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Know All About Staggered or Monthly Payout in Term Insurance

All our lives we work towards providing our family a secure present and future. To this effect, we take a term insurance policy to ensure that our family is taken care in case of sudden death. However, what we often fail to consider before buying the policy is how the death benefits i.e., sum assured, would be paid to our nominee(s) and the ways by which they would use it.

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Due to limited financial knowledge, most families fail to use the lump sum amount wisely.  So even though you had the best of intentions while buying that policy, your family could still not be looked after.

To deal with this problem, insurance companies have started offering a staggered or monthly payout option. Instead of a lump sum payment, your nominee will receive 10% of the insured amount and the rest would be paid as monthly installments over the next 15-20 years.

One can select from any of the combinations available:

  • Part sum assured (high proportion) + monthly income: Usually, 50%-70%of the sum assured is paid to the nominee immediately after the death of the policyholder and the remaining part is paid in the form of monthly installments to support the family’s regular financial requirements.

  • Part sum assured + monthly income (equal proportion): In this case, the nominee gets both the sum assured and the monthly income in equal proportions.

  • Sum assured and monthly income increasing yearly: In this case, the monthly income increases annually by 10%-20%. It is a very useful feature as it helps dependents deal with inflation.

Available Options in the Market

Here’s a look at some of the best available online term plan options in the market:-

Lump Sum + Monthly Income Plan
Name of the insurer Plan Name Premium Lump sum amount Monthly payout
HDFC Life Click 2 Protect Plus Income Option Rs 8,679 Rs 1 crore Rs 50,000 for a period of 15 years
Max Life Online Term Plan- Life Cover + Monthly Income Rs 7,400 Rs 1 crore Rs 40,000 for a period of 10 years
Reliance Life Online Income Protect Rs 15,725 Rs 1 crore Rs 50,000 for a period of 15 years

Disclaimer: “Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

*Above calculations are for a 30-year old male looking for Rs 1 crore coverage for a 30-year tenure.

Conclusion

With the option of staggered payment, you get to customize the plan as per your family’s needs. With a combination of lump sum and monthly installments, you can rest assured that in your absence, your family would be financially secure.   


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