Life Insurance

Knowingly or unknowingly we take a lot of steps to protect ourselves on a daily basis. Whether it is wearing a helmet before taking your bike for a spin or wearing gloves before handling something hot. It is only natural that we take our lives a bit more seriously. If you want to protect yourself and your loved ones from any unforeseen events in the future, a life insurance policy is a must! One of the most commonly given pieces of advice is to buy life insurance. But what exactly is a life insurance policy? This is what we’ll focus on here.

Term Insurance

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About Life Insurance

A life insurance policy is a contract between you and a life insurance company. As per the contract, you need to pay a fixed premium annually and the insurance company will provide life cover in exchange. Should anything unexpected happen and the policyholder loses his/her life, the policy will compensate the nominees of the policy. One needs to pay the premiums till the end of the policy term or till the death of the policyholder.

There are different types of life insurance policies that one can choose from. Thus, it is essential to understand the different types and opt for a plan that best suits your needs. While a life insurance policy cannot bring back the life of the policyholder, it can at least offer financial assistance to the surviving members of the family so that they can continue with their lives normally without any financial stress.

About Sabse Pehle Life Insurance Campaign

A comprehensive life insurance plan is always significant to cope with such emergencies and take care of the family in all possible ways in the absence of the main bread earner of the family or the insured individual. So, remember always that Sabse Pehle Life Insurance.

Types of Life Insurance Plans in India

As mentioned above, there are different types of life insurance policies that you can buy. Being aware of the different plan types will help you better decide which plan is ideal to you.

Term Insurance Plans

It is the vanilla life insurance plan, where you pay premiums and receive life cover in return. If an insured individual loses his/her life within the policy term, the nominees will receive the sum assured as specified in the policy. However, if they outlive the policy, there are no other benefits. The duration of the policy is fixed and usually ranges between 10 to 40 years. The plan offers a lot of flexibility in terms of sum assured, the term of the plan, payment frequency, riders, etc. Term insurance plans are known for their low premiums and high life covers.

Policy NameSum Assured (In INR)Minimum Premium Amount (In INR)Policy Term (In Years)Premium Payment Term (PPT)
Max Life Online Term Plan Plus25 Lakh to 100 Crore

  1. 4,800 for Non-smokers

  2. 6,750 for Smokers

  1. 10 to 50 (for Regular Pay and Pay till 60)

  2. 15 to 50 years (for 10 Pay)

  1. Regular Pay

  2. Pay till 60 years of the age

  3. 10 Pay, premium payment for a fixed period of 10 years

ICICI Prudential iProtect SmartBased on the premium amount2,400Single Pay - Policy Term is 5 or 20 years

Regular Pay - Policy Term is 5 years or 85 years less the entry age or 99 years less the entry age

Limited Pay (5 and 7 years) - Policy Term is 10 or 85 years less the entry age

Limited Pay (10 years) - Policy Term is 15 years or 85 years less the entry age. Or 99 years less the entry age

Limited Pay (60 years less the entry age) - Policy Term is PPT + 5 years or 85 years less the entry age. Or 99 years less the entry age
HDFC Life Click 2 Protect 3D Plus10,000 to 1 Crore521 per month

  1. Life Option - up to 85 years less the age at entry

  2. 3D Life Option, Extra Life Option, Income Option, Extra Life Income Option - up to 85 years less the age at entry

  3. Income Replacement Option or Return of Premium Option - 5 to 40 years

  4. Life Long Protection Option - Whole Life

  5. Long Protection Option - Whole Life

  1. Life Option - Single Pay, Regular Pay and Limited Pay of 5 to (84 years less the age at entry)

  2. 3D Life Option, Extra Life Option, Income Option, Extra Life Income Option - Single Pay, Regular Pay and Limited Pay 5 to (84 years less the age at entry)

  3. Income Replacement Option or Return of Premium Option - Single Pay, Regular Pay and Limited Pay : 5 to 39 years

  4. Life Long Protection Option - Limited Pay of (65 years less age at entry) or (75 years less the age at entry)

  5. Long Protection Option - Limited Pay : (65 years less the age at entry)

Canara HSBC iSelect Term PlanMinimum - 25 lakh and the maximum sum assured is subject to board approved underwritingAs specified by the insurer

  1. 5 to 40 for age less than 35 years

  2. 5 to 9 for age 35 years and above

Regular Pay
SBI Life eshield PlanMinimum - 35 lakh and the maximum sum assured is subject to board approved underwritingYearly - 2,779

Half-Yearly – 1,418

Quarterly - 723

Monthly - 237

  1. For Level Cover - 5 years to 80 years less the age at entry

  2. For Increasing Cover - 10 years to 75 years less the age at entry

Regular Pay

Unit Linked Insurance Plans or ULIPs

ULIP or Unit Linked Insurance Plan is one of the more popular life insurance plans. It provides life cover along with opportunities to build wealth over time. The premiums that you pay towards the plan are split into two parts. A part of it goes towards securing life and the other part towards investment. Depending on your willingness to take a risk with your investment, you can opt for different investment classes such as debt, equity and balanced funds.

Policy NameSum Assured (IN INR)Policy Term (In Years)Premium Payment TermMinimum Premium Amount (In INR)Maturity Benefit
HDFC Life Click 2 Invest

  1. 125% of Single Premium for single pay

  2. 10X the annualized premium for regular and limited pay if age at entry <= 55 years)

  3. 7X the annualized premium for regular and limited pay if the age at entry > 55 years)

5 to 20

  1. Single Pay

  2. Limited : 5, 7 and 10 years

  3. Regular: 5 to 20 years

  1. Single: 24,000

  2. Annual: 12,000

  3. Half-yearly: 6,000

  4. Quarterly: 3,000

  5. Monthly: 1,000

Policy fund value payable either in lump sum or installment
SBI Life eWealthAnnualized Basic Premium x 1010 to 30Regular pay

  1. INR 24,000 per annum for yearly mode

  2. INR 2,000 for monthly mode

Policy fund value paid in a lump sum
ICICI Pru Wealth Builder II

  1. For single pay - 1.2X single premium to 10X the single premium

  2. For regular and limited pay - Sum Assured multiple depends on age

10, 15, 20, 25

  1. Single Pay

  2. Limited Pay - 5, 7 or 10 years)

  3. Regular Pay

  1. Single Pay: 48,000

  2. Limited Pay and Regular Pay: 24,000 p.a.

Policy fund value + Top-up fund value, if any. This benefit is payable in a lump sum or installment as per your choice
Bajaj Allianz Fortune GainThe minimum sum assured is 1.25 times the Single Premium. The maximum sum assured is based on the age at entry7 to 30Single50,000Single Premium Fund Value plus Top Up Premium Fund Value, if any,
Max Life Platinum Wealth Plan1.25 times the annualized premium to (10 times annualized premium10 to 20Single Pay, Limited Pay for 5 years and Regular Pay2 lakhPolicy fund value will be payable on maturity, provided the settlement option is not exercised

Endowment Plans

Endowment plans are more traditional when it comes to life insurance. They are a bit similar to term plans when it comes to payout on the death of the insured. However, if an insured outlives the policy, they stand to receive a lump sum maturity benefit. Endowment plans ensure that you receive life cover along with savings.

Policy NamePolicy Term (In Years)Premium Payment TermMinimum Premium Amount (In INR)Sum Insured (In INR)Guaranteed Additions (GA)
HDFC Life Sanchay5 to 40Single Pay, 5, 6, 8 and 10 years

  1. Annual: 30,000

  2. Half yearly: 15,000

  3. Quarterly: 7,500

  4. Monthly: 2,500

Minimum sum assured is 2,510, and there is no maximum limit on it

  1. 8% for a policy term of 5 to 19 years

  2. 9% for a policy term of 20 to 40 years

ICICI Prudential Assured Savings Insurance Plan10, 12 and 155, 7 and 10 years

  1. 12,000 for 10 pay

  2. 18,000 for 7 pay

  3. 18,000 or 30,000 for 5 pay

As specified by the insurer

  1. 9% for a policy term of 10 years

  2. 10% for a policy term of 12 or 15 years

Bajaj Allianz POS Goal Suraksha10 and 155, 7, 10 and 12 years

  1. Yearly- 3,000

  2. Half-yearly - 2,100

  3. Quarterly - 1,250

  4. Monthly - 450

30,000 to 10 Lakh

  1. 0.01% for a policy term of 10 years and 7 pay

  2. 0.01% for policy term 15 years and 5 pay

  3. 2.30% to 3.46% for policy term 15 years and 7 pay

  4. 6.29% to 7.75% for a policy term of 15 years and 10 pay

  5. 8.43% to 10.25% for a policy term of 15 years and 12 pay

Aviva Young Scholar Secure Plan10 to 25Regular pay50,000 per annumThe maximum and minimum sum assured is higher of the following - 0.5 x Policy TermX the annual premium or 10 x annual premium

  1. At the end of the 10th policy year - 1.00%

  2. At the end of the 15th policy year - 3.00%

  3. At the end of the 20th policy year - 4.00%

  4. At the end of the 25th policy year - 5.00%

Canara HSBC OBC Guaranteed Saving Plan10, 12, 15, 205, 7 and 10 years

  1. Annual - 20,000

  2. Half-Yearly - 10,200

  3. Quarterly - 5,200

  4. Monthly - 1,800

The minimum sum assured is 76,500, while the maximum limit is subject to board approved underwriting

  1. 10% for 5 pay

  2. 14% for 7 pay

  3. 20% for 10 pay

Money-Back Plan

Since it is a life insurance plan at its core, the nominees will receive the sum assured in the event of the death of the policyholder. However, the policy also pays survival benefits at regular intervals if the policyholder lives through the policy term. Money-back policies serve as a great long-term investment instrument with regular payouts to help you with different life milestones.

Policy NamePolicy Term (In Years)Premium Payment Term (In Years)Sum Insured (In INR)Survival BenefitMaturity Benefit
LIC Money Back PolicyUp to 2015Up to 1 Crore15% of the Basic Sum Payable at the end of 5th, 10th, 15th and 20th policy year40% of the Basic Sum Insured with bonuses
SBI Life Smart Money Back Gold15, 20 and 25

  1. Single Premium

  2. Limited Premium (8, 10, 12)

  3. Regular Premium

Minimum - 2 lakh and the maximum sum assured has no limit110% of the basic sum assuredFinal survival benefit + vested simple reversionary bonus + terminal bonus, if any
Canara HSBC OBC Smart Stage Money Back plan1511Minimum - 1 lakh and the maximum sum assured has no limit, subject to underwriting15% of the sum assured55% of Sum Assured + Accumulated Annual Bonuses along with Final Bonus, if any,
Bajaj Allianz cash Assure16, 20, 24 and 28Policy Term less 5 yearsMinimum - 1 lakh and the maximum sum assured is subject to underwriting

  1. For a 16-year policy term - 15% of the Sum Assured

  2. For a 20- year policy term - 20% of the Sum Assured

  3. For a 24- year policy term - 25% of the Sum Assured

  4. For a 28-year policy term - 30% of the Sum Assured

60% of the Sum Assured + Vested Bonus + Terminal Bonus (if any)
Aegon Life Regular Money Back Insurance Plan20Single, 7 and 10Based on the age and premium payment term of the life assured150% of the sum assuredAccrued reversionary bonus plus terminal bonus, if any

How Does Life Insurance Work?

Knowing how life insurance policies work will not only better your understanding of different plans but also help you maximize.

Premiums and Benefits – The first part of the equation involves paying the premium at regular intervals. Most life insurance policies have different payment intervals to make it easier for policyholders. You can opt for annual, half-yearly, quarterly or even monthly payments. Failing to pay the premiums might attract fines and elude you from enjoying the benefits.

Claim Settlement – In the unfortunate event of the death of a policyholder, the nominees of the policy must get in touch with the insurer to report the incident. Apart from the death certificate, they might have to submit additional documents for claim settlement.

Rejection/Delay – The lack of certain documents or potential fraudulent practices might slow the claim process or even lead to claim rejections. All the life insurance plans have an exclusion list. These are scenarios where the insurer will not honor the claims.

Loans – There are a few life insurance companies and policy types that offer loans to policyholders against their life insurance policies. These funds can be used for emergencies. One might have to submit certain documents to avail of the benefits.

Benefit & Features of Life Insurance Plans in India

If you were to invest your money in a life insurance policy, below are some of the benefits and features that you will get access to.

  1. Life Cover : If the policyholder loses his/her life, the nominees of the policy will receive the sum assured as per the policy documents.
  2. Financial Security : The untimely death of the bread earner of a family can unsettle the finances. A life insurance policy can help you curb that risk.
  3. Financial Goal : Picking up the right life insurance plan can help you achieve your financial goals or work towards them effectively.
  4. Build wealth : Life insurance plans such as ULIPs can help you build wealth over time while getting life cover as well, thus making it a win-win situation for you!
  5. Tax Benefits : Any premium that you pay towards a life insurance policy is tax-deductible under Section 80C of the Income Tax Act. If there are any compensations from a life insurance policy, those are non-taxable as well under Section 10(10D).
  6. Long Term Planning : Life insurance policies help you plan for different milestones of life and even plan for your finances over the long term.

About Life Insurance Riders

Riders are essentially enhancers to your life insurance policy. You can improve the effectiveness of your policy by opting for life insurance riders. Some popular riders are:

  1. Accidental Death : Should policyholders opt for it, they will get an additional sum assured apart from what is already mentioned in the native policy.
  2. Premium Waiver : There might be times when a policyholder cannot pay the policy premiums. This rider would come in handy at such times by waiving off the future premiums.
  3. Critical Illness : The diagnosis and treatment of critical illnesses can hurt your finances very badly. This rider pays out the pre-defined percent of the sum assured on the diagnosis of any critical illness so that the money can be used for treatment.
  4. Disability : Accidents or incidents at the workplace might result in either permanent disability or temporary disability of policyholders. The disability rider will provide financial assistance to the policyholder.

How Does the Rider Sum Assured Work in Life Insurance?

The rider that you choose from the types shown above will have a separate sum assured. Usually, the sum assured fixed for the rider does not exceed that of the base plan. Since the sum assured comes separately, the insurer charges an additional premium for the same. You must be wondering whether you will need to pay the premium of base plan and rider separately or together. Well, the premium of the two will add to the total that you need to pay together. So, if the base plan premium comes as INR 10,000 and the rider premium is INR 5,000, you will need to pay INR 15,000 on the due date.

Importance of Life Insurance

Each of us has different needs. However, there is something that none of us can predict – the future. While it can bring a lot of good and positive things, there is always uncertainty regarding life. By paying a premium for a life insurance policy, you can get coverage against the worst that could happen.

It might not always be helpful for you but would offer financial assistance to your loved ones even in your absence. If you want to lead a stress-free life about the future and want to ensure that your loved ones continue with the same lifestyle, investing in a life insurance policy is one of the best ways to do so.

How to determine if you need a life insurance policy?

This is a question that many people ask. No matter how complicated the question may seem, the answer to it is simple. Compare your assets and liabilities and check if your loved ones are financially dependent on the income that you earn. Also, check the liquidity of the assets that you have and if you have taken any personal loans or business loans. If the liabilities you have sought is more than the value of your assets or if you believe that your nominee(s) may have a hard time repaying your loans in your absence, buy a life insurance policy.

In short, life insurance policies help pay off the expenses or financial liabilities arising immediately after your death. Also, some life insurance policies come with added benefits like paying off the pre and post-hospitalization medical expenses at the time of the death of the insured. This means that having a life insurance policy in place ensures that your family members will not have to pay off your medical bills from their hard-earned savings.

What is the right time to buy life insurance?

The earlier you buy life insurance, the more you gain from the policy. The fragility and uncertainty of life prompted the necessity of including life insurance as an essential financial tool. Many people tend to postpone the idea of life insurance misconceiving that there is always more time to buying one. However, delaying the insurance buying decision only increases the risk of your dependents losing out on the policy benefits.

How Does the Insurer Set Life Insurance Premiums?

Life insurance premiums are decided based on the age, gender, residence, profession of the policyholder. Besides, lifestyle habits too impact the premium amount. Let’s check the impacts of these on the premium amount individually.

Age – The age of the policyholder is one of the key factors deciding the premium of a life insurance plan. Young individuals tend to get the policy at a lower premium compared to their older counterparts. The reason being young individuals are less likely to have health complications as opposed old aged people who are more likely to have medical concerns.

Type of Life Insurance Plan – While the premium for the term plan remains fixed during the entire policy term, the same for other life insurance variants varies. Life insurance variants, except term insurance plans, offer investment benefits too besides a life cover. The multiple payouts from these plans translate into a greater premium for policyholders to pay.

Gender – Female policyholders are offered lower premiums compared to their male counterparts

Profession – If you earn regularly without any stoppages, you could be offered a lower premium than an individual whose job not only leads to irregular income but is also quite risky health wise.

Residence – Your residence also plays a key role in setting your life insurance premium. Living in a location with amenities can get your premium lower than an individual residing in a far flung location.

Smoking Habits – Non-smokers are offered lower premium than those addicted to smoking and drinking. The reason is obvious – people who don’t smoke and drink are less likely to have health complications.

Type of Investments – Except term insurance plans, all other life insurance plans offer investment benefits. These plans invest in various products such as equity and debt instruments. While unit-linked insurance plans (ULIPs) offer scope for greater returns at the expense of increased risks, endowment plans invest in instruments offering guaranteed returns. So, the premium for ULIPs will most likely be higher than that of other plans.

How should policyholders proceed for insurance claim settlement?

Policyholders may go to the nearest branch personally with the policy documents and the death certificate of the insured. The nominee should then fill a claim intimation form, either downloaded from the company’s website or taken from its branch, subsequent to which the company would issue a reference number. The company after checking the validity of the documents submitted and the correctness of the details shared settles the claim within a month of claim application form submission.

Can I Surrender a Life Insurance Policy?

A sudden financial emergency can stop you from paying the life insurance premium. But that might take away the benefits in case the policy does not acquire a surrender value. Without the same, the policy will lapse taking away all the benefits. So for a successful surrender, the policy must acquire a surrender value. You may ask, when does it happen then? Well, most life insurance plans acquire a surrender value after one pays the premium without fail for at least two-three years. The surrender value so acquired will be given to you.