traditional life insurance plan. iSelect Star is a term plan with return of premium option. All the term insurance premium will be paid back to you, if you outlive the policy term.

Go for at least 12 times cover than your annual income. Or you can go as far as 20 times coverage as per your needs.

The right time is when you don't have anything to keep your Family safe from financial storms, and they rely on you for financial needs.

If you are unable to make the payment or suffering from a terminal illness, the best term insurance plan pays a part of the sum insured to treat your disease.

Term life insurance plan riders are attachment or endorsements made, while taking the term insurance policy, as a supplementary coverage to policyholders. Apart from the core death benefit, term insurance plan riders offer below-given additional benefits:

  • Accidental Death Rider When a person suffers from a terminal illness, his/her family ends up spending a significant amount in treatment and medical expenses. Accelerated death rider pays a part of the sum insured in advance to cover such costs and save the family from running out of cash.
  • Accidental Disability Rider If the policyholder can't pay the premium because of an accident or permanent disability, a sudden disability this pays the premium on behalf of the policyholder till completion of policy term or for a defined duration.
  • Critical Illness Rider If the insured person gets a heart attack, cancer, or any other critical illness, this rider pays a lump sum on valid diagnosis.
  • Premium Waiver Rider If the policyholder is unable to make payments due to income loss or disability, a premium waiver rider waives off all future premium payments. And the term insurance policy remains active until the expiration date.
  • Income Rider: This rider in a term insurance plan ensures that your family receives regular income + sum insured in case of unfortunate demise of life insured.

Anyone can go for life insurance as it offers some savings after the maturity date, but it doesn't cover the protection of your family . The best term insurance plan is solely designed for taking care of loved ones if something happens to you. Term insurance plans act as a shield between your family and sudden financial fall. They make sure that your family lives a healthy life even after you. With a little amount paid per year, you can be worry-free from the family's financial conditions.

Questions that you need to ask while Buying the Best Term Insurance Plan?

  1. 1. Are you buying a term plan with return of premium?
  2. 2. Amount of premium you have to pay based on your age, habits, education, and monthly income
  3. 3. The total number of benefits covered in the term insurance plan. Do they include benefits that you care about the most?
  4. 4. How to save money on tax if you pay for the term life insurance plan?
  5. 5. Do they offer regular income options?
  6. 6. Can you change the coverage and premium in the future?
  7. 7. Does the claim consider valid if death occurs outside India?
  8. 8. Which kind of death is not covered by a term insurance plan?
  9. 9. Can NRIs take a term insurance plan? If yes, what are the conditions?
  10. 10. Does the term insurance plan have a cash value if you decide to cancel the term insurance policy?
  11. 11. Under what circumstances can a term insurance plan be cancelled?
  12. 12. Can I pay the premiums online or make electronic payments?
  13. 13. What will happen to the term life insurance plan if the life assured starts smoking after purchasing the policy?
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