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Product crack: Met Family Income Protector Plus

LiveMint logoLiveMint 06-06-2014 Deepti Bhaskaran

This is a term plan by PNB MetLife India Insurance Co. Ltd that staggers the sum assured or the death benefit into monthly payments for the beneficiary upon the death of the policyholder. The policy can also be bought as a return of premium plan.

What you get

There are three things that you need to choose from in this policy: the monthly benefit, policy term and the choice of plan.

In terms of monthly benefit, the policy offers five options. You can opt for monthly payment of `10,000, `25,000, `50,000, `75,000 or `1 lakh.

There are three policy terms to choose from and depending upon your choice, the duration of death benefit is spelt out. So, if you opt for a 10-year policy term, the monthly benefit upon your death to your nominee or beneficiary will be for a period of 20 years. For a policy term of 15 years, the monthly benefit will be for a period of 15 years and for a policy term of 20 years, the monthly benefit will be for a period of 10 years. Paras Jain/Mint

The third option to choose from is the choice of plan. You can either opt for a pure term policy that doesn’t pay anything back if you survive the policy term, or opt for a return of premium plan that will pay 110% of the premium paid by you on surviving the policy term. Of course, the second option is more expensive since it guarantees money back at the end of the policy term.

How does it work?

Suppose a 35-year-old male buys this plan for a policy term of 20 years and opts for a monthly payment of `1 lakh for 10 years, or a total of `1.2 crore, as death benefit. The insurer reports the sum assured in present value terms by discounting it; so, in this case the illustration shows the sum assured to be `91 lakh, and the policyholder will have to pay an annual premium of `17,775. If he opts for the return of premium option, the premium will go up to `48,854.

The return of premium option is more than twice the price of a pure term plan, because it guarantees money back on survival. There is, however, little merit in paying such high premiums to get that money back several years later.

Mint Money take

Insurers are increasingly getting innovative about designing the death benefit for the nominees. A periodic income plan is good for a not so savvy nominee, as she may not know how to put the lump sum money to good use or may get misguided advice. In that sense, this plan works well. However, there are online term plans in the market that you should look at. They offer lump sum benefit along with periodic income and are cheaper since they can be bought online only.

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