Life Insurance Claim: Spreading The Payouts at monthly..!

by Mr. SANJAY TRIPATHY,  HDFC Life

Protection plans launched so far in the country have focused on covering immediate liabilities by paying a lumpsum to the family, and not on how this can be used by the policyholder’s family.

But recently, certain insurers have attempted to address this problem by offering protection products with staggered payouts at monthly or annual frequency over a few years.

In small amounts..!

Let’s explain staggered payouts with an example. Say, Mr. Verma, a 35-year-old with an annual income of  RS. 8 lakh, has taken a pure protection plan for 15 years.

Under the plan, his/her family will receive Rs. 1 crore in case of his demise. If this happens, Mr Verma’s family will receive a huge inflow compared to his annual income.
Given the trauma the family is going through, this will add to the burden due to the immediate financial responsibility of managing this large amount, so that it generates enough return to support the family’s financial goals and daily expenses.
Families may be misled in such situations, by financial advisors, opportunistic relatives or / friends.

On the other hand, say Mr. Verma buys a pure protection plan of the same value which offers 10% of the cover value — that is, Rs. 10 lakh - paid upfront for immediate consumption. Thereafter, the policy will give staggered payouts of 0.5% of the cover value — Rs. 50,000 a month for the next 15 years.

Such a system will make it far easier for the family to meet expenses and goals, with enough time to carefully chart out an investment plan.

 Mr. SANJAY TRIPATHY,  HDFC Life

The lumpsum, while it can be invested, may not necessarily provide such regular income, more so since staggered payments commence immediately.

Benefits..!

The lumpsum & monthly income received from the insurance company will be tax-free.
What’s more, the premium amount that has to be paid will be lower than the standard policies that pay lumpsum benefits.

There are also variations that insurers are coming up with. For instance, the policyholder can choose for an increasing payout option where the monthly payout increases by 5% to 10% each year to deal with inflation.
About the author..!

About the author..!

The writer is Mr. Sanjay Tripathy Sr. EVP - Marketing, Product, Digital and E – Commerce at HDFC Life 
Share:

No comments:

Post a Comment

Popular Posts

Blog Archive

Recent Posts

Featured Post

BSE releases list of 25 stocks available for T+0 settlement starting March 28, 2024

BSE releases list of 25 stocks available for T+0 settlement starting March 28, 2024