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Income Replacement

If you are unable to work due to injury or illness, Income Replacement plans provide a regular monthly payment. Compare and find the best plans at policybazaar.com.

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What is Income Replacement Insurance?

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

  • Have dependants like parents and in-laws

  • Have existing loans and other debts

  • Have a spouse or children

You can also opt for a whole life insurance policy in case you want your income replacement policy to cover you for your whole life (till 99/100 years of age).

one crore term plan
plus

Term Plans

₹1
Crore

Life Cover

@ Starting from ₹ 16/day+

₹50
LAKH

Life Cover

@ Starting from ₹ 8/day+

₹75
LAKH

Life Cover

@ Starting from ₹ 12/day+

How Does the Income Replacement Plan Work?

Let us understand how income replacement insurance works with the help of an example:

Suppose you bought a term income replacement plan to financially secure your wife and two kids. The life cover of the plan is 1 Crore for a 40-year policy term, and you need to pay the premiums for the entire policy term. You chose for the benefit amount to be paid in regular instalments for 5 years. If you unfortunately pass away during the 9th policy year, the entire 1 Crore life cover will be paid to your wife in the form of regular income for the next 5 years. Your wife can use the benefit amount to take care of the monthly expenses and pay the child’s fees.

What is the Need for Income Replacement Term Plans?

Here is a list of benefits of buying income replacement insurance in India 2024:

  • Take Care of Monthly Expenses: Your family can use the benefit amount to pay for the monthly expenses and obligations like child’s fees and debts.

  • Prepare Against Inflation: The large life cover can help your family prepare against potential inflation and ensure that your family lives a comfortable life in your absence.

  • Stress Free Family: With income replacement insurance, you and your family can live a peaceful life knowing that your family will stay financially stable in your absence. They can use the life cover amount to take care of their needs, like medical bills and other unexpected expenses. 

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.

one crore term plan

Secure Your Family Future Today

₹1 CRORE

Term Plan Starting @ ₹449/month+

Get an online discount of upto 10%+

Compare 40+ plans from 15 Insurers

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What are the Benefits of Income Replacement Insurance?

Following are the additional benefits of buying an income replacement plan in India 2024:

  • Affordable Premiums: Term income replacement insurance in India is the most affordable type of life insurance that offers a large life cover at budget-friendly premiums. For example, you can secure a life cover of 1 Crore at just 525, payable monthly.

  • Suitable Life Cover: With term insurance plans, you can get a large life cover that is at least 10 to 20 times your current annual income. This amount can help your family stay financially stable in the event of your untimely death during the policy tenure.

  • Tax Saving Benefits: You can claim term insurance tax benefits as per the prevailing tax laws under sections 80C, 80D, and 10(10D) of the Income Tax Act, 1961.

  • Paperless Process: The entire process of buying an income replacement policy online eliminates the requirement of carrying physical documents or filling out paper forms. You can simply log on to the company website, fill in the required details, and attach a copy of the scanned documents to buy term plan in India.

  • Easy Claim Settlement: Various life insurance companies in India offer a quick claim settlement (some companies even settle claims in just 4 hours). You can check the company’s CSR before buying income replacement insurance and ensure that the company has a good CSR value. A CSR of more than 95% indicates that the company settled most of the claims received in the specific financial year.

What are the Important Features of Income Replacement Insurance?

Here is a list of all the important features of an income replacement plan:

  • Policy terms for such plans are generally between 5 years to 40 years. However, those who want may opt for a longer tenure and can check out the policy terms offered under different income replacement term plans.

  • Premiums are decided as per the age of the person because it determines the risk factor involved. So, the sooner you go for it, the lower the premiums and the larger the cover.

  • The income replacement term insurance policy premium amounts remain uniform throughout your policy term except in case of a lapsed policy.

With many insurance companies offering Term Insurance, make informative decisions with us. Feel free to contact us, toll–free 1800 208 8787 or write to us at care@policybazaar.com

Points to Remember While Choosing the Right Income Replacement Insurance

You should consider the following points while choosing the right income replacement plan:

  • The life cover for your income replacement term insurance policy should be enough to cover your family’s financial needs in your absence. 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 insurance. It should cover you until you are ready to retire. Therefore, you should always opt for an income replacement term insurance policy that offers flexibility of coverage.

  • Don't forget to take into account the crucial factor, inflation. Today, various insurers offer income replacement policy with regular income increasing at a fixed rate every year. This ensures that your family is able to tackle inflation in the long run.

When you are thinking of term insurance, specifically as an income replacement insurance, 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.


FAQ's

  • What is income replacement plan?

    Ans: An income replacement term plan is a type of insurance that offers the death benefit in case of the death of the policyholder during the policy term. The policyholder can choose for this death benefit to be paid in monthly instalments or increasing monthly instalments, which can act as an income replacement for the family in the absence of the main breadwinner.
  • How much is income replacement insurance?

    Ans: The income replacement term plan premiums depend on a variety of factors. However, the premiums for this plan can start from just Rs. 525, payable monthly.
  • Q: Who should buy the income replacement plan in India?

    Ans: The following people should buy income replacement term insurance policy in India 2024:
    • Young individuals
    • People with kids
    • People with dependants (parents or in-laws)
    • Taxpayers
    • Retirees
    • Married individuals
    • People with loans
  • Q:What are the factors that affect the term income replacement insurance premium rates?

    Ans: The factors that affect the term income replacement plan premium rates are:
    • Age at the time of buying the policy
    • Gender
    • Lifestyle habits (smoking/alcohol)
    • Pre-existing conditions
    • Occupation type
    • Life cover
    • Policy term
  • Q: Who is eligible to buy income replacement insurance in India 2024?

    Ans: People who are more than 18 years old but below the age of 65 years are eligible to buy income replacement plans in India. However, you should always go through the policy document of the desired term plan to check the specific eligibility of that plan.
  • Q: What do the income replacement methods equates human life value hlv to?

    Ans: The income replacement method equates Human Life Value (HLV) to the future payout and financial help the family or dependents would receive in their absence. Thus, HLV represents the present value of future earnings and financial contributions that would be lost if the individual were to suffer an untimely death. Thus, a human life value calculator helps evaluate the suitable life cover amount a person should opt for in their income replacement term plan.
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