Your family will always be your first priority. It is only natural that you would want to provide them with the best of things in life. However, you can never be certain that they can maintain the same lifestyle or be financially secure when you are not around. You would, therefore, do well to plan ahead to ensure that you protect your family against unforeseen circumstances. One of the ways to safeguard your family against financial vicissitudes is opting for a term insurance plan such as Kotak Preferred Term Plan. A pure risk cover plan which provides special premium rates to non-tobacco users and women, Kotak Preferred Term Plan is a non-unit linked non-participating protection plan. In the event of the death of the life insured during the term, the nominee would receive the death benefit.
Kotak Preferred Term Plan offers high protection at a nominal cost. Customers can choose from two death benefit payout options, namely, immediate payout and recurring payout. Policyholders can also opt to increase or decrease their cover during the policy term by exercising the ‘step up/step down’ option. Kotak Preferred Term Plan offers preferential rates for female lives and non-tobacco users. Customers can also avail of flexible premium payment options and opt for additional protection courtesy critical illness benefit rider. Policyholders can enjoy tax benefits on premiums under 80(C) and benefit under 10(10D) of the IT act.
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Features of Kotak Preferred Term Plan:
- The minimum entry age is 18 years while the maximum entry age is 65 years. The maximum maturity age is 75 years.
- The minimum policy term is 5 years while the maximum policy term is 40 years.
- Policy and premium payment term: Regular Pay - equal to policy term; Limited pay - 5 pay for policy term 10 to 40 years, 7 pay for policy term 12 to 40 years and 10 pay for policy term 15 to 40 years. Single Pay: Single payment
- Premium payment option: Regular, limited and single pay
- The minimum sum assured is Rs. 25,00,000 while there is no limit to maximum.
- For a Sum Assured of Rs. 25 Lakhs, the Recurring Payout for Regular Pay (5 year term), Single Pay (5 year term) and 10 year Limited Pay (15 year term) is Rs. 3,700, Rs. 10,375 and Rs. 3,775 respectively. For a minimum premium based on a Sum Assured of Rs. 25 Lakhs, immediate Payout for Regular Pay (5 year term), Single Pay (5 year term), and 10 year Limited Pay (15 year term) is Rs. 4,075, Rs. 11,700 and Rs. 4,225 respectively. There is no limit on maximum premium which will depend on the maximum basic sum assured, subject to underwriting.
- The premium can be paid on a yearly, half-yearly, quarterly and monthly basis.
- Modal factor: The modal loading used to calculate the premium instalment is 100% (yearly), 51% (half yearly), 26% (quarterly) and 8.8% (monthly).
Benefits of Kotak Preferred Term Plan:
- Step-Up Option: Customers can avail of this option at the time of buying the policy. This option provides additional cover at some stages of life. Customers can increase their basic sum assured sans further medical examination. The increase in the basic sum assured, however, depends on the event and is payable according to the chosen plan option. If you choose to increase your basic sum assured for marriage and buying a house after commencement of the policy, the maximum increase can be up to 50% of your basic sum assured. If the event is birth or legal adoption of a child, the maximum increase can be up to 25% of the basic sum assured. The aforementioned options can be exercised within one year from the date of the event. However, an additional premium will be charged for an increase in basic sum assured. This option is available for a nominal fee (upto 15 years- 3%; above 15 years- 5%) which will be charged at the end of 45 years or the end of policy term, whichever is earlier. However, this is available for regular premium payment option only.
- Step Down option: You can also scale down your basic sum assured, if need be, subject to the minimum cover available under this plan. Your premium will be recalculated based on your revised sum assured. A step down request will incur a charge of Rs. 500.
- Death Benefit: In the event of the death of the life insured, the nominee can exercise two options, namely, immediate payout and recurring payout. As per immediate payout option, the sum assured on death, will be paid immediately, following which, the policy will terminate. As per the recurring payout option, 10% of the sum assured will be paid at the time of claims settlement while 6% of the sum assured will be paid every year for 15 years (monthly payment will be 8.22% of the annual payment). The first payment will start one month after the death of the life insured. However, if the nominee wants a lump sum instead of regular payouts, a discounted value of the outstanding regular payouts will be paid (3% p.a compounded yearly).
- Payment options: This plan offers single, limited and regular pay options. If you opt for limited or regular premium payment, you can pay your premiums on an annually, half yearly, quarterly or monthly basis.
- Kotak Critical Illness Benefit (CIB): A portion of the basic sum assured is paid in advance upon diagnosis of the listed critical ailments.
- Tax benefits: Customers can avail of tax benefits under section 80C and 10(10D) of IT Act, 1961 subject to terms and conditions. Tax benefits are subject to change.
Ajit Devulapalli, a 30-year-old IT employee, opts for Kotak preferred term insurance plan for a sum assured of Rs. 1 crore for 30 years. Devulapalli is a non-smoker and married with two children. He opts for a regular payment term and a recurring payout. He pays an annual premium of around Rs. 11,000. In the event of his unfortunate death, his nominee will immediately get 10% of the sum assured, i.e, Rs. 10,00,000. Subsequently, Rs. 6 lakh will be paid annually to the nominee over a period of 15 years. If Devulapalli wishes to increase his risk cover, he can choose the step-up option, following which, his premium will be recalculated.
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GST of 18% is applicable on life insurance effective from the 1st of July, 2017