Payout Insurance Options by Different Insurers

What is a Life Insurance Payout?

A Payout is a death benefit provided to beneficiaries or dependents of a term 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. 

   

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. 

*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.”

Note: Know what is term insurance first and then buy a term plan for your loved ones.

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.

Note: Check out the best term insurance plan in India and choose one that suits your requirements.