Monthly income payout in term insurance - how it works

When the COVID19 crisis started no one expected it to go on for one full year and even beyond Yet here we are almost a year after the pandemic struck the world and the end is nowhere in sight The deadly virus has infected over 81 million people with over 177 million deaths1 The situation is no better in India which saw a late surge in the number of infections While it was better placed in the initial few months of the global pandemic it is now the secondmost infected nation second only to the US The number of infected people is now close to 10 million in India and almost 15 lakh people have already died in the country due to the deadly virus2Term life insurance to protect against uncertaintiesIn such circumstances amid all this uncertainty about onersquos survival all precautions need to be taken to ensure safety and security of our loved ones and ourselves While everyone is doing their bit by wearing masks washing hands frequently and maintaining social distancing there is still an off chance that one may get infected despite these precautions And worse yet what happens to their family if they are not able to overcome the virus Having a term insurance policy becomes crucial in such circumstances to protect the financial future of your loved ones especially if they are financially dependent on youMoreover while COVID19 may make one realize this it is not the only reason to have onersquos life covered Life is uncertain as it is and one must have a comprehensive life cover in case of an unfortunate event of death By opting for the right kind of term life cover you can ensure that in case of any such eventuality your loved ones can continue to live their lives with the same comforts and can achieve the same goals that they had set for themselves even in your absence The benefits paid by the insurance company towards the chosen policy would take care of the financial needs that you would have otherwiseLump sum vs monthly payoutWhen you buy term insurance depending on the product features the policyholder has the option to choose how the nominee would receive the sum assured also known as the death benefit You could either choose a lump sum payment or in the form of monthly payoutsThe idea of lump sum payment is quite simple As the name suggests the dependents of the deceased would get the entire sum assured as a onetime payment if the policyholder dies within the policy term They can then decide how to use that moneyOn the other hand in case of monthly payout option the beneficiary of the policy receives the sum assured in monthly instalments which may run for a period of 10 years depending on the policy terms and conditions thereby ensuring regular income for the family of the deceasedWhy you should consider monthly payout optionThe biggest reason to opt for the monthly payout option under your term life insurance plan wherever the product features permit is if your family is not financially perceptive In such a case they may not be able to manage a large sum paid as lump sum payment However if they receive monthly payments that could work out better for them as they would serve as income replacement Given the fact these monthly payments last for 10 years depending on the policy terms and conditions your familyrsquos future would be sortedEven for families with good financial condition that allows various ways to customize payout options as per the needs You can go with an option of ldquolump sum with monthly incomerdquo where your nominees receive the benefit partly as a lump sum and the rest in monthly instalments You can also go with ldquolump sum with increasing monthly incomerdquo where the monthly payout gradually increases over time to help with rising inflation One needs to take the decision as per their needsIn these trying times a term insurance is necessary However just getting one for the sake of it is not enough One must analyse the needs of their family and their future requirements before choosing the right plan In the end it is all about securing the financial future of your family It is not something to be taken lightlySource1 httpswwwworldometersinfocoronavirus2 httpswwwworldometersinfocoronaviruscountryindiaFor more details on risk factors terms and conditions please read sales brochure amp policy document available on wwwbajajallianzlife com carefully before concluding a sale Bajaj Allianz Life eTouch Online Term UIN116N140V03 is a nonlinked nonparticipating pure term life insurance planThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever