Income Replacement

Income Replacement Plans

Income replacement plans are nothing but another name for TERM INSURANCE! Naturally, these are meant to protect your family, dependents, or the loved ones in case of all eventualities especially when you\'re no longer there to see to their well-being. It is ideal for people who,

• Have others depending on them financially
• Wish to protect their family from financial consequences after death
• Have creditors

However, remember that income replacement plans are not for you, if you seek investment-linked plans, looking for whole life protection for your dependents, or intend to decrease the life insurance corpus over a plan term.

Points to Weigh

When choosing a term insurance consider the following,

• Your term insurance should be such that it is capable of replacing your income in case you\'re no longer there to take care of your dependents. It includes basic family expenditure, financial liabilities as loans, marriage, and education of children.
• Also, the length of coverage is extremely important when you are thinking of term insurance as a part of income replacement plans. What is ideal tenure of coverage? It should cover you until you are ready to retire. So, try to go for a plan that offers flexibility of coverage.
• Don\'t forget to take into account the crucial factor, inflation. Today, insurers are offering term insurance with an increasing cover at the rate of 5% to 10% annually. Some assured increases automatically as the time passes and it balances inflation successfully.

When you are thinking of term insurance, specifically as an income replacement plan, opting for those that offer RETURN OF PREMIUM makes sense. These are also known as TROP Plans. It will adequately replace your income while offering premium refund upon maturity.

Term Plan Benefits

Benefits of TROP include,

• Cost-Effective Plans
• Low Premiums
• Financial Security
• Low Risk Involved

To optimize the profits from term insurance plans, you should assess your present situation, such as, existing financial liability, covered levels, health state, and required protection.

Important Features

• Premiums are decided as per the age of the person because it determines the risk factor involved. So the sooner you go for it lower the premiums and larger the cover.
• Policy terms for such plans are generally between 15 years to 20 years. However, those who want may opt to increase it until 65 years to 70 years.
• Premium amounts remain uniform throughout your policy term except in case of broken contract.
• If you are expecting high returns than term insurance may no longer be cost-effective.

With many insurance companies offering Term Insurance, make informative decisions with us. Feel free to contact us, toll–free 1800-103-3999 or write to us at enquiry@policybazaar.com

Best Financial Calculators:

• Retirement Calculator
• Human Life Value Calculator
• Saving Calculator
• Income Tax Calculator