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What Is Staggered Payment Option Under Term Insurance Policy?

Staggered payment meaning - It is a payout option under term plan where the nominees receives a portion of the sum assured as a lump sum and the remaining in monthly or annual payments. Click here to know more.

  • 31,981 Views | Updated on: May 22, 2024

Term policies offer death benefit to the immediate family, but one thing that goes unnoticed is that not everyone is a pro at handling finances. When the family receives a lump sum amount as cover, the amount might be big and the family might not be good at handling finance. For such people, there is a staggered payment option.

In case you are wondering about what staggered payment is, we are here to help you understand the idea behind it and how you can opt for one.

What is Staggered Payment?

Staggered payment is an option under a term plan wherein the nominee(s) 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 payment option comes with two different choices:

Monthly income

Under this option, the remaining money after the lump sum payment is paid in monthly instalments. 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 increases the income by a certain percentage annually. This way, you can tackle the ever-rising expenses.

Things You Must Remember While Choosing 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. If the insurer’s family has to repay loans, the staggered payment option might not be the right choice. Taking a lump sum cover will be more helpful for your family.
  • You might not have any debts, but if you are for making sure a monthly income keeps flowing. For example, the school fees of your children require a fixed monthly income source. The staggered payment option is best for this purpose.
  • Staggered payment options are designed to keep the insurer’s family secure financially, and help them cope up with the loss. Not everyone is comfortable managing money and this might lead to a problem of overspending sometimes. In order to help family members, take care of the cover and keep them financially secure always, a staggered payment option can act as a boon in most cases.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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