test

How Does the Income Replacement Plan Work?

Let us understand how income replacement insurance works with the help of an example:

Suppose you bought a term income replacement plan to financially secure your wife and two kids. The life cover of the plan is 1 Crore for a 40-year policy term, and you need to pay the premiums for the entire policy term. You chose for the benefit amount to be paid in regular instalments for 5 years. If you unfortunately pass away during the 9th policy year, the entire 1 Crore life cover will be paid to your wife in the form of regular income for the next 5 years. Your wife can use the benefit amount to take care of the monthly expenses and pay the child’s fees.