• 15 SEP 2016

    Choose a payout option as per your family's needs

    Everyone knows that a life insurance policy provides a death benefit in the form of a Sum Assured, which is payable to the nominee of the Life Assured when he meets with an untimely demise during the policy period. But what most people are unaware and ignorant of is how to ensure that this death benefit is actually benefiting his family after his demise. But the question is how do you ensure this?

    Payout options

    If you judiciously decide about the payout option, you can ensure that your family gets the best advantage of the death benefit after your demise. Let us understand this with an example. You have bought a Term insurance plan like Edelweiss Tokio Life – MyLife+ with a Sum Assured of Rs.1 cr fr a policy term of 40 years. The plan has three payout options:

    • Fixed lump sum
    • Fixed monthly payout
    • A combination where one part is given in lump sum and the other in equal monthly instalments

    On what basis would you choose the payout option.

    Let us assume that you have a home loan going for a period of 20 more years. Let us also assume that your wife is a working woman who earns enough to pay a part of the home loan EMI's. In this situation, it is better that you select a combination payout. This way, the lumpsum amount can help to foreclose a part of the loan and reduce the EMI's and also take care of the funeral costs. The monthly payouts will help to take care of the daily maintenance expenses.

    Another example

    Let us take another example. Let's assume that you have a child who is approaching high school and you have a home loan which will run for another 5 odd years. In this scenario, it's better that you opt for a lump sum payout. This lump sum amount can settle your home loan as also give your spouse a decent corpus for meeting the education expenses of your child. This amount can be further re-invested by your spouse to maximise it.

    Decide with care

    This way, by making a simple assessment of your needs and the life stage that you are in, you can decide the best payout option; one that will hold your family in good stead in the uncertain future.


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