What is the Death Benefit of a Super Income Plan?
- Posted on: 23 January 2023
- 351 Views
- 5 min read
A family will benefit from the Super Income Plan’s death benefit after the policyholder has passed away. The beneficiary or nominee will receive a guaranteed amount as the death benefit. A Super Income Plan is eligible for tax benefits under the legislation established by the Indian government. The Super Income and maturity benefits are other significant benefits of the Super Income Plan.
Did you know that most life insurance plans have a death benefit?
Super Income Plan (SIP) is an investment opportunity through which an individual can earn an assured benefit during the plan's tenure. The death benefit is one of the features of the policy that ensures the investor's family gets the most from the plan. In case of an unfortunate demise, the nominee or beneficiary is entitled to receive the benefit and claim other perks applicable.
Shriram Life Super Income plan ensures that even after the policy holder passes away, the family will benefit from the policy before it is terminated. The flexible tenure of the SIP can help an investor plan according to their investment goals and dreams. Additional rider covers on the Super Income Plan can be purchased for a nominal rate to enhance the features of the policy.
What is the Death Benefit?
The death benefit is available with most life insurance plans. A death benefit is included in a policy to cover the loved ones if the policy holder is met with an unfortunate demise. A nominee or beneficiary can claim the death benefit upon producing the death certificate of the policy holder. Deciding and registering the details of a nominee is essential while applying for a policy.
According to the purpose of the policy, the death benefit will change. If the policy holder passes away during the policy term, provided all premiums are paid, the death sum assured will be paid to the nominee. The death benefit can be received in three ways: income payouts, lump sum payout or 50% as a lump sum and 50% as regular payouts.
How is the Death Benefit Calculated in a Super Income Plan?
In a Super Income Plan, the death benefit is defined as 10 times the annualised premium or 105% of all premiums paid until death. This means that if the policy holder invested Rs. 1 lakh per year, in the event of demise, the nominee or beneficiary will receive approximately Rs. 10 lakhs. Let us further understand this with an example:
Mr. Jayan Vishwakumar, who is 35 years old, has invested in a Super Income Plan and is paying Rs. 30,000 as the annualised premiums. Suppose Mr. Vishwakumar suffers a sudden demise during the premium payment term of the Super Income Plan. In this case, the death sum assured will be paid to the nominee or beneficiary and the policy will be terminated. The death sum assured is defined as 10 times the annualised premium or 105% of all premiums paid till policy holder’s demise, whichever is higher.
If it is considered to be 10 times the annualised premium, the nominee or beneficiary can calculate the amount like this (assuming all premiums have been paid):
Annualised premium amount x 10 = Death sum assured
Rs. 30,000 x 10 = Rs. 3,00,000
This means that the nominee or beneficiary will get approximately Rs. 3 lakhs after the policy holder's demise.
The policy holder’s family is covered in this way, making it an attractive investment option for those worried about the future.
What are the other benefits available with a Super Income Plan?
- Loan facility
A policy loan can be arranged using the surrender value if an investor needs extra funds in the near future. Only loans smaller than the plan's value are available to policy holders. The annual loan rate on the debt is about 9%, compounded every half year. The maximum amount permitted for a loan taken out throughout premium payments is 80% of the surrender value. The loan amount must be less than 60% of the surrender value if it is taken out after paying the premium.
- Tax benefits
According to the current tax legislation, tax benefits are available for the Super Income Plan. Section 80C of the Income Tax Act of 1961 permits tax deductions on the premiums paid during the policy's tenure. Tax benefits are subject to change according to the tax laws. It is wise to stay updated with the latest information before investing.
- Super Income Benefit:
Consider a scenario where the policyholder lives until the end of the period for paying premiums. The Super Income Benefit will be paid from the end of the premium payment period until the policy's expiration at a set monthly amount. Multiplying the annualised premium, Super Income Benefit factor and relevant percent for higher premiums yields the SIP Benefit.
- Maturity Benefit:
The "Guaranteed Maturity Sum" will be paid and the policy will be terminated if the life assured survives to the conclusion of the policy. The maturity benefit is defined as 5 times the annualised premium.
How will the Super Income Plan be good for you?
The Super Income Plan is a unique investment option with benefits that cover the investor and their family. The super income benefit, maturity benefit and death benefit are the main advantages that make the policy attractive. Besides these benefits, there are also rider covers that can enhance the benefits of your insurance.
Invest in a Shriram Life Super Income Plan to get the best benefits and add-ons to help you rest easy and plan for the retirement. A loan can be claimed against the Super Income Plan to access emergency funds for a short term.
1. What is the death benefit of SIP?
The death benefit of a Super Income Plan is a guaranteed bonus given to the nominee or beneficiary in the event the policy holder suffers an unfortunate demise.
2.Who benefits from the death benefit?
The policy holder's family is entitled to get the death benefit if the policy holder passes away. In this way, the family will be protected from any sudden expenses.
3.How is death benefit calculated in the Super Income Plan?
The death benefit is 10 times the annualised premiums or 105% of the premiums paid until the day of death.
- The Super Income Plan death benefit will be helpful to a family after the policy holder has passed away.
- The death benefit has a guaranteed sum that will be given to a nominee or beneficiary.
- Tax benefits are available for a Super Income Plan according to the laws prescribed by the Government of India.
- Super Income and maturity benefits are also significant advantages of the Super Income Plan.