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3 Features of Term Insurance Which Makes a Nominee’s Life Easier

Jun 27, 2018 | 2 years ago | Read Time: 3 minutes | By CA Karan Batra

The sole purpose of getting a term insurance is to ensure that your loved ones don’t have to face financial troubles in your absence.

But did you know that apart from maturity amount, the term insurance also has added benefits that proves to be of great advantage to the nominee. These features supports your loved ones when they need it most.

Let’s have a look at these amazing features of term insurance that we tend to overlook but is actually very beneficial,

  1. Regular Income Payout Option
  2. Waiver of Premium Benefit
  3. Life Stage Adjustment Feature

1. Regular Income Payout Option    

This is an interesting feature of term insurance where, the policyholder can choose how the maturity amount will be disbursed to the nominee. It can be either a lumpsum amount, a monthly payout or a mix of both.

For instance, say you have an term insurance cover of Rs. 1 crore. Here, you can decide how this money will be received by your nominee. It can be in the following ways,

  • Complete Rs. 1 crore on maturity
  • 50,000 per month for 16.5 years
  • 50,00,000 as lumpsum amount and then Rs. 50,000 per month for the next 10 years.

It is a great option of the term insurance, especially if you are main bread earner of the family. It ensures that even in your absence the family gets a monthly income.

Also, if the nominee is not financially very sound, it might be difficult for them to manage a lumpsum amount. Even in this case, the Regular Income Payout Option could be great advantage.

2. Waiver of Premium Benefit

This is one of the most beneficial feature of term insurance.

If due to an accident or illness the policy holder gets disabled, needs a long hospitalization for treatment or becomes incapacitated, the premium for the rest of the policy term will be waived but the policy shall remain intact.

For instance, say Mr. Z took a term insurance policy for Rs. 1 crore cover with a tenure of 25 years. The premium is Rs. 10,000 p.a.

After 7 years he met with an unfortunate accident in which he lost his hand and hence declared permanently disabled.

In this case, the term insurance will waiver the premium payable after 7 years and the policy will remain intact.This amazing feature helps to take the burden off the shoulders of the policyholder and family in the extreme times of distress and need.

3. Life Stage Adjustment Feature

You might have taken a term policy while you were single or just got married. But with time as things change so does the need of term insurance cover. The amount you got covered would have been assessed keeping in mind the responsibilities at the moment, but with time you may have an evolved lifestyle which may require reassessment of the term insurance cover.

Thankfully, you can increase the sum insured of your policy depending upon your requirement. Some insurers give the option of revising the cover amount based on the life stage you are at. Generally there are three defined life stages, at the time of marriage, first child birth and second child birth.

It is not mandatory or restrictive that you can revise your cover amount at the aforementioned life stage only. You can assess your own life and find what is the most important stage of your life and accordingly revise the cover.

It can be starting a new business, or undertaking a new liability such as a loan. All these could increase the liability on your loved ones and hence you might want to increase your cover depending on it.

These are the three most beneficial features of the term insurance policy that make it an excellent choice to provide financial security for your family.

Along with it, some banks offer additional coverage for accidental death, critical illness, heart and cancer treatment etc.

While taking the term insurance cover, assess these additional covers also which might prove to be beneficial for you.


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