It is no more a hidden fact that life insurance cover protects us from multiple kinds of uncertainties. People buy life insurance policies with the aim that it would benefit the family’s prosperity and well-being in the long run.
Even though almost all insurance policy covers, such as the savings investment plan, term insurance covers etc., have their own competitive advantage over others, any buyer should first evaluate the benefits arising from entering into such an agreement.
This article describes the Income benefit criteria offered by policy covers, such as specific Tata AIA policies. An in-depth study of the following would be helpful before planning to add a policy to investment plans in India.
What is an Income Benefit In Life Insurance?
Income benefit in life insurance can simply be understood as a receipt of steady periodic income from the chosen insurance plan. These life insurance benefits are mostly associated with kinds of savings investment plans that offer income payouts as a percentage of the annualised premium.
A savings plan insurance policy is therefore considered to be the best alternative for ensuring life against unforeseen circumstances with an additional benefit of continuous income payouts after the policy tenure is over.
Different Types of Income Payouts in an Income Benefit Life Insurance
Fixed income payouts
Under a fixed income payout scheme, the policyholder receives income payouts at a fixed rate over the tenure of the policy period.
Increasing income payouts
This particular model of income payout scheme increases the amount of money received on a yearly basis. The rate at which the payout increases is pre-determined based on certain multiplying factors. A saving policy investment plan is designed with such a feature to multiply benefits for the family and ensures enhanced security against uncertainties even after the death of the policyholder.
When Should One Purchase a Life Insurance Policy With an Additional Income Benefit Feature?
Sole bread earner of the family:
Income benefitting insurance policies are the most useful for post-retired individuals. It ensures that the family continues to enjoy a financially secure life even after the primary source of income is no longer active.
One Or More Dependents
Expenses increase as the family size increases. This responsibility of running the family on food, clothing and shelter can be a major burden for the income earner unless supported by a secondary income source. A good savings plan insurance distributes the burden of bearing expenses for the family.
EMIs to be Paid
Payment of monthly instalments for the purchase of heavy-priced items drastically reduces the funds to be allocated for other necessary expenses. An insurance cover with an appropriate income benefit policy provides for the funds to be used for such mandatory needs.
Combating Inflation
Inflation is a phenomenon that increases the general level of prices in an economy. This reduces the ability of individuals to purchase the same goods over time. An added income benefit strengthens the family’s capacity to continue purchasing goods and services without financial constraints.
Conclusion
A savings plan, life insurance policy or other such financial covers is a long-term investment that one avails of to secure their family’s future. Decisions made after proper knowledge and analysis about features such as an income benefit plan can provide suitable returns and sustain financial security over time.