How Life Insurance Can Help You Earn Extra Income
Did you know that life insurance can give you a wide range of benefits, beyond just a life cover?
In addition to the lump sum payment that nominees receive as death benefits, life insurance policies can benefit policyholders and their families in so many ways. Depending on the type of life insurance you choose, you can enjoy benefits such as:
- A savings component to meet your major life goals
- Additional coverage in the form of riders
- Investment options in the form of ULIP funds
But that's not all. Some life insurance policies can also help you earn additional income. So, if you've been looking for different ways to either add to your existing income or replace it, perhaps the solution is as simple as buying the right life insurance plan!
Here's how life insurance can help you earn extra income
Income plans, which are essentially savings plans, give you the advantage of regular income payouts. These plans are also called guaranteed income plans or regular income plans. Whatever the name may be, the essence is that these life insurance covers give you two key benefits.
The first is a life cover, which all life insurance plans offer. The second one, unique to income plans, is the income benefit. Curious to know how that works? Let's find out.
How do income plans work?
When you buy an income plan, you will have to choose the key parameters of the policy, such as the following:
- The sum assured
- The premium payment mode
- The premium payment term
- The policy term
- Add-on riders, if any
- The income payout option
- The income payout term
- The income payout frequency
The insurer then checks your application, calculates the premium applicable to you, and issues the policy. In income plans, the premium payment term is generally limited, so you can pay off all your dues within a short period of time. Once the premium payment term is complete, the income payouts begin, provided you have survived that term. And these payouts continue for the tenure chosen by you.
For example, let's say a 25-year old policyholder purchases an income plan with the following parameters.
- Premium payment term: 6 years
- Policy term: 7 years
- Income benefit payout period: 20 years
- Sum assured: Rs. 7 lakhs
So, in this case, he will continue to pay premiums for 6 years, till he attains the age of 31. Thereafter, he will start to receive the survival benefits guaranteed under the income plan for the next 20 years - that is, till he attains the age of 51.
However, in case he passes away during the policy term, his nominee will receive the sum assured along with any other bonuses or benefits due under the plan.
5 benefits of the income payouts from your life insurance plan
The income you receive from these life insurance plans come with a wide variety of benefits. Here's a preview of how the survival benefits from an income plan can help you.
You enjoy an additional source of income
When you are in your prime working years, in your 30s and 40s, you may enjoy promotions and pay hikes at work. Simultaneously, your family may also grow. And with this, so will your family's needs. The additional income from your income plan can help you meet these requirements without any financial burden. You can make use of these payouts in various ways. Here are some examples.
- You can pay your child's school fees
- You could take your family on a vacation
- You could make essential big ticket purchases
- You can use the income to repay your loans
There are flexible payout options
The income offered by income plans comes with flexible payout frequencies. In most cases, you can choose from the following payout option.
This kind of flexibility makes it easy for you to customize the payouts in a manner that is best suited to your specific needs. For example, if you want to use the income from your plan to repay your debts, the monthly payout option could be ideal for you. Instead, if you wish to use the funds to pay your children's school fees, the semi-annual or the quarterly payout option may be better.
You get to earn immediate benefits
In general, savings plans offer you maturity benefits at the end of the policy term only. So, if your policy term is 30 years, you will not receive any benefits until that period is complete. But with income plans, you do not have to wait till the end of the policy term for the benefits to start.
The survival benefits are generally paid out at the end of the premium payment term. For example, in the case of the ABSLI Assured Income Plus, you can pay your premiums for 6, 8 or 12 years, after which you can enjoy guaranteed income for 20, 25 or 30 years!
It can replace your income post-retirement
Before you retire, you need to ensure that you have an alternate source of income to rely on. There are many ways to do this. And an income plan is one of the most beneficial products you can invest in if you want to secure an alternate source of income. You can buy an income plan even when you are approaching the age for retirement. The income payouts can help you and your spouse meet your everyday requirements after you have retired, when you no longer receive salary.
The benefits are tax-free
The benefits that you receive from your life insurance plan are tax-free. So, you can rest assured that these additional benefits do not come with the added burden of tax. Furthermore, these tax benefits are also coupled with the deductions that you can claim under section 80C of the Income Tax Act, according to which the premiums are deductible from your total taxable income.
All things considered, the extra income you earn from your life insurance plan can be put to a variety of uses. You can customize the plan according to your needs, and above all, you can rest assured that your family's needs are taken care of in the present, and that their financial security is guaranteed in the future.
Read next: HERE'S HOW YOU CAN BENEFIT FROM THE ABSLI ASSURED INCOME PLUS
If you're interested in setting up an additional stream of income, the ABSLI Assured Income Plus can help you out. We have a blog that tells you the many ways in which this plan benefits you.
ENJOY LONG-TERM INCOME WITH SHORT-TERM INVESTMENTS
With the ABSLI Assured Income Plus, this is now possible. All you need to do is pay your premiums for 6, 8 or 12 years, and earn long-term income over 20, 25 or even 30 years.
And that's not all. This plan also gives you a host of other benefits like loyalty additions, a commutation option and several customizable benefits!
ABSLI Assured Income Plus (UIN: 109N127V04) is a non-linked non-participating individual life insurance savings plan. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations etc. For policies issued on minor life, the date of commencement of risk shall be the date of commencement of the policy. Where a policy is issued on a minor life, the policy will vest after attainment of majority of the Life Insured. Where the Life Insured (whether major or minor) and Proposer/Policyholder is different, on the death of the Proposer/Policyholder, his legal heirs, in accordance with the existing succession laws, will be considered as new Proposer/Policyholder. As there is no death benefit payable on the death of the Proposer/Policyholder, the policy status does not change, and the policy continues.
ABSLI Life Shield Plan
A term insurance plan that offers you the flexibility of plan options suitable for your family's non- negotiable goals and ensure they need not compromise on their lifestyle. UIN: 109N109V04
- Choice of 8 plan options
- Cover your spouse under the same policy
- Longer Life cover till age 85
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