Edelweiss Tokio Life has launched two life plans namely, Edelweiss Tokio Life Protection, Edelweiss Tokio Life Income Replacement.
These are term plans. So the plans only pay death cover or sum assured chosen by you to your beneficiary.
Protection is a simple term plan. In case of death during the term of the policy, the policy will pay the sum assured in lump sum to your beneficiary. On maturity, you get nothing back.
Income Replacement..!
Income Replacement is a tailor made plan which dresses the lump sum payment as monthly income. So, instead of choosing a lump sum death cover, you need to choose monthly payouts.
On death, the beneficiary will receive these monthly payouts till the end of the term or till a minimum of 5 years if the remaining policy term is less than 5 years.
Both term plans give a discount on premium if you choose a higher death cover or sum assured.
Under the Income Replacement plan, the monthly income increase by 5% every year. However, this increase is on a simple interest basis.
For instance, a monthly payout of Rs. 20,000 in year one will become Rs. 21,000 in year two and Rs. 22,000 in year three at 5% simple interest.
Interestingly the monthly payouts in case of death already factor in the 5% increase. For example, if the policyholder dies in the 3rd year, the policy will start on a monthly payout of Rs. 22,000. A 30 year old buying a sum assured of Rs. 50 lakh for 30 years will have to pay Rs. 6,815 as annual premium.
Premium..!
Premium of Income Replacement plan in comparison are cheaper. A quick calculation shows that a monthly income of Rs. 20,000 or a total sum assured of around Rs.1.24 crore (the monthly payout will increase by Rs.1,000 every year on 5% simple interest) is priced at Rs. 8,262 whereas Protection plan is priced at Rs. 14,260.
Income Replacement plan, however, promises monthly income payout only for the remaining years in the term. So if a policyholder, say, dies in the 20th year in the above example, the insurer will have to pay the entire sum assured of Rs. 1.24 crore. Under the Protection plan, the liability would be limited to about Rs. 53 lakh.
These are term plans. So the plans only pay death cover or sum assured chosen by you to your beneficiary.
Protection is a simple term plan. In case of death during the term of the policy, the policy will pay the sum assured in lump sum to your beneficiary. On maturity, you get nothing back.
Income Replacement..!
Income Replacement is a tailor made plan which dresses the lump sum payment as monthly income. So, instead of choosing a lump sum death cover, you need to choose monthly payouts.
On death, the beneficiary will receive these monthly payouts till the end of the term or till a minimum of 5 years if the remaining policy term is less than 5 years.
Both term plans give a discount on premium if you choose a higher death cover or sum assured.
Under the Income Replacement plan, the monthly income increase by 5% every year. However, this increase is on a simple interest basis.
For instance, a monthly payout of Rs. 20,000 in year one will become Rs. 21,000 in year two and Rs. 22,000 in year three at 5% simple interest.
Interestingly the monthly payouts in case of death already factor in the 5% increase. For example, if the policyholder dies in the 3rd year, the policy will start on a monthly payout of Rs. 22,000. A 30 year old buying a sum assured of Rs. 50 lakh for 30 years will have to pay Rs. 6,815 as annual premium.
Premium..!
Premium of Income Replacement plan in comparison are cheaper. A quick calculation shows that a monthly income of Rs. 20,000 or a total sum assured of around Rs.1.24 crore (the monthly payout will increase by Rs.1,000 every year on 5% simple interest) is priced at Rs. 8,262 whereas Protection plan is priced at Rs. 14,260.
Income Replacement plan, however, promises monthly income payout only for the remaining years in the term. So if a policyholder, say, dies in the 20th year in the above example, the insurer will have to pay the entire sum assured of Rs. 1.24 crore. Under the Protection plan, the liability would be limited to about Rs. 53 lakh.
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