Death Benefit Options


Death Benefit Options

A death benefit is paid out to the beneficiary of a life insurance policy when the insured dies. In an “Investment-Linked Life Insurance Plan (ILAS),” different types of “Death Benefit Options” are available. And depending on which choice you make, the death benefit amount could be affected. So let’s learn about the death benefit options to manage your life insurance policy better!

What is Death Benefit Option?

Whereas a “death benefit” is a sum of money paid out to the beneficiary of a life insurance policy when the insured dies, “death benefit options” allow the insured to select, based on their circumstances, one of the following three options for how the beneficiary can receive the death benefit:

  • Level Death Benefit
  • Increasing Death Benefit
  • A specified percentage of the total premiums paid

Impact of different types of Death Benefit Options

Death Benefit OptionLevel Death BenefitIncreasing Death BenefitDeath benefit being a specified percentage of the total premiums paid (typically 105%)
DefinitionUp until the day of death, the higher of the account’s accumulated value and the pre-decided amount of sum assured will be selected as the death benefit.Up until the day of death, the account’s accumulated value + the pre-decided sum assuredThe death benefit is linked to the investment options. If the investments flop, the death benefit may be lower than the premiums paid
More or less death benefit?Lower than Increasing Death BenefitHigher than Level Death BenefitDepends on investment performance

Can I change my Death Benefit Option after purchasing the insurance?

Generally speaking, insurance companies allow policyholders to change from the “level death benefit option” to the “increasing death benefit option” in the first policy year without having to submit a health certificate. After the application is approved, the change will be effective in the next policy month. 

Next article - Death Settlement Options
Some insurers offer flexible death settlement options, let's explore how can the beneficiary receive the death benefits.
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