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Term insurance plans are simple. You pay a regular (monthly, quarterly, half-yearly or annual) premium, for which you get a life cover. In case of your death within the tenure of the policy, your family would receive a pre-determined amount which will help them financially. However, how the payout is made to the nominee can be chosen by you at the time of purchase, on the basis your assessment of which payout option will best suit your family. The payout options are classified into three:
1. One-time Lump Sum Payout: This option offers a lump sum payout to the nominee, in case of an event of death of the policyholder. Axis Max Life Smart Total Elite Protection Term Plan offers to pay 100% of the sum assured immediately to the nominee on the death of the life insured.
For example, if you were to purchase a lump sum payout plan that offers a life cover of Rs. 1 crore, this entire amount would be paid to your nominee all in one go as a lump sum, upon your death. To know more details about Smart Total Elite Protection Term Plan click here.
2. One time Lump Sum + Fixed Monthly payouts: In this case, the nominee will get 100% of the sum assured as a lumpsum payout plus an additional payout each month for the next few years (as chosen by the policyholder at the time of purchase of the plan). Axis Max Life Smart Total Elite Protection Term Plan offers to pay 100% of the sum assured immediately to the nominee on the death of the life insured.
Now let’s see which of the above would suit you. Ideally the type of term plan you choose, should depend on the financial goal/ liability that you intend to cover with it. Meaning, different life stages would require different term plans.
| Life Stage | Term Plan variant to be considered | How it will help |
Young and unmarried | Term plan with a one time lump sum payout | At this stage of life, your liabilities include an education loan repayment or helping your parents pay out the loans that they may have taken for your future (like marriage, higher studies etc). Hence, a term plan is essential for you to ensure that all these liabilities are taken care of, even in case of an unfortunate event of death. The variant that would best suit you would be a ‘One-time Lump Sum Payout’ as the money received immediately can be used to pay off all loans by your parents and they wouldn’t be in financial debt anymore. |
Married with no children | Term plan with a regular monthly income | As you start to build a life together with your spouse, your income would be an essential part of running the household, and you may even avail loans. A term plan with a monthly payout would be like a replacement of your income and will lessen the financial burden on your spouse. |
Married with young children | Term plan with a lump sum payout and an increasing monthly income | When your children come into your life, they become your top priority. You want to do everything in your power to make all their dreams come true and help them achieve their full potential. A term plan with a lump sum payout followed by an increasing monthly income would assist your nominees close any financial liabilities (like loans) that you may have had, the increasing monthly income while also meeting their everyday expenses like school fees, grocery bills and other daily household expenses. |
Parents with children in high school | Term plan with a lump sum payout and an increasing monthly income | As your children approach their graduation, it becomes necessary to financially prepare for their university education, which is considerably more expensive. In such a situation, a term plan with a lump sum payout and an increasing monthly income would provide the financial support your family requires. |
Nearing retirement | Term plan with a life cover and an increasing monthly income | In retirement, you require a corpus to enjoy your golden years. While you may have saved enough, you still require complete peace of mind, especially if you have to provide for a spouse as well. A term plan with a life cover and an increasing monthly income would assist with the corpus and help your spouse/ nominee meet all the rising costs, giving you the peace of mind that they will be taken care of even in your absence. |
Now that you’ve learnt how important your life stage is in deciding which term plan is best for you, be sure to consider your liabilities, decide your financial goals, research well, and read the fine print of your term plan, before choosing one.
ARN:- Jul21/BG/19
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