The sum insured is one of the most important factors to be considered when purchasing a term plan. You must ensure that you have enough coverage in case something happens to you. In this blog post, we will discuss how you should choose the right sum insured for your Kotak e-Term Plan.
Let’s get started.
An Overview of Kotak e-Term Plan
Kotak e-Term Plan is a pure online term insurance plan by Kotak Life Insurance that can offer a high sum assured at an affordable price. The plan can be bought and renewed online without any medical tests. It also provides the flexibility to choose the policy term and premium paying term as per the policyholder’s needs.
Now that we have a brief overview of Kotak e-Term Plan, let’s look at how one should decide the sum insured while buying this plan.
Factors while deciding on the Sum Insured
Various factors should be considered while deciding on the Sum Insured. Some of them are as follows:
• Inflation
As per the rule of thumb, the sum insured should be at least 15-20 times your annual income. This ensures your family does not face financial problems in case of your untimely demise. You can also calculate term insurance premium with a Kotak e-Term calculator.
• Lifestyle
We are often used to a lifestyle, so are our family members. Therefore, you will need a specific amount when your family needs to continue with their lifestyle. This is because your family will need to maintain the same standard of living even in your absence.
• Dependents
If you have dependent parents or children, then you will need a higher sum insured as compared to someone who does not have any dependents. This is because your death will have a more significant financial impact on your dependents as compared to someone without any dependents.
Sum Insured on Death
When you buy a life insurance, as per your policy, premiums, and tenure of the plan; you get a sum insured in case you (the policyholder) die. If the policyholder dies during the policy term, the death i.e., sum insurance at the time of buying the policy will be payable by the insurance company.
a) For Single Premium
Sum Insured on death will be higher of the following:
- Basic Sum Insured or
- 125% of the Single Premium paid
In single premium policies, the sum assured on death is higher than the basic sum assured or 125% of the single premium paid. This ensures that your family receives at least 125% of what you have paid as a premium in case of your untimely demise.
b) For Regular and Limited Premium
11 times Annualised Premium is the Sum Insured upon death. Also, 105% of all premiums paid till the date of death is the Sum Insured upon death. This is a significant factor to consider while buying a Kotak e-Term Plan.
Thus, one must determine the Sum Insured carefully while buying this plan. It is advisable to take help from an expert before making this decision. The expert will be able to guide you properly and help you make the best decision for yourself.
The Bottom Line
When calculating the Sum Insured for a Kotak e-Term Plan, one must primarily consider their future goals and objectives. Insurance is not just about protecting oneself from uncertainties but also about financial planning for long-term security. A little bit of homework at the beginning can go a long way in ensuring a bright and prosperous future.
