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Everyone dreams of a luxury house, expensive car, international holidays, etc. But is our life certain? Can you predict how long you will live? The answer is no. But with a term plan, we can eliminate financial uncertainty and secure our dependents. A term plan helps you insure your life by paying a nominal premium regularly. Disabled or differently-abled people are in greater need of a term plan as they are dependent on other people.
India is lagging in making the country well-equipped for differently-abled people. The main challenge that differently-abled people face is stable earnings. If their guardian passes away, they usually face several challenges as they are unable to afford proper care and amenities. In such cases, term plans help you cope with such problems and offer a peaceful life to your disabled dependent.
A term plan is life insurance. It is quite similar to medical insurance, where you get paid if you are sick. Here, your dependents will be paid in the event of your death. You need to pay regular premiums to the insurance company. In return, the insurance company offers you a lump-sum amount in the event of your death during the policy period. There is no maturity value in the case of a term plan. It means that if the term plan is for 30 years and you paid regular premiums, there is no maturity value at the end of 30 years if you live.
A term plan for disabled people is a special kind of insurance plan, where a nominee is a disabled person. The insurance provider doesn’t pay a lump sum amount to a nominee on the insured’s death. Instead, regular payments are made to the dependent until death. This is a valuable scheme for disabled people. They can live a normal happy life, even after the death of their guardian.
A term plan for the disabled is a limited-period payment plan that offers a lump sum and a series of regular payments to the dependent after the death of the insured. Mostly, the payments made under this scheme are for a maximum period of 35 years, and the benefits received are till the death of the disabled dependent. The features of the term plan for the disabled are:
The insurer should be between the age of 22 - 65. The premium amount is determined based on the age of the disabled nominee. The younger the nominee, the lower will be the premium amount. So it is always advisable to start a term plan early.
The sum assured of the disabled term plan starts from ₹50,000, and there is no upper limit. So the insured should decide the upper limit based on the requirement of the disabled dependent.
A disabled term plan covers the entire life of the dependent. The dependent receives a stable income from the insurance company until death.
The premium can be paid over a few fixed tenures, or single payment of the premium can also be made. The longer the tenure, the lower will be the premium amount.
In the case of the insured’s death during the policy period, a certain percentage of the maturity value + guaranteed1 bonus + terminal bonus is provided to the dependent. The rest of the sum assured is converted to an annuity and fixed, regular payments are made to the dependent until death.
Term plans for the disabled also come with many optional benefits. These benefits can be added during the policy term to make the dependent more secure. The maturity value can also be altered by paying an extra premium.
The benefits from the term plan should be used only by a disabled person. The features have been added to give a good life to disabled persons. Hence, it should not be misused.
The premium paid for the term plan for the disabled is fully *tax-deductible under section 80DD. So the premium you pay towards the term plan will reduce your tax liability.
In the case of the early death of the dependent, the policy expires. The insured can claim a refund of the premiums paid in the policy period.
There are several factors that an insured should consider before buying a term plan for disabled dependents. The factors are:
Choosing the Right Sum Assured
The sum assured is very important in a term plan. The insured should choose the right sum assured, adequate for the dependent. If the sum assured is less, it may be difficult for the disabled to manage his/her expenses after the guardian’s demise.
Premium as per Financial Capacity
The premium of the term plan depends on the sum assured and tenure. If the premium is too high, the insured may not be able to pay the premiums regularly, and the policy may lapse.
A term plan is a long-term commitment. You are planning to protect your dependent’s life. So when the commitment is long, the insurer’s credibility is an important factor that needs to be considered. The insurer should have goodwill in the market.
Term plans for the disabled are important in countries like India. As we lack proper amenities and social security to take care of the differently-abled, guardians must ensure that their disabled dependents are protected throughout. Choose the right term plan for the disabled, pay regular premiums throughout the tenure, and secure the future of your dependents.
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1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
*Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
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The products are underwritten by Tata AIA Life Insurance Company Ltd.
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This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
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