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Life-long income or Long term income- what to choose

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Life-long income or Long term income- what to choose
May 02, 2019

The returns that accrue from investment plans are meant to be utilized for further fund growth or meeting a specific financial target. This implies that whatever be the resources generated from any particular investment benefit, the reaped benefits must match your specific requirements. Owing to the increased innovative approach followed by the insurance providers in terms of specific plans and features, there are varied plans that you can choose for your comprehensive benefits. One such feature that decides the frequency and the volume of returns for which you are eligible is the term of payment benefit. Essentially, this feature offers you a choice between having a long-term income or a life-long income benefit. Therefore, it is important for you to have a clear understanding of the difference between the two.

A life-long income option is the one in which the policy holder is entitled to receive a regular income until the time she/he attains 99 years of age. Thus, it is an income option that secures you financially for life. In essence, it means that you invest in a guaranteed income plan for a pre-fixed policy term and after the maturity of the term, regular payouts in the form of monthly payouts are given to the policy holder until the lifetime. Although the pros in this case are guaranteed benefits for a lifetime and hence, an assured return factor is there. On the other hand, if you need funds for meeting a long-term financial goal, a lifelong income option simply does not suffice. This is because your funds may be tied up during the tenure of the plan and as such, it may not be possible for you to partially withdraw the funds owing to which you may have to seek alternate sources of emergency income. Hence, a lifelong income plan may not suit the immediate or any emergency fund-requirements.

On the other hand, a long term income option gives the benefit of a guaranteed income for a pre-fixed term that may vary from 10 to 12 years, depending on the insurance provider. Such an option entitles the policy holder to receive fixed, regular pay-outs for the mentioned term of the policy, after a particular policy term. Hence, such a plan offers coverage of regular financial requirements for a set period of time. However, as with lifelong income plans, there is no coverage against any emergency fund-requirements. This is because both – lifelong and long term income plans are basically meant to serve as modes of a regular income and are thus not to be viewed as short-term or immediate-term financial coverage. The benefits that both these options offer are directed towards ensuring a secure and regular income, either for a lifetime or for a long term, depending upon your specific requirements.   

HDFC Life offers HDFC Life Sanchay Plus- a non-linked and non-participating saving insurance plan that allows you to increase your fund-corpus through monetary growth and allows you to retain and multiply your savings fund for meeting your financial requirements and goals.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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