Understanding the Benefits of 10 Crore Term Insurance for High Net-Worth Individuals

 


 

Having the right life insurance policy is essential when safeguarding your family's financial future. For individuals with significant wealth, a 10 crore term insurance plan is the best way to ensure their loved ones can maintain the same level of financial security. In this article, you will find out what this important financial instrument is, how it operates, and why High Net-Worth Individuals (HNIs)should be interested.

Who Are High Net-Worth Individuals (HNIs)?

HNIs are those with significant wealth, mainly in terms of investible assets. Personal assets such as homes or cars are not considered in this case but rather liquid financial resources, which include stocks, bonds, and cash.

Why Do HNIs Need Term Insurance?

Although HNIs have significant wealth, they also have liabilities, business responsibilities, and estate planning issues. Term insurance offers special benefits:

1. Financial Security for Dependents

In the unfortunate event of the policyholder's demise, a ₹10 crore term insurance payout can create financial security for the family so that their dependents can maintain the same living standards while meeting all long-term goals.

2. Affordable Premiums

Term insurance provides substantial life cover at relatively low premium rates. Moreover, HNIs can opt for flexible payment terms, such as limited premium payment modes, and stay covered for the entire policy term.

3. Protection Against Loans and Debts

Many HNIs run businesses or own assets acquired through loans. In case of their untimely demise, the insurance payout can help settle debts, preventing financial stress on their heirs or business partners.

4. Estate Planning

Term insurance often forms part of HNI's estate plan. The lump-sum payout ensures that the heirs receive liquid cash, making it easy to distribute and pay outstanding estate-related tax obligations.

5. Business Continuity

For business owners, a ₹10 crore term plan can be crucial to keep the business going. The money can be injected into the business to bring liquidity, settle all outstanding liabilities, or compensate for the loss of a key decision-maker.

6. Tax Benefits

HNIs can avail of significant tax benefits under Sections 80C and 80D of the Income Tax Act. These benefits apply to the premiums paid.

7. Riders for Added Benefits

Term policies are flexible. Riders such as the Accidental Death Benefit or the Critical Illness Rider. Adding riders can extend the policy's coverage and provide increased financial protection.

Types of Term Insurance Plans for HNIs

HNIs have the option to select from various term insurance plans to suit their individual financial objectives. The two most common types are:

1. Regular Term Insurance Plans

These policies offer financial protection to the beneficiaries in case of the policyholder's untimely death during the policy term. They are suitable for individuals seeking straightforward financial protection.

2. Decreasing Term Plans

The sum assured reduces over time, matching the policyholder's decreasing financial liabilities. These plans offer lower premiums and are ideal for those nearing retirement.

Key Factors to Consider

When choosing a ₹10 crore term insurance plan, HNIs should evaluate:

  • Claim Settlement Ratio (CSR): Opt for insurers with a high CSR for reliability.
  • Flexibility: Look for customisable policy terms and premium payment options.
  • Medical History: Disclose all health conditions to ensure smooth claim processes.
  • Nominee Selection: Appoint a trusted nominee to handle the payout efficiently.
  • Comparison of Plans: Use online tools to compare features, premium costs, and benefits across insurers.

Conclusion

A term insurance plan for 10 crores is an essential financial product for high-net-worth individuals looking to secure their family's financial future. With comprehensive coverage, simplicity, and benefits like tax savings on premiums, this plan provides peace of mind and financial stability.