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What Is Staggered Payment Option Under Term Insurance Policy?

  • 12th Nov 2019
  • 717
What Is Staggered Payment Option Under Term Insurance Policy?

The death benefit received from a term policy can save the future of a family when the main bread earner passes away before time. However, it has been seen that some people find it hard to manage the lump sum received as cover, as it is often a big amount of money. The staggered payment option can be helpful in this case.

Read this article to know the staggered payment meaning before you decide whether to opt for it or not.

Staggered Payment Meaning

Staggered payment is an option under a term plan wherein the nominees receive a portion of the sum assured as a lump sum and the remaining money comes in form of monthly or annual payments. The duration of the payments varies from policy to policy. This way, the nominees do not have to worry about what to do with the lump sum, and they can plan their finances accordingly. The monthly payments make it easier to take care of the household expenses without much hassle.

Different staggered payment options

The staggered insurance payouts option comes with two different choices:

Monthly income

Under this option, the remaining money after the lump sum payment is paid in monthly installments. The payment amount is fixed and it is paid for a pre-determined period.

Increasing monthly income

If you are worried about inflation, this option will surely ease your mind. When you opt for the increasing monthly income option, the insurance company increases the income by a certain percentage annually. This way, you can tackle the ever-rising expenses.

Things you must remember when choosing the staggered payment option

You must opt for the staggered payment option if:

  • You are not sure that your family can handle a huge amount of money at once. The death of a loved one family can repay your loans, the staggered payment option might not work for you. Taking a lump sum cover will be more helpful for your family.
  • You do not have any debts.However, if you are buying a term insurance plan to make sure that your monthly payment. For example, the education of your children requires a fixed monthly income source. The staggered payment option is best for this purpose.
  • You are focusing on the future life goals.Every family has certain financial goals and some of these can only be met with regular monthly payment. For example, the education of your children requires a fixed monthly income source. The staggered payment option is best for this purpose.

When you are getting your term insurance online, be careful about finding the right options on the online form. If you want to take the staggered payment option, do not forget to specify that on the form. Make sure that your family does not have to go through much trouble when making a death claim.

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