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₹20 Lakhs Term Insurance

A ₹20 Lakhs term insurance plan provides substantial financial protection to beneficiaries in the event of the insured's demise, offering peace of mind at an affordable premium.

  • 4,982 Views
  • Updated on: Jul 01, 2024
Buy 20 Lakh Term Plan

In the world of financial planning, securing the future of loved ones is paramount. One of the most effective ways to provide this security is through term insurance, a type of life insurance policy that offers a substantial death benefit at an affordable premium.

Key Takeaways

  • ₹20 Lakhs term insurance offers significant coverage for beneficiaries in case of the insured’s death.
  • It provides financial security at an affordable premium, ensuring peace of mind for policyholders.
  • The coverage amount can help cover expenses like outstanding debts, mortgage payments, and education costs.
  • It serves as an income replacement tool, supporting dependents in the absence of the primary earner.

Among the various coverage options available, a ₹20 Lakhs term insurance plan stands out as a popular choice due to its significant coverage amount and affordability.

What is ₹20 lakh Term Insurance?

A ₹20 lakh term insurance policy offers a death benefit of 20 lakh INR to the designated beneficiaries if the insured passes away during the policy term. The term duration can vary, typically ranging from 10 to 40 years, depending on the insurer and the policyholder’s preference. This coverage amount is chosen based on the insured’s financial obligations, such as outstanding loans, education expenses for dependents, and income replacement for the family.

How Does ₹20 Lakh Term Insurance Plan Work?

A ₹20 lakh term insurance plan offers coverage of ₹20 lakhs in the event of the insured’s death during the policy term. Here are some key features of such a plan:

Purchase the Policy

To initiate a ₹20 lakh term insurance plan, you need to apply for coverage with an insurance company. The insurer will assess factors such as your age, health status, lifestyle habits, and financial situation to determine your eligibility and premium rate.

Pay Premiums

Once your application is approved, you will need to pay regular premiums to keep the policy active. Premiums can typically be paid monthly, quarterly, semi-annually, or annually, depending on your preference.

Stay Covered

As long as you continue to pay your premiums on time, your ₹20 lakh term insurance plan remains in force, providing coverage for the specified term duration.

Benefit Payout

In the unfortunate event of your demise during the policy term, your beneficiaries will be entitled to receive the death benefit of ₹20 lakh from the insurance company. They can use this lump sum payout to meet their financial needs and maintain their standard of living.

How to Calculate ₹20 lakh Term Insurance Premium?

The term insurance calculator offers user-friendly functionality, aiding in the estimation of appropriate life insurance coverage. Its outcomes rely on key information inputted by the user, including:

Age

Your current age as per recognized documents like Aadhaar or PAN card.

Desired Retirement Age

Tailored to individual preferences, considering factors such as career goals and lifestyle choices.

Existing Life Cover

Assists in determining the additional coverage required if there’s an existing term or traditional life insurance plan.

Annual Income

Utilizing this data, the calculator gauges the financial needs of dependents in the event of the policyholder’s demise.

Existing Loan Details

Provides insights into current liabilities, including home loans and other EMIs.

Current Savings

Accounts for existing savings, impacting the financial security of dependents.

Using the provided information, the calculator generates:

Insurance Cover

An estimate of the total or additional life insurance coverage needed, factoring in income, liabilities, age, and retirement plans.

Benefits of Buying ₹20 Lakhs Term Insurance Premium?

Term insurance serves as a crucial financial tool, offering protection and peace of mind to individuals and their families. Opting for a ₹20 lakhs term insurance premium brings forth several advantages that cater to diverse financial needs and priorities.

Affordable Premiums

One of the primary benefits of purchasing a ₹20 lakhs term insurance premium is its affordability. Despite providing substantial coverage, term insurance plans typically come with affordable premiums.

Premium Payment Flexibility

Term insurance plans often offer flexibility in premium payment options. Policyholders can choose from monthly, quarterly, semi-annual, or annual premium payment frequencies, depending on their convenience and financial capability.

Enhance your plans by Choosing the Add-ons that Best Suit your Requirements

Another significant benefit of ₹20 lakhs term insurance premiums is the ability to enhance coverage by opting for add-ons or riders. These add-ons provide additional protection and customization options tailored to specific needs and circumstances.

Get Tax Benefits Under the Income Tax Act

Investing in a ₹20 lakhs term insurance premium offers tax benefits under the Income Tax Act of 1961. Premiums paid towards term insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act, reducing the policyholder’s taxable income by the premium amount.

Secure the Financial Future of Your Loved Ones

Perhaps the most significant benefit of purchasing a ₹20 lakhs term insurance premium is the assurance of securing the financial future of your loved ones. In the unfortunate event of the policyholder’s demise during the policy term, the sum assured of ₹20 lakhs provides a crucial safety net for the family.

Features of ₹20 Lakh Term Life Insurance Policy

A 20 lakh term life insurance policy is a valuable financial tool that provides essential protection for individuals and their families. Understanding its features is crucial for making informed decisions when selecting a policy.

Death Benefits

The primary feature of a ₹20 lakh term life insurance policy is its death benefit. In the event of the insured’s demise during the policy term, the beneficiaries are entitled to receive the sum assured of 20 lakhs from the insurance company.

Surrender Benefit

Some ₹20 lakh term life insurance policies may offer a surrender benefit, allowing policyholders to surrender their policy before maturity in exchange for a cash value. While surrendering a policy means forfeiting the death benefit, policyholders can receive a portion of the premiums paid, providing a financial cushion in times of need.

Additional Riders

Another feature of ₹20 lakh term life insurance policies is the option to enhance coverage through additional riders or endorsements. These riders provide policyholders with the flexibility to customize their coverage based on their specific needs and circumstances. Common riders include critical illness riders, accidental death benefit riders, waiver of premium riders, and income benefit riders.

Loans

Some ₹20 lakh term life insurance policies may allow policyholders to avail of loans against the policy’s cash value. This feature provides policyholders with access to liquidity during times of financial need, such as medical emergencies or educational expenses.

Points to Consider When Investing in a 20 Lakhs Term Plan?

Investing in a 20 lakhs term plan requires careful consideration of various factors. From premiums to claim settlement ratio and add-ons, several key points should be evaluated before selecting the right plan.

Premiums

One of the primary considerations when investing in a 20 lakhs term plan is the premium amount. Premiums vary between insurance companies and are influenced by factors such as age, health status, lifestyle habits, and the chosen sum assured. It’s essential to assess whether the premium amount fits within your budget and is sustainable over the long term.

Claim Settlement Ratio

The claim settlement ratio (CSR) is a crucial indicator of an insurer’s reliability and trustworthiness. It represents the percentage of claims settled by the insurance company against the total number of claims received in a financial year. A higher CSR indicates that the insurer has a good track record of settling claims promptly and fairly, providing reassurance to policyholders and their beneficiaries.

Add-ons

Many ₹20 lakhs term plans offer additional riders or add-ons that can enhance the coverage provided by the base policy. These riders allow policyholders to customize their coverage based on their specific needs and circumstances. Common add-ons include critical illness rider, accidental death benefit rider, waiver of premium rider, and income benefit rider.

Who Should Opt for ₹20 Lakh Term Insurance Plan?

Term insurance is a vital component of financial planning, offering financial protection to individuals and their families in the event of unexpected tragedies. A 20 lakh term insurance plan provides a substantial coverage amount, but determining if it’s the right choice requires considering various factors.

Young Professionals and Breadwinners

Young professionals who are the primary breadwinners of their families should consider opting for a ₹20 lakh term insurance plan. Since they are likely to have dependents who rely on their income for financial support, having adequate life insurance coverage is crucial.

Married Individuals with Dependents

Married individuals with dependents, such as spouses and children, should also consider investing in a ₹20 lakh term insurance plan. The death benefit provided by the policy can offer a financial safety net to the surviving family members, allowing them to maintain their standard of living and pursue their goals even after the insured’s demise.

Individuals with Outstanding Loans

Individuals with outstanding loans, such as home loans or personal loans, should seriously consider opting for a ₹20 lakh term insurance plan. In the event of the insured’s death, the death benefit can be used to repay these debts, preventing the burden from falling on the family members.

Self-Employed Individuals and Entrepreneurs

Self-employed individuals and entrepreneurs often have fluctuating income streams and may not have access to employer-sponsored life insurance plans. Opting for a ₹20 lakh term insurance plan can provide them with the necessary coverage to protect their businesses and provide financial security to their families.

Those Seeking Affordable Coverage

Lastly, individuals seeking affordable life insurance coverage without compromising on the sum assured should consider opting for a ₹20 lakh term insurance plan. Term insurance is known for its affordability, allowing individuals to secure significant coverage at a relatively low cost.

Why Should You Buy 20 Lakh Term Insurance?

While the coverage amount varies based on individual needs, a 20 lakh term insurance policy offers substantial benefits and serves as a prudent investment for many individuals.

Financial Protection for Your Family

The primary reason to invest in term insurance is to provide financial security to your family in case of your untimely demise. A ₹20 lakh term insurance policy offers a substantial death benefit, ensuring that your loved ones can maintain their standard of living and meet their financial obligations even after you’re no longer there to provide for them.

Adequate Coverage at an Affordable Cost

One of the key advantages of a ₹20 lakh term insurance policy is that it provides significant coverage at a relatively low cost. Term insurance is known for its affordability, allowing you to secure a substantial sum assured without breaking the bank. This makes it accessible to a wide range of individuals, including young professionals and families with limited budgets.

Replacement of Lost Income

In the event of your demise, your family may struggle to replace your lost income, especially if you were the primary breadwinner. A ₹20 lakh term insurance policy can help bridge this gap by providing a lump sum payout to your beneficiaries. This money can be used to cover essential expenses such as mortgage payments, school fees, and daily living costs, ensuring that your family’s financial needs are taken care of.

Repayment of Outstanding Debts

If you have outstanding debts such as home loans, car loans, or personal loans, a 20 lakh term insurance policy can help ensure that these debts are repaid in your absence. The death benefit can be used to settle outstanding balances, relieving your family from the burden of debt and providing them with a fresh start.

Peace of Mind

Investing in a ₹20 lakh term insurance policy provides you with peace of mind knowing that your loved ones will be taken care of financially, even if you’re no longer around. It offers reassurance that your family’s future is secure, allowing you to focus on living life to the fullest without worrying about what would happen to them in your absence.

Tax Benefits

Premiums paid towards a ₹20 lakh term insurance policy are eligible for tax deductions under Section 80C of the Income Tax Act. Additionally, the death benefit received by your beneficiaries is tax-free under Section 10(10D), ensuring that they receive the full amount without any tax deductions.

Conclusion

₹20 lakhs term insurance provides substantial coverage and financial protection to policyholders and their families. By understanding its features, benefits, and considerations, individuals can make informed decisions to secure their loved ones’ financial futures.

FAQs on 20 Lakh Term Insurance

1

What are the eligibility criteria to purchase a ₹20 lakh term plan?

Eligibility criteria typically include age, health status, and lifestyle habits. Applicants should usually be within a certain age range, generally between 18 and 65 years old. They should also undergo a medical evaluation to assess their health condition.

2

What is the premium amount for a term plan offering coverage of ₹20 lakhs?

The premium amount for a ₹20 lakh term plan varies based on factors such as the policyholder’s age, health status, lifestyle habits, and chosen policy term. Generally, younger individuals and non-smokers may pay lower premiums compared to older individuals or smokers.

3

What happens if I survive the policy tenure?

If you survive the policy tenure of a term plan, the coverage typically expires, and no benefits are payable. However, some policies may offer maturity benefits or return of premium options, depending on the terms and conditions specified in the policy document.

4

How can I purchase a ₹20 lakh term plan?

You can purchase a ₹20 lakh term plan by contacting insurance companies directly, visiting their websites, or consulting with insurance agents or brokers. The application process usually involves filling out a form, undergoing a medical examination, and providing necessary documentation.

5

Do premiums for ₹20 Year Term Life Insurance differ from person to person?

Yes, premiums for ₹20 year term life insurance can differ from person to person based on individual factors such as age, gender, health status, occupation, and lifestyle habits. Individuals with higher risks may be charged higher premiums compared to those with lower risks.

6

Can a ₹20 Year Term Life Insurance policyholder cancel the policy?

Yes, a policyholder can usually cancel a 20-year term life insurance policy at any time by submitting a written request to the insurance company. However, cancellation may result in the loss of coverage and potential forfeiture of premiums paid, depending on the terms of the policy.

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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The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.

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