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

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

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How to Choose the Right Payout For Your Term Policy?

31/10/2022 |

A term policy is a type of life insurance policy that provides coverage for a certain period or a specified term. The benefits of term insurance are paid if the person insured dies during the specified period in the policy and the policy is active. The policyholders can extend or renew the insurance after the expiration of the term based on the maximum entry age norms of the plan. The premium on a term insurance policy is calculated based on the insured’s age, health, and life expectancy.

 


Buying term insurance is not enough. Getting an adequate sum assured that takes care of the needs of the family is important. For this, an individual needs to consider various factors like the value of future incomes, expenses, liabilities, and investments.

 

How to Buy Term Life Insurance?

 

Term insurance can be bought online and offline. However, buying term life insurance online is a quick and hassle-free process. All term life insurance companies in India provide the option of buying the policy online.

 

To buy term insurance offered by Tata AIA Life Insurance, one only needs to follow this process:
 

 Visit the official website
 

  • Select the plan you want to buy
  • Provide basic details
  • Enter the OTP you receive on your phone number
  • Verify the premium and other plan details
  • Pay the premium
  • You will receive a soft copy of the policy at the registered email address

 

There are various benefits of term life insurance.

 

For instance, Tata AIA Life Insurance Guaranteed Return Insurance Plan(Individual, Non-Linked, Non-Participating, Life Insurance Savings Plan (UIN:110N152V10) provides various benefits, like:

 

  • Guaranteed1 returns (a lump sum, regular income, and whole life income)
  • Insurance coverage to secure the future of the family
  • The option of joint life to cover your spouse
  • Add-on riders# to enhance insurance protection

 

Term Life Insurance Payout

 


The payout a nominee would receive can be chosen by the insured during purchase. The payout option needs to be decided after assessing what suits the family of the insured.

Tata AIA offers the payout options:
 

  • Lump-Sum: A lump-sum payout provides the entire amount of payout to the nominee in the event of the policyholder’s demise, which is equal to the Guaranteed1 Maturity Benefit.

  • Regular Income:In this option, the insured can choose to replace the regular monthly income with the payout amount. Thus, the income of the family will continue even after the insured’s demise. The period for which the payout will continue is decided in advance. A Guaranteed1 Annual Income (GAI) defined as a percentage of one Annualised Premiums shall commence from the end of the year.

  • Whole Life Income:In this alternative, the policyholder can choose to get guaranteed1 annual income, a percentage of the total premium paid, after the maturity of the policy. These annual payouts will continue till the policyholder’s death or till the second death in case of joint life. The policyholder can also choose to receive the guaranteed1 income monthly. In case of the insured’s demise, the guaranteed1 amount can be received by the nominee. A Guaranteed1 Annual Income (GAI), which is a percentage of Total Premiums Paid, shall start from the end of the year.

 

Most Suitable Payout Option for Term Insurance
 

The best payout option for an individual depends on the life expectancy and the financial goals the insured person wants to meet.
 

For a young, unmarried person, the most likely option would be a lump sum payout. The lump-sum amount will help the parents of the insured pay off the debts they might have taken for the future of the deceased.

 

A married person with no children can opt for a regular income because they might have to pay EMIs at this stage of life. Such regular income would help the spouse pay the EMIs and manage monthly expenses.

 

A married person with children can go for the whole life income option. Here, the guaranteed1 income will not only help pay off the financial liabilities, but monthly payouts will help meet the monthly expenses if the insured chooses. In case of the policyholder’s death, the family will continue to receive the amount for a peaceful life.

 

How does a term insurance payout work?
 

To obtain a life insurance payout, the first step is to file a claim with the insurer. This can be done by filing a claim online using the web portal, contacting the insurer over the phone to file a claim, or visiting the nearest branch of the insurance company.

 

When filing a claim, a beneficiary has to provide the following documents as evidence:

 

  • Photocopy of the death certificate of the insured person.
  • Term insurance policy document on which the claim is made.
  • Duly filled claim form provided by the insurer.
  • Identity and address proof of the beneficiary.
  • Bank details of the nominee.
  • Medical records.
  • Other documents needed by the insurer.

 

Once these documents have been submitted, the insurance company will examine and assess them.

 

If there are no disputes in the claim process and the documents are clear, the process is smooth and quick. For claims that do not violate any clauses or terms, the settlement takes 30 to 60 days and sometimes even less.

 

Conclusion
 

A term life insurance is essential as it helps the loved ones after an insured’s demise to sustain financially. The insured can also avail of tax* deduction under Section 80C of the Income Tax* Act, 1961, for the premium paid towards term life insurance up to ₹ 1.5 Lakh per annum.
 

Tata AIA Life Insurance Plans allow an individual to choose from three payout options:
 

Endowment, Regular Income, and Whole Life Income.
 

The insured can easily plan their future with a guaranteed1 return. They can also choose to increase insurance protection with additional riders#. The premiums can be in single or limited periods (annually, quarterly, or monthly). The insurer can also avail of a loan against the policy and get tax* deductions.
 

L&C/Advt/2022/Oct/2643

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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 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 podcast 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.
  • *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.