Discount on renewal premium from second policy year onwards for life assured who quit smoking after declaring smoker status on policy inception
Aegon Life Insurance has launched an innovative version of its flagship and popular ‘iTerm’ Insurance Plan. The new Aegon Life iTerm Insurance Plan provides regular monthly income after the age of 60 and offers financial protection till the age of 100 years. It also gives the flexibility to choose from three plan options and multiple benefits to the customers. RupeeIQ looks at the product in detail.
The new Aegon Life iTerm Insurance Plan appears to be quite affordable. The company has driven down the premium costs quite a bit. The term plan appears to be cheaper than comparable rivals. For instance, for a 30 year old male (non-smoker) Aegon iTerm costs Rs 1,365 per month for Rs 1 crore sum assured for 99 years compared to Rs 1,401 per month for PNB MetLife’s Mera Term Plan.
The new Aegon Life iTerm Insurance Plan offers a choice of life cover till the age of 100 years. This means the maximum policy term can be as long as 82 years under this plan as the minimum entry age is 18 years. A cover till age 100 years is a great and affordable way to leave a legacy for your loved ones. A 40-year male (non-smoker) can get Rs 1 crore sum assured term cover by paying Rs 2,103 monthly for as long as 100 years of age.
The term plan offers flexibility to choose the death benefit payout either as a lump sum payment, or as fixed monthly income for 100 months, or as a combination of both.
a) Life Protect – Under this option, on the earlier of death or diagnosis of the terminal illness of the life assured during the policy term, the effective sum assured will be paid to the claimant. The policy will terminate post payment of this benefit. This is plain-vanilla term insurance.
Do remember that under the Life Protect, the policy offers what it calls ‘Life Stage Option’ which allows you to increase the base sum assured of your policy ( by 25-100%) on the occurrence of marriage, birth/adoption of 1st and 2nd child, and home loan disbursal. For each tranche, the additional premium will be determined using an additional sum assured
To opt for this plan, the minimum annualised premium has to be Rs 25,934 (exclusive of taxes) or minimum monthly premium of Rs 2,256 (with a direct debit mandate, exclusive of taxes).
b) Protect Plus – Under this plan option, in addition to the benefits available under ‘Life Protect’ plan option, you will get ‘Auto-increase of Cover’ benefit. In that case, from the start of 2nd policy anniversary the company will increase the sum assured under your policy by 5% of the base sum assured (simple rate) at the start of each policy year, till the policy anniversary subsequent to your 55th birthday (post this no further increments will be applicable). The beauty is the policy premium will remain unchanged throughout the policy term!
To opt for this plan, the minimum annualised premium has to be Rs 44,752 (exclusive of taxes) and a minimum monthly premium of Rs 3,893 (with the direct debit mandate, exclusive of taxes).
c) Dual Protect – Under this plan option, in addition to the benefits under ‘Life Protect’ plan option, you will get ‘Survival Benefit’. The ‘Survival Benefit’ adds dual protection element to life cover for entire policy term plus a lump-sum payout along with with regular income post your earning years. So, you can get 5% of the base sum assured as lump-sum on the policy anniversary following 60th birthday, and subsequently, a regular income of 0.1% of the base sum assured will be paid monthly in arrears till maturity or date of death/diagnosis of terminal illness, whichever happens first.
To opt for this plan, the minimum annualized premium has to be Rs 39,284 (exclusive of taxes) or minimum monthly premium has to be Rs 3,418 (with the direct debit mandate, exclusive of taxes).
4. Additional protection against accident and terminal illness – The term plan provides inbuilt terminal illness benefit and additional coverage against accidental death
5. Flexible premium payment options – You can pay premiums either every year during the policy term or for a limited period of 5, 10 years or till your age of 60 years; or pay premium in a lump sum as a single premium. You can also pay the premium either annually, half-yearly or monthly.
In case you have opted for a single pay policy, the death benefit is the highest of: 1.25 x Single Premium; or Effective Sum Assured
In case you have opted for a regular pay (not applicable under ‘Dual Protect’ plan option) or limited pay policy, the death benefit is defined as the highest of: 11 times the annualized premium; or 105% of total policy premiums payable (excluding taxes) as on the date of death; or Effective Sum Assured.
6. InstaCover – When you apply to purchase a policy from Aegon Life, the company says it will offer the InstaCover™ benefit (subject to its board approved underwriting policy) where the company will pay the claimant, base sum assured in case of death of the life assured within the InstaCover period as a lump sum. This is provided the company has received the completed application and the requisite policy premium.
The InstaCover will apply in the period between the date the company receives the completed application (including premium) and — the earliest of either the day before the policy is issued, or the day the customer withdraws the application or the day the company rejects the application or 30 days from the date when the company issued the InstaCover letter.
The company will issue an ‘InstaCover Letter’ to you at the start of the InstaCover period, which will clearly mention the risk commencement date, applicable terms, and conditions of the cover, premium receipt and procedure for claims and servicing.
7. Terminal illness benefit – On diagnosis of a terminal illness, provided the policy is in force and all due premiums have been paid, the policy will pay an amount equal to 100% of the death benefit applicable as on the date of diagnosis of a terminal illness. The policy will terminate on payment of the said benefit.
8. Quit smoking benefit – Discounts may be provided on renewal premiums from second policy year onwards, for smokers (life assured falling under the smoker category at policy inception) on quitting smoking. You will need to undergo medical tests (conducted at company cost, before the first policy anniversary) post which the applicability of this benefit will be decided. For availing this benefit, your policy should have been issued on “standard terms” with the smoker loading at policy inception. This benefit is only applicable to regular and limited pay options.
9. Surrender value – Under ‘Life Protect’ & ‘Protect Plus’ plan option for regular pay policies, there is no benefit payable for policies surrendered at any point over the policy term. But for single pay policies, upon surrender of the policy anytime before the date of maturity, the company will pay a surrender value.
Under ‘Dual Protect’ plan option single pay policies, your policy will acquire a non-zero surrender value immediately after issuance. Consequently, you may surrender the policy anytime during the policy term. For limited pay policies, your policy will acquire a non-zero surrender value on payment of at least two years’ premium in full.
Term insurance is a simple product but most customers hesitate to buy it because of a lack of returns on survival. Aegon Life has tried to marry term protection and survival benefits. Other companies have tried this as well.
Aegon has also tried to attract customers with additional benefits such as quit smoking, auto-increase of cover, life stage benefit and InstaCover. All of this has been done, without too much tinkering with premium costs.
Disclaimer: Views expressed here in this article are for general information and reading purposes only. They do not constitute any guidelines or recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide/investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product including ULIP.
Subscribe & keep learning!