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?

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 must pay a fixed premium annually and the insurance company will provide life cover in exchange. Should anything unexpected happen and the policyholder loses their life, the policy will compensate the nominees of the policy. One must pay the premiums till the end of the policy term or till the death of the policyholder.

There are a lot of different types of life insurance policies that one can choose from. Thus, it is essential to understand or be aware of the different types and opt for a plan that best suits your needs. While life insurance policy cannot bring back the life of the policyholder, it can 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 up with such emergencies which takes 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 for your requirements.

Term Insurance Plans

It is the vanilla life insurance plan, where you pay premiums and receives life cover in return. If an insured individual loses their life within the term of the policy, the nominees will receive the sum assured of 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.

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.

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 pay-out 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.

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 pay-outs to help you with different life milestones.

How does Life Insurance work?

Knowing how life insurance policies work will not only better your understanding of different plans but help you make the most of it as well.

1. Premiums and benefits

The first part of the equation involves paying the premiums 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 keep you away from enjoying the benefits.

2. Claim Settlement Ratio:

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 claiming the policy.

3. Rejection/Delay

The lack of certain documents or potential fraudulent practices might slow the claim process or even lead to claim rejection. All the life insurance plans have an exclusion list. These are scenarios where the insurer will not honor the claims. Any claims made for such cases might lead to claim rejection.

4. Loans

There are a few life insurance companies and policy types, that offer loans against life insurance for the policyholders. 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 their 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. 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 in the long term.

About Life Insurance Riders

Riders are essentially enhancers for 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 a policyholder 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.
  3. Critical Illness : The diagnosis and treatment of critical illnesses can hurt your finances very badly. The critical illness 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 for the policyholder.

Importance of Life Insurance

Each of us has different needs and requirements. 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 itself. 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.