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Death benefit and additional terms in a coverage plan: Understand the intricacies

May 24, 2019
Insurance is a primary way that must be availed of in order to secure the future of your loved ones in your absence. These days, owing to the enhanced customer-focus and thrust on innovative market-approach, the insurance providers are continuously offering new and new plans with varied benefits. Therefore, as the well-wisher of your family and dependent relatives, it is extremely important that you take informed decisions based on knowledge of the market in alignment with your specific needs and requirements. As part of this, it is equally important for you to know about various insurance terms so that you know the exact features that you are going to purchase. Following are the various terms in a coverage plan that you must know about:
  1. Death benefit: This is the main sum assured i.e. the payable benefits to which the policy holder's nominee(s) are entitled in the event of the policy holder's demise during the policy term.
  2. Payable premiums: These are monthly, bi-annual, annual or one-time payments that have to be paid by the policy holder to the insurance provider in return for the purchased policy.
  3. Life Assured: Life insured is the person who is under the coverage of the insurance plan. In case of a traditional term insurance plan, mostly the life assured is the policy holder i.e. the person who pays the premiums. However, it may not always be the case. In case of a gifted policy (for instance, to a dependent spouse), the life insured may be the spouse while the person paying the premium is the husband/wife.
  4. Frequency of premium payment: This is the chosen or the decided frequency at which you are supposed to pay the premiums. This may be monthly, bi-annual or annual. Various insurance providers also provide the option of one-time lump-sum payment of the payable premiums in return for the accrued benefits.
  5. Policy term: This is the tenure of coverage i.e. the number of years for which the coverage is being sought under the plan. Once this term gets completed, the policy matures and the coverage ceases to exist.
  6. Maturity benefits: These are the monetary benefits for which the policy-holder is eligible in case she/he survives the policy term. A traditional life insurance policy entitles the policy holder to receive such benefits whereas a traditional term plan offers no such benefits, although certain plans do come with ROP i.e. the return of premium option at higher chargeable premium.
  7. Riders: These are the additional optional benefits that can be chosen together with the main plan benefits. These riders are in the form of riders for critical illnesses, accidental disabilities etc. While choosing to buy a rider, you must make sure that it meets your specific requirement.

HDFC Life offers HDFC Life Click 2 Protect 3D Plus - an online term insurance plan that offers complete financial protection against the uncertainties of death, disability and disease.

ARN: EC/06/2017/9792

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