‘Death benefit’ is a very colloquially used term in life insurance. It refers to all benefits under a life insurance policy paid to the beneficiary (nominee) on the death of the policy holder. This refers to sum assured in a term insurance plan and sum assured plus bonuses/guaranteed additions in case of endowment plans.

Most insurance companies pay the sum assured as one lumpsum, though some offer to pay it over regular intervals as monthly or annual income to the nominee.

IRDAI’s regulation mandates that in any life insurance policy, the sum assured should not be less than 10 times the annual premium for individuals below 45 years.

For older individuals, the sum assured needs to be at least seven times the annual premium.

One exception here is policies of tenor less than 10 years, where the sum assured has to be at least five times the premium. That said, at any point, the cover amount under the policy will have to be at least 105 per cent of all premiums paid till date of the claim.

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