Payout Insurance Options by Different Insurers

A life insurance payout will give much-required financial security if you lose a partner or spouse.If you are a beneficiary, you could use the amount to pay for funeral costs, to pay bills, for covering the child care cost, or for their higher education. The choice is yours. So, to fulfill your life goals, you receive the life insurance payout. There are several options available when it comes to life insurance payouts. It is very important to understand these options so that you can select the right one as per your requirements. 

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What is a Life Insurance Payout?

A Payout is a death benefit provided to beneficiaries or dependents of a term insurance plan when the policyholder dies. At the time of signing up for the policy, the policyholder has to decide how the death benefits will be paid out. The decision of selecting a payout option should be based on financial understanding, financial liabilities of your family, and any other objectives, 

Types of Payout Options 

Typically, the life insurance plans offer two types of payout options to the life assured or the nominee/beneficiary. If the policyholder passes away before the completion of the policy tenure, the insurer pays the death benefit equivalent to the sum assured to the nominee. If in case the life assured has outlived the policy term, the insurance companies pay the maturity benefit along with the bonus. 

The payout received by the nominee in the form of a death benefit is generally pre-determined. The amount received by the policyholder varies based on the policy type you avail, its T&Cs, and its returns in case of maturity benefit. 

  1. Lump-sum Payout 

    This option is the most popular one as it involves receiving the death benefits on a go. In case the life assured dies in an unfortunate event, the insurance company pays a lump sum amount equivalent to the sum assured to the beneficiary/nominee of the policyholder. 

    In this, the sum assured amount as maturity or death benefits are paid out to the life assured or their nominee/beneficiary in a form of a single payment. This lump sum payout might also include bonuses and loyalty additions. Single payments make sure that the policyholder or his/her nominee receives a substantial amount of money in one transaction so that they can select to invest in other instruments or use it for fulfilling some sizable expenses such as repayment of debts, college fees, housing loans or down payments. 

  2. Periodic Payouts 

    In periodic life insurance payouts, one part of the benefits is payable as a lump sum amount, while the remaining benefits might be converted to installments or annuities. These are paid by the insurance company over the term of a pre-determined period. In this manner, the policyholder enjoys a steady flow of income that can help meet the periodic payouts (regular) expenses such as utility bills, rent, or EMI payments included in the repayment of a loan. 

Steps to Receive the Payout 

The main step in receiving a life insurance payout is to file a request for a claim with the insurer. This can be done in 3 ways: 

  • a claim online on the company’s website or using a mobile application 

  • Contact the insurance company over the cell phone and file your claim 

  • Visit the companies nearest branch office and then submit a written application along with the claim form. 

     
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Payout Options Given by Different Insurers

Different insurers offer different options of payout. Choose wisely as per your required. Let’s discuss three insurers: ICICI Payout Term insurance, PNB Payout term insurance, and Max Life for your smooth understanding of payout options. 

Insurance Companies Payout Options
ICICI Life Insurance
  • Lump-sum Payout
  • Income: A fixed percentage of the benefit amount will be payable for a certain number of years in equivalent installments every month. 
  • Lumpsum and income 
  • Increasing income 
Max Life Insurance
  • One-time lump sum payout 
  • One-time lump sum + Fixed Monthly Payouts 
  • One time Lump sum + Increasing Monthly Payouts
PNB Life Insurance
  • Full lump sum payout
  • Lump sum+ Regular Monthly Income Plan 
  • Lump-sum + Increasing Monthly Income 
  • Lump-Sum + Regular Monthly income (till your child turns to be 21 years) 
Bharti AXA 
  • Lump-sum Payout
  • Monthly Income 
  • Lump-sum Plus Monthly Income 
Kotak Mahindra
  • Immediate Payout
  • Increasing Recurring Payout
  • Level Recurring Payout
Bajaj Allianz 
  • One-time lump sum payout 
  • One-time lump sum payment in addition to fixed monthly payouts 
  • One-time lump sum payment in addition to increasing monthly payouts 
Edelweiss Tokio 
  • Regular Income 
  • Regular Income plus Lumpsum 
  • Increasing Monthly Income
Future Generalli 
  • Lump-sum Protection
  • Income Protection: The death benefit shall be payable as payouts made every month (monthly income) to your beneficiary/nominee during the payout time as selected by you at the commencement of the policy. 
Exide Life 
  • Lump-sum Payout
  • Family Income Payout – Provides fixed percent of the death benefit to the assured’s nominee over certain months from the death date of the policyholder. 
  • Lump-sum with family income payout option 
IndiaFirst Life Insurance 
  • Lumpsum Benefit
  • Income Benefit
Star Union Daichi 
  • Lump-sum payout 
  • Monthly Income 
  • Lumpsum + monthly income 
LIC of India 
  • Level SA: Absolute assured amount to be payable on death, which shall remain constant throughout the policy tenure. 
  • Increasing SA: Absolute assured amount to be payable on death, till the completion of 5th year of the policy. 
Aditya Birla 
  • Lump-Sum Payment: Death benefit is paid as a one-time payment. 
  • Lump-sum payment with increasing annual income: at 5% pa 
Aegon Life  Lump-sum death benefit 
Sahara Life Insurance  Lump-Sum death benefit 
Canara HSBC OBC Life Insurance
Aviva Life Insurance 
  • Lump-sum payout
  • Income Benefit 
  • Lump-sum plus income benefit  
Shriram Life Insurance 
  • Assured Income Payouts 
  • Lump-sum Payout 

50 percent of the death benefit as lump sum and rest 50 percent as regular payouts 

SBI Life Insurance 
  • Lump-sum payouts 
  • Regular annual payout
Tata AIA Life Insurance 
  • Lump-sum payout
  • Income Benefit 
  • Lump-sum plus income benefit  
HDFC Life Insurance 
  • Life Protect Option: This option provides a lump sum payment in case of the policyholder’s death during the policy term. 
  • Income Plus Option: The policyholder is covered for the full policy tenure and also gets a lump sum amount along with regular income from 60 years of age. 
IDBI Federal Life Insurance  N/A

*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply

“Tax benefit is subject to changes in tax laws. Standard T&C apply.”

Wrapping It Up!

Term insurance investment provides you and your family with a financial security net which is much-needed during critical times. Term insurance policies could provide financial protection in case of an unfortunate event. Term insurance premium calculator is available online and is free of cost, using which one can calculate the estimated premium required to pay based on the desired sum assured. Above, we have discussed the payout insurance by different insurers such as ICICI Payout Term insurance, PNB Payout term insurance, Max Life, and others. 

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

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