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₹5 Lakh Term Insurance

A ₹5 Lakh term insurance plan provides a death benefit of ₹5 lakh to beneficiaries if the policyholder passes away during the term, offering financial protection and stability.

  • 1,431 Views | Updated on: May 02, 2024

While you strive to build a secure future for yourselves and your families, unexpected events can derail these plans. It is wise to have a backup financial plan so that your family can live comfortably, even when you are not around. The insurance market offers several term plans that provide financial security to the policyholders.

Key Takeaways

  • A ₹5 Lakh term insurance is essential for ensuring a family’s financial security in unforeseen circumstances, with affordability and comprehensive coverage.
  • A term plan offers savings on premiums under Section 80C and 80D of the Income Tax Act of 1961.
  • ₹5 Lakh term insurance also provides a safety net for family members in the unfortunate event of the policyholder’s demise.
  • Settling a claim for a term plan involves regular premium payments, and beneficiary notification in case of demise for the beneficiary to receive the sum assured.

Term insurance for ₹5 lakhs acts as a powerful shield, offering crucial financial protection to your loved ones in your absence. You must have comprehensive knowledge of a ₹5 lakh term insurance plan to provide better protection to your family members.

What is ₹5 lakh Term Insurance Plan?

A ₹5 lakh term insurance plan is a type of life insurance policy that provides a death benefit of ₹5 lakhs to the beneficiaries if the policyholder passes away during the term of the policy. It offers financial protection to the insured’s family or dependents by providing a lump sum amount in the event of the policyholder’s death, helping them cover expenses and maintain their standard of living. This type of term insurance plan typically offers affordable premiums, making it accessible to individuals seeking basic life insurance coverage.

Why Do You Need ₹5 Lakh Term Insurance?

Owning a ₹5 Lakh term insurance policy offers the dual advantage of life insurance and savings, serving as a convenient combination of both needs within a single plan. It eliminates the necessity and hassle of purchasing and maintaining separate policies. It provides security, ensuring that the policyholder’s family can maintain financial stability in the event of an unfortunate incident. Opting for a ₹5 Lakh term insurance plan means paying lower premiums compared to higher coverage policies, making it accessible to more individuals.

How Does a ₹5 Lakh Term Plan Work?

A term plan is a financial tool that helps bring economic stability to a policyholder’s life. However, if you are planning to buy a ₹5 Lakh term insurance plan, you must understand how it works so that you can avail yourself of the benefits it offers. Here is how a ₹5 Lakh term plan works:

What to Do?

  • The first step is to research and compare different insurers to find a plan that suits your needs and budget.
  • You will pay a fixed premium amount regularly, typically annually, semi-annually, quarterly, or monthly, depending on your chosen plan.
  • As long as you pay your premiums on time and within the grace period (if offered), your policy remains active.

What Happens in the Case of Demise?

  • If you pass away during the policy term, your beneficiary (the person designated to receive the death benefit) should notify the insurance company.
  • The beneficiary will need to submit the required documents, such as the death certificate, policy documents, and proof of beneficiary status.
  • Upon verifying the claim and ensuring all documents are in order, the insurance company will pay out ₹5 lakh (the sum assured) to your beneficiary.

Benefits of ₹5 Lakh Term Insurance?

Like any other term insurance plan, ₹5 Lakh term insurance plan also provides a number of benefits to the policyholders. Let us closely look at some of its benefits in detail:

Affordable Premiums

When buying any plan, affordability is more important than any other factor. Term insurance plans are known for their low and affordable premiums. Having an affordable premium enables you to pay the premiums and retain your financial health without any disruption. Term insurance ₹5 lakhs premium is not only affordable but also offers deductions on taxes.

Premium Payment Flexibility

Flexibility to pay premiums adds to the benefits offered by a term plan. As a moderate earner in society, you might not be able to pay the premium in full. ₹5 lakh term insurance offers the flexibility of premium payment as per your requirements. It allows you to pay premiums quarterly, half-yearly, and annually.

Customize Plans with Additional Benefits to Meet Unique Requirements

Every individual has different needs, and with term insurance plans, you can cater to those needs by customizing your plan. ₹5 lakh term insurance plan comes with the freedom to customize it as per your individual needs.

Maximize Tax Benefits under the Income Tax Act

Who does not like to save money? With a term insurance plan, you can easily save up to ₹1.5 lakhs per year on the premiums paid under Section 80C of the Income Tax Act, 1981. Section 80D of the Income Tax Act 1961 also allows tax deductions of up to ₹25,000 every year on health insurance premiums.

Ensure the Financial Security of your Family

Term insurance plans are essential for providing a security net to your family in your absence. They offer financial protection to your beneficiaries in case of your untimely demise. You can ensure their financial well-being by investing in a good term plan.

Steps to Buy ₹5 Lakh Term Insurance

When buying a term insurance plan for a significant sum like ₹5 lakhs, you should follow these essential steps:

Step 1. Research and compare different insurance providers and term insurance plans, evaluating coverage, premiums, features, and claim settlement ratio to find the best fit.

Step 2. Determine the appropriate coverage amount by assessing your financial needs and obligations.

Step 3. Obtain the application form for your chosen term insurance plan from the insurance provider’s website or through an agent.

Step 4. Depending on factors like age and health condition, you may need to undergo a medical examination as per the insurer’s policy.

Step 5. Submit necessary documents, including identity, address, income, and age proof, along with the application form.

Step 6. Pay the premium for your chosen term insurance plan, with options for annual, semi-annual, quarterly, or monthly payments.

Step 7. The insurer will review your application, medical reports (if needed), and documents to assess risk and determine insurability.

Step 8. Thoroughly review the policy document to ensure accuracy and alignment with agreed terms.

Wrapping Up

A ₹5 lakh term insurance plan offers essential financial protection to the policyholder’s loved ones in the event of an unforeseen tragedy. Its affordability, combined with comprehensive coverage, makes it a prudent choice for individuals seeking basic life insurance. Moreover, its dual benefit of providing both life insurance coverage and savings simplifies financial planning by consolidating these needs into a single, manageable plan.

Understanding the benefits of a ₹5 lakh term insurance plan empowers individuals to make informed decisions about securing their family’s future.

FAQs on ₹5 Lakh Term Insurance


1

What are the eligibility criteria to purchase a ₹5 lakh term insurance plan?

Eligibility criteria to purchase a ₹5 lakh term plan typically include age, health condition, and income stability.



2

What is the premium amount for a term plan offering coverage of ₹5 lakhs?

Premium amounts vary based on age, health, and insurer’s terms but are typically affordable for basic coverage.



3

What is the term duration of the ₹5 lakh Term Insurance?

Term duration for a ₹5 lakh term insurance is usually chosen by the policyholder, often ranging from 5 to 40 years.



4

What happens if I move to another country after purchasing ₹5 Lakh Term Insurance?

Moving abroad usually does not affect coverage, but inform your insurer of any necessary adjustments.



5

Can I avail of loans against my ₹5 Lakh Term Insurance policy?

Loans against term insurance policies are generally not available.



6

Can I convert my ₹5 Lakh Term Insurance into a pension plan upon retirement?

Conversion into a pension plan may not be possible; check with the insurer for options.



7

Is the premium for ₹5 Lakh Term Insurance fixed for the entire policy term?

Premiums may be fixed or subject to change based on insurer policies.



8

What happens if I want to increase my coverage amount midway through the policy term?

Increasing coverage might require a reassessment of eligibility and adjustment of premiums.



9

Can I purchase ₹5 Lakh term insurance for my children?

Some insurers offer child plans separately; inquire with them for details if you want to purchase a ₹5 lakh term insurance for your children.



10

Can I choose the frequency of premium payments with ₹5 Lakh Term Insurance?

Premium payment frequency options for a ₹5 lakh term insurance vary among insurers, including annual, semi-annual, or monthly payments.

- 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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