Finance, Loans & Insurance
Income Replacement Term Insurance – The Concept and Beyond!
You went ahead and bought a term insurance cover of Rs.1 crore. As per your assumptions, the amount of Rs.1 crore should be enough to help you meet all your goals such as education, healthcare, marriage, shelter and more.
During the tenor of your term insurance, if something happens to you, your family will help you get a lump sum of Rs.1 crore. However, the expenditures of your family may not be the lump sum amount. Yes, they may need only a certain amount for expenses each month. Thus, it may worry you as to how you can use the term insurance amount to generate regular income.
Hence, the point of the discussion that comes to the forefront is that leaving some amount for your family is not enough as they should also know how to make the most of the amount.
What is an Income Replacement Term Insurance Plan?
The income replacement insurance plan is nothing but the death benefits scheme. It has no entitlement for a maturity benefit.
The assured sum payment is not released once the duration gets completed, it can only be made during the event of the death of the insured or the policyholder.
In this case, when an insurer dies, the income replacement term insurance service provider makes a monthly payment to nominees.
How does the Income Replacement Term Insurance Plan Work?
Suppose if you availed a plan that has the provision to get an assured sum worth Rs.1 crore.
When you die, your designated nominees will receive a payment each month which should be a portion of the assured sum which is Rs.1 crore.
But, what is the time till when your nominees or family members receive the amount? The answer is they will continue to receive a monthly payment until the entire amount of Rs.1 crore is exhausted which means that after this, the plan will terminate.
The concept is simple to understand – the moment your assured sum of Rs.1 crore is finished after the insurer keeps paying your nominees, the plan will then end.
For example, if your beneficiaries or the nominees or the family member were receiving Rs.5 lakh per month, the payment will stop after 1 year and 8 months. After the period of 1 year and 8 months, the assured sum will exhaust and the plan will end.
What are the benefits of the Income Replacement Term Insurance Plan?
Here are some features and benefits of the income replacement term insurance plan that can safeguard your family:
- The income replacement term insurance plan is a pure protection plan which guarantees the financial security of your family at lower premiums
- Being a pure plan it does not come with any maturity benefit. It means that you need not worry about the return on investment (ROI) that the amount you kept in the scheme will give you. It means that you only need to remain invested in the plan to ensure the financial security of your family/nominees/beneficiaries
- You can purchase it online and hence, it is dead easy to procure
- The most vital benefit of the income replacement term insurance plan is offering your nominees with a monthly income. Hence, it can replace the income that you were receiving while being alive and aids the family run the show easily.
The Bottom Line
If you are apply for the term insurance, you should opt for the income replacement term insurance plan to ensure a steady income for your family each month.
If you are ready to start now, you can apply for the income replacement term insurance plan online today. Happy investment!