Edelweiss Tokio life insurance has launched 2 new term plans recently – Life Protection and Income Replacement Plan. Let us see inside of both these plans.
Life Protection Plan: This is a pure term plan. The nominee gets the S.A. on the death of the life insured. There are no survival benefits on maturity. The protection plan helps the family maintain the same standard of living in case of an unfortunate death of the chief earning member of the family. The cost of protection reduces for higher sum assured. You can also avail lower rates for leading a healthy life style. E.g.: Non- consumption of Tobacco. You can choose to pay the premium for a limited period while you enjoy the protection cover for a longer period.
Please note that it is NOT a online term insurance plan, where the company reduces the mortality charges as there is no involvement of agent or other sales team. So, here you've to pay higher premium as compared to other online term insurance plans from Bharti-AXA Life or ICICI Prudential life.
You've to buy this plan from the company insurance agent.
Income Replacement Plan: This is one of the different term insurance plan. Generally, in term insurance plans, on the death of the life insured, the family get full S.A. and they are free to invest this amount as per their need. But here, on the death of life insured, the family will not get complete S.A. Infact, the company will pay a monthly amount to the nominee as decided by the life insured. Monthly benefit increases by 5% every year to mitigate the inflation effects. There are no other benefits on maturity.
Monthly benefit will be provided for minimum of 5 years even if the remaining Policy Term is less than 5 years.
I do not find this plan so attractive as the purpose of the term insurance plan is to cover risk. Replacement of monthly income for some years is good but what after that?
E.g., if the life insured has taken a term plan for 20 years and he died after 14 years, the company will pay monthly amount for the next 6 years and there are no maturity benefits. How will this family survive after 6 years?
I suggest to take online term insurance plans from other companies where the premium rates are very attractive and on unfortunate death of life insured, the nominee gets the complete S.A. and they are free to invest that amount in FD, Gold, PPF etc. as per their need and risk appetite.