Don’t Miss This New Category In Term Insurance: Income Protection Plans & Benefits

Investing in a term insurance plan is gaining huge significance now as it will not only help in boosting your peace of mind but will also safeguard the future of your family members. Term insurance policy offers financial protection to the family members for a specific "period" or "term". In the situation of premature or untimely death of the breadwinner during the specified policy term, the family will obtain a sum assured which will help them meet their financial requirements.

Term insurance offers a brand-new category namely "Income Protection Plan" that will offer lifelong income to the family members of the breadwinner. The revolutionary category is poised to become a game-changer in the insurance industry and will gain the interest of customer amid its several key benefits, according to Rhishabh Garg - Head, Term Insurance - Policybazaar.com.

The salient features of the Income Protection Plan include lifetime income for nominee as long as they survive, tax-free payouts, special discounts on premium up to 13%, guaranteed payout to family members for 10-years in case of the untimely death of policyholder, and income will be adjusted for inflation every year by compounding rates beginning from the day you purchase the plan, added Rhishabh Garg.

Income Protection Term Plan seeks to provide an entirely new take on term insurance. The unique feature of the plan is that instead of offering just one-time payout, it will ensure a regular supply of income to the family members of the deceased. The plan aims to provide financial stability when the sole breadwinner is not around to meet the day-to-day expenditures of the family members.

How Income Protection Term Plans Function? If an individual opted for Income Protection Term Plan, it is imperative to understand how the plan works in order to avail its maximum benefits. We can cite an instance wherein if a policy holder is 30-years old and earning 10 lakh income per annum. If he chooses to buy the term plan till he attains the age of 70 (approximately 40 years tenure) and if some unforeseen incident happens to him in the first year, the term plan will ensure that the policyholder's family members receive a minimum amount based on his income plan ( let say 10 lakhs) every year till the date the policy matures.

Key Benefits Of Income Protection Term Plan: Below are the several benefits that the policy holder will be eligible to receive if he opts for the Income Protection Term plan:

Guaranteed Lifetime Income For Policy Holder's Family: The top feature of Income Protection Term plan is the assured and continuous income flow for the deceased's family members in the event of his/her untimely death. The nominee will get regular income payouts as long as they live in order to provide them a stable financial future. The strategy eliminates the pressure of a handling the large lump-sum that may lead to financial mismanagement. The plan offers steady income, just like the policyholder's monthly salary to offer long term financial stability to family members, stated Rhishabh Garg.

Inflation Adjusted Payments: The most striking feature of the Income Protection Term plan is that the income that the policy holder's family receive, it will not remain fixed. The payouts under the Income Protection Term plan will increase over the time to account for inflation. As inflation gradually brings down purchasing power of money, the money that might be adequate today, may fall short few years later. Income Protection Term plan seeks to address this aspect by adjusting the payouts with an annual 5% increase, capped at 1.5 times the original income payout.

Tax Free: Just like traditional term insurance plan, Income Protection Term plans offer dual tax benefits. Policyholders will be eligible to claim deductions on the premiums paid under section 80C of the Income Tax Act. Also, the income that the policy holder's family receive from Income Protection Term plan, it will also be tax-free.