What Is Income Replacement Insurance?

What is an Income Replacement Insurance Plan?

An income replacement insurance plan, also called a term plan, is a type of life insurance. It is designed to provide financial security to your family or those who depend on you in the event of your unfortunate death. This term plan replaces your income and provides a safety net for your loved ones. It helps your family to continue to live the way you always dreamt of and be able to pay for important life events after you're not alive anymore, such as children’s education, weddings, etc. You can either choose to receive the payout of this income replacement insurance in a lump sum or periodically.

Let’s understand this with the help of an example:

Anil, a non-smoking man of 33 years of age with a yearly salaried income of Rs. 10 Lakhs, bought a term life insurance plan (a type of life insurance) to secure his family financially. As the sole breadwinner for his family, he aimed to ensure purchasing one of the best term plans for his loved ones. Comparing over 15 term plans on Policybazaar, he selected the one aligning best with his preferences. Anil opted for a 1 Crore life cover for a policy term of 30 years, committing to paying Rs. 1021 per month for the same term. Therefore, in the unfortunate event of his demise, Anil's income will be substituted by the life cover, which his nominees will receive as the death benefit.

What Does Income Replacement Insurance Offer?

Income Replacement Insurance offers the below-mentioned benefits:

• Financial Support To Policyholder’s Family: Offers financial assistance to your family in case of your unfortunate demise.

• Income Replacement: Replaces some/all of the amount you would have earned as salary/income.

• Lifestyle Maintenance: Helps your loved ones maintain their living standards after your unfortunate death.

• Expense Coverage: Covers essential expenses after you're gone, such as day-to-day expenditures, children’s education, clearing debts/loans, etc.

• Payout Options: Provides the death benefit payout to the nominee/beneficiary either as a lump sum or in smaller periodic payments.

• Tax Benefits: Premiums paid for income replacement insurance may qualify for tax benefits under the Income Tax Act of India, 1961.

*Note: You can use the term insurance calculator to calculate the premium amount of your chosen term plan.

How To Buy Income Replacement Insurance From Policybazaar?

Here are the steps to buy Income Replacement Insurance from Policybazaar:

• Step 1: Visit Policybazaar’s official website and click on ‘Term Insurance’ 

• Step 2: Fill in the basic details such as date of birth, name, contact details

• Step 3: Click on ‘View Plans’

• Step 4: Mention further details about your smoking or tobacco habits, yearly income, occupation and education

• Step 5: Choose the plan that suits your financial needs and proceed to pay

• Step 6: Select your preferred payment method and pay to complete the purchase

*Note: It is advisable to know what is term insurance and compare first and then proceed to buy the ideal term plan.

Wrapping It Up!

Income Replacement Insurance is important for individuals who support their families, have dependents, or aim to protect their businesses. To ensure long-term family security, comparing term plan options from 15+ insurers on Policybazaar is a smart decision. This way, you can choose the ideal term plan that aligns with your needs and provides comprehensive financial protection for your loved ones or business.

Note: You should also check the term insurance benefits if you are planning to purchase the term insurance plan.