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A life insurance payout will give much-required financial security if you lose a partner or spouse. If you are a beneficiary, you could use the amount to pay for funeral costs, to pay bills, for covering the child care cost, or for their higher education. The choice is yours. So, to fulfill your life goals, you receive the life insurance payout. There are several options available when it comes to life insurance payouts. It is very important to understand these options so that you can select the right one as per your requirements.
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A Payout is a death benefit provided to beneficiaries or dependents of a term plan when the policyholder dies. At the time of signing up for the policy, the policyholder has to decide how the death benefits will be paid out. The decision of selecting a payout option should be based on financial understanding, financial liabilities of your family, and any other objectives,
Typically, the life insurance plans offer two types of payout options to the life assured or the nominee/beneficiary. If the policyholder passes away before the completion of the policy tenure, the insurer pays the death benefit equivalent to the sum assured to the nominee. If in case the life assured has outlived the policy term, the insurance companies pay the maturity benefit along with the bonus.
The payout received by the nominee in the form of a death benefit is generally pre-determined. The amount received by the policyholder varies based on the policy type you avail, its T&Cs, and its returns in case of maturity benefit.
This option is the most popular one as it involves receiving the death benefits on a go. In case the life assured dies in an unfortunate event, the insurance company pays a lump sum amount equivalent to the sum assured to the beneficiary/nominee of the policyholder.
In this, the sum assured amount as maturity or death benefits are paid out to the life assured or their nominee/beneficiary in a form of a single payment. This lump sum payout might also include bonuses and loyalty additions. Single payments make sure that the policyholder or his/her nominee receives a substantial amount of money in one transaction so that they can select to invest in other instruments or use it for fulfilling some sizable expenses such as repayment of debts, college fees, housing loans or down payments.
In periodic life insurance payouts, one part of the benefits is payable as a lump sum amount, while the remaining benefits might be converted to installments or annuities. These are paid by the insurance company over the term of a pre-determined period. In this manner, the policyholder enjoys a steady flow of income that can help meet the periodic payouts (regular) expenses such as utility bills, rent, or EMI payments included in the repayment of a loan.
The main step in receiving a life insurance payout is to file a request for a claim with the insurer. This can be done in 3 ways:
a claim online on the company’s website or using a mobile application
Contact the insurance company over the cell phone and file your claim
Visit the companies nearest branch office and then submit a written application along with the claim form.
Different insurers offer different options of payout. Choose wisely as per your required. Let’s discuss three insurers: ICICI Payout Term insurance, PNB Payout term insurance, and Max Life for your smooth understanding of payout options.
| Insurance Companies | Payout Options |
| ICICI Life Insurance |
|
| Axis Max Life Insurance |
|
| PNB Life Insurance |
|
| Bharti AXA |
|
| Kotak Mahindra |
|
| Bajaj Allianz |
|
| Edelweiss Tokio |
|
| Future Generalli |
|
| Exide Life |
|
| IndiaFirst Life Insurance |
|
| Star Union Daichi |
|
| LIC of India |
|
| Aditya Birla |
|
| Aegon Life | Lump-sum death benefit |
| Sahara Life Insurance | Lump-Sum death benefit |
| Canara HSBC OBC Life Insurance | |
| Aviva Life Insurance |
|
| Shriram Life Insurance |
50 percent of the death benefit as lump sum and rest 50 percent as regular payouts |
| SBI Life Insurance |
|
| Tata AIA Life Insurance |
|
| HDFC Life Insurance |
|
| IDBI Federal Life Insurance | N/A |
*All savings are provided by the insurer as per the IRDAI approved insurance plan. Standard T&C Apply
“Tax benefit is subject to changes in tax laws. Standard T&C apply.”
Note: Know what is term insurance first and then buy a term plan for your loved ones.
Term insurance investment provides you and your family with a financial security net which is much-needed during critical times. Term insurance policies could provide financial protection in case of an unfortunate event. Term insurance premium calculator is available online and is free of cost, using which one can calculate the estimated premium required to pay based on the desired sum assured. Above, we have discussed the payout insurance by different insurers such as ICICI Payout Term insurance, PNB Payout term insurance, Max Life, and others.
Disclaimer: Policybazaar does not endorse, rate, or recommend any particular insurer or insurance product offered by an insurer.
Note: Check out the best term insurance plan in India and choose one that suits your requirements.
†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
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