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Kotak e-Term Plan is a pure term plan that provides a high level of protection to your loved ones in your absence.
The Kotak Health Shield Plan helps secure your finances in times of sudden medical expenses related to illness such as Cardiac, Liver, Neuro and Cancer (all early and major stages of illness /conditions of Cancer); along with offering protection for Personal Accident - in case of accidental death or disability.
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You buy a term insurance policy when you have certain responsibilities like providing for your family or paying off a home loan. And leaving behind a lump sum amount is a good way to secure your family financially without burdening them. But what should you do with an insurance policy when you have zero liabilities? Surrendering your policy is the most reasonable option. Read further to know if surrendering your term policy is the best option and if not, then why you should stick to it.
If you have no liabilities then paying hefty premiums may seem like a waste. The money paid towards premiums can be used for a better cause. But if you have a pure term insurance plan then the policy cannot be surrendered. Insurance policies with an investment or savings component are the only type of term plans which can be surrendered. So, if you are sure that there is no requirement of a death benefit then surrendering the policy should be the way to go.
Things to ensure before you stop your term insurance policy
What is ‘Surrender Value’?
Surrender Value is the money you receive on voluntary exit from your life insurance plan before the maturity date. Insurers pay the sum from the earnings on your premium portions allocated towards savings. Policies acquire surrender value after you pay the premiums for some time.
Term plans are pure protection plans without any savings component. Hence, regular term insurance policies usually have no surrender value.
However, Kotak Life limited-pay and single-pay e-term plans accrue surrender value after you pay the premium for a specified period. The amounts you get on surrendering such policies depend upon the premium paid and the remaining policy term. Surrender charges apply.
When you buy life insurance, you can exit the policy before the maturity period if you wish to. In return for exiting the policy, you get some amount of money which is the policy’s surrender value. Like previously mentioned, term plans need to have an investment or savings components like Unit-Linked Insurance Plan (ULIP) have a surrender value.
Every company has a set period after which you can surrender the plan and cannot be done immediately after buying the plan. The set period also depends on your policy term and the number of years you have completed after buying the policy. The amount received after surrendering the insurance plan attracts income tax and other charges if you have availed a loan against the policy.
1. Securing Your Family
Your family may be financially stable at the moment, capable of looking after themselves but tomorrow’s situation is still unknown. A financial need could arise at any time leading your family to become dependent to make ends meet. To secure the future for your spouse and children, receiving a death benefit would help them stabilize their financial condition.
2. Safeguarding Against Health Risks
There is always a chance of getting a critical illness which has no connection to heredity or lifestyle.Treatments for many critical illnesses can cost a lot which doesn’t go easy on any family. Choosing the right plan would aid in paying off the medical expenses and getting you the right therapy.
3. Paying Off Loans
You may not have any loans to your name but your spouse or children could end up taking one. The sum assured would make it easy for them to pay it off without burning their savings. This could also hold true if you were to take a loan due to an emergency but were unable to pay it completely. Your family would have to bear the financial burden of paying it off.
Alternatives to surrendering term insurance
1. Should I surrender my term insurance policy?
If you have no unpaid loans or financial dependents, you may not want to continue paying your term insurance premiums. But in future, needs for life insurance might resurface. If you want to keep your loved ones’ financial future secure for the long term, term insurance is essential.
2. Reasons to stick to your term insurance plan
Kotak e-Term Plan is a pure term insurance plan that provides a holistic life protection at affordable prices. Find out the eligibility criteria, key ...Know more
The Kotak Term Plan is a pure risk cover plan and an economical way of providing an adequate level of financial protection.Know more