Income Protection Insurance helps your family members in your absence.
We all work very hard in our career. Our aim is to reach new heights in our career, earn maximum money and save more for our family. But it is a matter to think about what will happen to your loved ones after you leave.
We all work very hard in our career. Our aim is to make our career (Career) Reach new heights, earn more money and do more for your family Savings (Savings) can do But it is a matter to think about what will happen to your loved ones after you leave. In such a situation, salary protection insurance will help you. (Salary Protection Insurance) will do. income protection insurance (Insurance) Also called. It is a financial tool, which helps your family members in your absence.
It is a term insurance policy, in which the regular income payout option is usually available with the payment of a lump sum amount. Under the policy, you will get the option at the time of purchase as to how you divide the total sum assured amount into regular income and lump sum amount.
However, the person who is thinking of buying this insurance must keep in mind that it is a term policy without any maturity benefit. The nominee created by the policyholder will get the Assured Death Benefit in lump sum on the death of the policyholder.
How does Salary Protection Insurance work?
If you are buying an income protection term insurance policy, then you have to choose the monthly income that you want your family members to get after your death at the time of purchase. It can be equal to or less than your current take home income.
Next, you have to choose the policy and premium payment term. For example, at the age of 30, you can buy a policy for 15 years for the regular premium paying term.
The insurance company will decide the percentage of increase in monthly income chosen by you. For example, the insurance company may offer an annual compound increase of 6 per cent on this income.
Let’s understand the calculation
Let’s assume that you have selected a monthly income of Rs 50,000. In the second year of the policy, your monthly income will increase to Rs 53,000 and then it will reach Rs 56,180 in the next year. After this, income will continue to increase in the same way.
Now let’s assume that the policyholder dies at the beginning of the fifth policy year. In such a situation, the nominee will get an amount of Rs 7.6 lakh as assured death benefit and an increased monthly income of Rs 63,124.
They will continue to get monthly income every year for the rest of the policy term. However, they have to take care of the terms and conditions of the insurance company.