Today’s youth are much more ‘woke’ than their parents and older family members. They have social and political consciousness, are self-aware, and are more open to learning. So no wonder when the COVID-19 pandemic began, a lot of young Indians, more than 82% in fact, took little to no time to reshape their beliefs on life insurance or term insurance. Now, several believe that life insurance is essential to secure them in the face of a crisis. Once you figure this golden rule beforehand, all that remains is to get a plan that suits your lifestyle and needs. But the buying bit is where it can get tricky, and questions about whether you should invest in a market-linked plan or a non-linked plan can arise.
Now, as vital it is to diversify your financial investments with both kinds of plans, knowing how volatile the current scenario is, it is wise to have at least one non-linked plan that gives you fixed and guaranteed returns.
What are regular income plans? How do they work?
Generally, life insurance plans give the breadwinner’s (called the insured or policyholder in insurance lingo) family a lump-sum payout in case of his/ her death. While this can seem like a boon at the start, it can soon turn into a bane if a family prefers managing their expenses through monthly incomes and does not know how to manage a huge lump-sum amount. To ease the stress of money management, regular income plans can be of immense help. These are life insurance plans that give a fixed and guaranteed income throughout the tenure of the insurance policy along with life insurance protection. This means that the family members of an insured not only receive a death benefit payout in case of the insured’s death but also receive regular periodic payments from a year after paying the premium for the plan. Under such plans, one can secure their family even during their lifetime. This is a great financial resource for those who wish to secure their loved ones in their presence and absence.
What are the premium payment and payout options in regular income plans?
Paying the premium of a regular income plan is very flexible and convenient for the policyholder. For instance, policyholders have the option to choose between monthly, quarterly, half-yearly or yearly terms for paying premiums. They also have the liberty to choose premium paying terms ranging between 5, 8, 10 and 12 years. Moreover, they can even decide when and which type of regular income returns they want to receive. One is where they will receive the same amount of guaranteed income every month. The other is where they will receive a guaranteed income that increases at a fixed percentage every year.
Who should opt for a regular income plan?
A regular income plan is best for those who are averse to taking market risks and want to ensure a fixed stream of income. Such a plan helps one avoid the chances of losses and stay safe from the effects of inflation as well. This is all the more essential in today’s COVID-19 stricken times. Moreover, policyholders get the added benefits of choosing to add extra riders. These riders cover demises and injuries caused due to critical illnesses and accidents and waive the payment of premiums in such situations and until the policyholder is fit to pay them again.
Those who want to ensure that their loved ones remain secure at all times should go for the regular income plan. By guaranteeing payment during the breadwinner’s presence and absence, a family can get round-the-clock protection. Furthermore, apart from receiving a death benefit payout in unfortunate cases of the policyholder’s death, families also receive a maturity benefit in case the policyholder survives the term of the regular income plan, so one doesn’t have to lose the effort of their invested income. So in all ways, this plan is a win-win!
To sum it up:
It is better to start small and early with a regular income plan than procrastinate. Let the magic of compounding work wonders for you.
As business tycoon Warren Buffett once said, “Someone’s sitting in the shade today because someone planted a tree a long time ago.”
Let yourself be the one to plant that tree of security. And let your loved ones receive the shade of financial freedom irrespective of what is going on in the world.
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