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Need assistance in choosing the right insurance plan? Get a call from our Expert.

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How Regular Income Payout Works in Life Insurance Policies?

All of us strive to save money throughout our lives so as to have financial stability once we retire. To attain this goal, we consider different savings plans to park our savings in a beneficial avenue. However, money management can give rise to various challenging scenarios. For instance, your financial commitments towards your family may be on the higher side, or there could be a lack of financial planning to deal with uncertain life events.
 

Therefore, plans with regular income payouts have become popular. People are increasingly preferring a regular income payout plan rather than one that offers a lump sum benefit. As a result, insurance providers have introduced comprehensive life insurance policies that offer savings and regular income benefits along with a life cover!
 

What Is A Savings Insurance Plan?
 


A savings insurance plan is a comprehensive life insurance policy that provides a life cover and guaranteed1 returns on maturity. Here are the basic features of the product:
 

  1. The life cover ensures a death benefit for your family in case of your unexpected demise during the policy term. The benefits can be further enhanced by opting for additional riders#, such as the accidental death rider#, terminal illness rider#, critical illness rider# etc.

  2. The guaranteed1 returns under the plan are provided to you when the plan matures. There are different payout options that you can choose from, namely a lump sum benefit, regular income benefit, or a combination of the two.
     

Let us discuss in detail how a regular income plan works and how you can draw the best benefits from it.
 

How Does A Guaranteed1 Regular Income Plan Work?
 

A regular income plan has three important aspects, namely the premium, the policy term, and regular income. These aspects are decided during the policy's inception. However, it is subject to revisions during the policy renewal process. Let us discuss these individual aspects in a little detail:
 

  1. Regular Income: You can decide the amount of the regular income you need based on your financial goals. For instance, if your investment in an assured savings insurance plan is for your retirement life, you can focus on the regular monthly income necessary for survival. It can include the cost of groceries, utility bills, medical expenses, etc.


    On the other hand, if the regular income is planned to pay for your child's school or college fees, you can derive an estimate of the amount required in advance. You can avail of the regular income either monthly or annually. Furthermore, you can define the income period for the regular income, for instance, 20 to 50 years after the policy term ends.

  2. Policy term: Policy term is crucial for your savings plan. It is always said that the longer you stay invested in a plan, the better are the returns. Hence you must make it a point to start investing in a savings plan early in life so that you can opt for a longer policy term.


    You are likely to be able to afford more amount for investment at a younger age as your family commitments may be lower than later in life. If your policy term is longer, you will also benefit from opting for a longer income period for the regular income plan.

  3. Premium: Premium is one of the most important aspects of your regular income plan, and it is determined on the basis of the regular income required, sum assured for the life cover, and the policy term. You can choose to pay the premium as a single payment, as instalments for a limited period, or as instalments for the complete policy term.

     

    You can select the frequency of premium payment based on your income and expenses. This frequency can be a single payment, or monthly, quarterly, semi-annual, or annual payments.
     

Therefore, based on the regular income required and the policy term, you can estimate the premium amount you have to pay. Our online calculator can help you check and plan for your premium payments. This way, you can customise the regular income plan to work as per your financial requirements and capacity. You will start receiving regular income when the plan matures, provided you have made the premium payments without fail.
 

You can customise your regular income plan to suit your financial goals. For instance, with the TATA AIA savings plans, you can opt for regular income with an in-built critical illness benefit. With such a plan, the premium will get waived off when you are diagnosed with a critical illness, and you shall receive a lump sum amount as financial assistance. Despite no further premium payments, the regular income and the insurance for life cover will remain intact.
 

Who Should Opt For A Savings Insurance Policy?
 

A savings insurance policy is one of the best ways to accumulate a substantial corpus in the long term and pursue your financial goals. A regular income plan can be a good investment for people who are:
 

  1. Planning for their retirement
  2. Looking for an alternate source of income while starting a new business
  3. Planning to pay for their child's school or tuition fees periodically
  4. Going on sabbatical leave for higher studies
  5. Going on a long vacation
     
Conclusion
 

Uncertain events in your life can have a deep impact on your financial status. Therefore, it is important to be prepared to accept the challenges in the best possible manner. If you feel a regular income is the way to sustain your life, then go for it!
 

A regular income plan in a life insurance policy works on the basis of your required regular income and the policy term. You must, thus, analyse your financial goals and decide the type of plan and payout options you want to opt for. As the returns under a regular income plan are guaranteed1, it is considered one of the apt plans offering savings as well as insurance.
 

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

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Disclaimer

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • 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.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry