A life insurance payout will give much-required financial security if you lose the policyholder who can be your spouse or partner. 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 children’s 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.Read more
*Tax benefit is subject to changes in tax laws. *Standard T&C Apply
** Discount is offered by the insurance company as approved by IRDAI for the product under File & Use guidelines
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.
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.
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 he/she 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.
In periodic life insurance payouts, one part of the benefits are 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.
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:
Different insurers offer different options of payout. Choose wisely as per your requirement. Let’s discuss three insurers: ICICI Payout Term insurance, PNB Payout Term Insurance, and Max Life for your smooth understanding of payout options.
ICICI Pru offers four payout options which are:
Your beneficiary will have the option to convert some or all of his/her monthly income into a lump sum amount. The lump-sum amount is the current value of the future payouts computed at 4 percent of the discounted rate.
Max Life offers three payout options:
PNB MetLife offers four payout options:
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.
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