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.
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.
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.
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