Index Fund Corner
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| Scheme Name | 1-Year Return | Invest Now | Fund Category | Expense Ratio |
|---|---|---|---|---|
| Axis Nifty 50 Index Fund | +32.80% | Invest Now | Equity: Large Cap | 0.12% |
| Axis Nifty 100 Index Fund | +38.59% | Invest Now | Equity: Large Cap | 0.21% |
| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | — | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
This makes it a cost-effective solution for long-term financial security.
In a limited pay term plan, policyholders pay premiums for a fixed number of years — usually between 5-15 years — rather than for the entire term of the policy.
After completing the payments, no further premiums are required, but the policy continues to provide coverage until its maturity or until the insured individual passes away.
Key factors to consider
Lower overall premiums: While the premiums may be slightly higher on an annual basis compared to regular term insurance plans, the total premium paid over the policy term is lower.
This makes it cheaper in the long run.
Flexibility in financial planning: By completing payments early, individuals free up funds for other financial goals, such as children’s education, retirement savings, or investments.
Ideal for mid-career individuals: These plans work well for those in their early or mid-career stages who have a stable income but anticipate significant future financial obligations. It is also a good option for those looking to reduce the burden of paying premiums into old age.
Offers and benefits
Wide coverage: Limited pay term plans offer coverage for the entire term of the policy, which could range between 10-40 years, depending on the policyholder’s needs.
Customisable add-ons: Many plans allow the addition of riders, such as critical illness or accidental death cover, offering further protection at an affordable price.
Death benefit: In the event of the policyholder’s death, the nominee receives the sum assured, ensuring that the family remains financially secure.
Exclusions and limitations
Suicide clause: Most term insurance policies, including limited pay plans, exclude coverage if the policyholder dies by suicide within the first 12 months of the policy term.
Pre-existing conditions: Any pre-existing medical conditions may not be covered immediately. A health check-up might be required before the policy is issued, and some conditions may have waiting periods.
Non-disclosure: If a policyholder fails to disclose important health information during the application process, it can lead to claims being rejected.
The bottomline
Limited pay term insurance offers an attractive option for those who want to reduce their future premium burden while maintaining coverage. However, before you decide, it’s important to assess your financial situation, health, and long-term goals.
Ensure that the higher initial premium fits your budget, and check the terms for exclusions and conditions.
Rhishabh Garg, Head of Term Insurance at Policybazaar.com, explains, “Limited-pay term insurance is ideal for individuals who want to ensure long-term coverage without the lifelong commitment of premium payments. It’s especially beneficial for those who have a stable income and wish to allocate funds toward other financial goals once premiums are paid off.”
