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Life Insurance 6082 views December 9, 2019
Life is always unpredictable and we don’t know what’s in store for us in the future. With the fast-moving life and competitive environment, it is of utmost importance to have strong protection against all the untoward incidents which might have a major and a huge financial impact on our families. Therefore, it becomes essential to protect ourselves and our family from unanticipated incidents. 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.
Table of Contents
Some Interesting Facts about Life Insurance
The insurance penetration in India remains one of the least in the world at 3.69%, as per the data of the IRDA (Insurance Regulatory and Development Authority) of India in the Financial year 2018. Between Financial Year 2015 and Financial Year 2017, the penetration of life insurance in India was a flat rate of 2.7%. The multifaceted nature of the product with huge of terms and conditions is one of the main reasons why it is not purchased by most.
Insurance in India in the global scenario
India’s part in the international insurance industry was only 2% in the financial years 2017. It is interesting to note that in the year 2017, the total premium for insurance collection in the Indian subcontinent has grown by a sharp 10.1% (by adjusting inflation) whereas the global premium for insurance collection grew by only 1.5% (by adjusting inflation).
The portion of the global life insurance business in the total premium collection of the world was 54.32%. However, the portion of Indian life insurance business in the total premium collection was at a very high rate of 74.73% while the same for the non-life insurance business in the total premium collection was only 25.27%. Life Insurance Business in India was ranked 10th amongst the 88 countries and the data is being published by Swiss Re. India’s contribution in the life insurance market was 2.76 per cent globally in 2017. However, when life insurance premium collected globally rose by only 0.5%, the life insurance premium in India increased significantly by 8% (with inflation-adjusted).
Let us see the global growth rate trend table as below for a better understanding:
Total Growth Rate in Premium for 2017
| Market | Life | Non-Life | Total |
|---|---|---|---|
| India | 8.0 | 16.7 | 10.1 |
| Asia | 5.6 | 5.8 | 5.7 |
| Advanced Markets | -2.7 | 1.9 | -0.6 |
| Emerging Markets | 14.0 | 6.1 | 10.3 |
| World | 0.5 | 2.8 | 1.5 |
Let us see the penetration of insurance and density in India as compared to non- Life and Industry table below:
Density- Measured as the ratio of premium to the total population
Penetration- Measured as the ratio of premium to GDP
Density and insurance Penetration in India
| Year | Life Density (USD) | Life Penetration | Non-Life Density (USD) | Non-Life Penetration | Industry Density (USD) | Industry Penetration |
|---|---|---|---|---|---|---|
| 2014 | 44.0 | 2.60 | 11.0 | 0.70 | 55.0 | 3.30 |
| 2015 | 43.2 | 2.72 | 11.5 | 0.72 | 54.7 | 3.44 |
| 2016 | 46.5 | 2.72 | 13.2 | 0.77 | 59.7 | 3.49 |
| 2017 | 55.0 | 2.76 | 18.0 | 0.93 | 73.0 | 3.69 |
Life Insurance Premium
The Life Insurance industry logged a premium income of INR 458809.44 crore in the year 2017-2018 as compared to INR 418476.62 crore in the financial year 2016-2017. There is a growth of the industry of 9.64% as compared to 14.04% in the previous financial year.
The private sector insurance companies have registered a growth of 19.15% as compared to 17.40% in the previous financial year their premium income. Even the Life Insurance Corporation of India had recorded a growth of 5.90% as compared to 12.78% in the previous financial year.
Let us see the underwritten premium in India in the table below:
New Business Premium- It includes all the 1st year premium together with the single premium
Figures in brackets specify the growth (in percent) in the preceding year.
| Name of the Sector | 2016-2017- INR Crores | 2017-2018- INR Crores |
|---|---|---|
| LIC | 124583.31 (27.27) | 134671.69 (8.10) |
| Private Sector | 50619.37 (23.84) | 59482.21 (17.51) |
| Total | 175202.68 (26.26) | 194153.90 (10.82) |
Total Premium- It includes all the new business premium together with renewal premium
| Name of the Sector | 2016-2017- INR Crores | 2017-2018- INR Crores |
|---|---|---|
| LIC | 300487.36 (12.78) | 318223.20 (5.90) |
| Private Sector | 117989.26 (17.40) | 140586.24 (19.15) |
| Total | 418476.62 (14.04) | 458809.44 (9.64) |
On the base of total premium income, the market contribution of all the private insurance companies has grown from 28.19% in the financial year 2016-17 to 30.64% in the financial year 2017-18. The premium income of LIC of India has fallen from 71.81% in the financial year 2016-17 to 69.36% in the financial year 2017-18.
New Business Premium- It includes all the 1st year premium together with the single premium
| Name of the Sector | 2016-2017- % | 2017-2018-% |
|---|---|---|
| LIC | 71.11 | 69.36 |
| Private Sector | 28.89 | 30.64 |
| Total | 100.00 | 100.00 |
Total Premium- It includes all the new business premium together with renewal premium
| Name of the Sector | 2016-2017- % | 2017-2018-% |
|---|---|---|
| LIC | 71.81 | 69.36 |
| Private Sector | 28.19 | 30.64 |
| Total | 100.00 | 100.00 |
What is Life Insurance
Life insurance is a contract between a policyholder and an insurer, where the insurer promises to pay a sum of money to the selected beneficiary in return for a premium upon the unfortunate demise of an insured person. In simple language, it is financial protection to the family to take care of all the monetary needs in case of death of the insured individual thereby paying a premium amount to the insurer.
Why Life Insurance is very Critical
Life Insurance is very important in everyone’s life and hence Sabse Pehle Life Insurance. Let us understand the reasons:
- Shield against uncertainties and worries: Life Insurance provides complete protection against the risks and worries which is connected with the financial requirement of the family.
- Paying and reducing off Debts: Many individuals avail loans to accomplish and meet several requirements and desires like buying a house, a car, etc. Many take a personal loan to sponsor the family wedding, as well as repaying other loans. In case of the sudden demise of the main bread earner of the family, the load of all these debts hits on the dependent family members. With a life insurance policy, all these worries are taken care of and the family can run smoothly financially without negotiating their requirements. Hence, Sabse Pehle Life Insurance.
- Family’s needs: The main motive of life insurance is supporting the family members and taking care of their needs, especially in the absence of the main person. The loss of steady income results in compromising the need of the family and also struggling every day to meet the basic aspects of life. And that’s exactly where life insurance plays a vital role and helps the family to take good care of their regular needs like education for a child, marriage, etc. Also, to build a reserve for savings and future investments thereby providing financial stability. Hence, another reason why Sabse Pehle Life Insurance.
- Insurance for the business: Another vital reason why Sabse Pehle Life Insurance is having protection for the business which one might runs. There are life insurance policies predominantly crafted for business owners where the business partner who is alive obtains the departed partner’s share of the enterprise together with the benefit of getting the pay-out of the sum insured to the designated nominee of the deceased individual.
- Long- and Short-term financial necessities: Life insurance policy can is important in providing support to the loved ones in taking care of their short term as well as long-term requirements. The family might require money to take care of the child’s education, to capitalize on the money as well as save for the future, to take care of recurrent household expenditures, and many more. Family’s short-term need might include instant expenses such as loans or other liabilities which needs to be refunded etc. Life Insurance policies are a combination of plans which takes care of such needs regular payouts as well as future income generation opportunity. Hence, Sabse Pehle Life Insurance.
- Mental peace of mind: Sabse Pehle Life Insurance comes with full complete peace of mind and one can lead a peaceful life.
- Tax Saving: Last but not least, another main reason one must have life insurance is to save tax. As per the current provisions of Section 80C of the Income Tax Act, 1961, policyholders can avail of the tax benefits of up to Rs.1.5 lakh on life insurance premiums. Additionally, the proceeds received under the death or maturity benefit tax-free under Section 10 (D) of the Income Tax Act, 1961.
What are the Benefits of Life Lnsurance?
Life Insurance policies offer several different benefits to individuals and we will understand why Sabse Pehle Life Insurance. Following are the most important:
- Coverage of risk: Having a life insurance policy ensures that the family and his/ her dependents remain to enjoy an interrupted lifestyle in case of unforeseen death of the main bread earner of the family
- All-Inclusive Plan for Different Stages of Life: Life insurance does not only offer monetary support in case of the policyholder’s unexpected demise but also acts as a medium for making a long-term investment to meet education of child, marriage, buying of a home and not to forget about preparation for a peaceful retired life. The planning is being done basis the risk appetite and life stages. Conservative life insurance plans, such as traditional endowment plans, offers precise maturity benefits and built-in guarantees through several options like Guaranteed Cash Values, Guaranteed Maturity Values Money Back and many more
- Coverage of increasing health costs: Life insurance providers offer monetary cover against hospitalization expenditures and many other critical illnesses. Due to inflation, health expenditures are increasing continuously and hence the need for life insurance plans has increased as well as the same ensures that the insured policyholder will have negligible medical charges
- Encourages Savings: Life insurance policies are usually long-term arrangements wherein the policyholder makes a fixed amount which helps the policyholder teach the habit of savings. Saving money frequently over a comparatively long time helps in the building of a good reserve which will help in meeting the monetary necessities at various stages of life
- The opportunity of gainful and Secure Long-Term Investment: Insurance industry is extremely regulated. The Insurance Regulatory and Development Authority of India has applied several guidelines by which the money of the policyholder is safe and secure with the relevant stakeholders. All the money invested is the responsibility of the stakeholders of the company. Life insurance also thereby help and support that the policyholder to focus on long-term returns rather than investing in risk market products to have short-term gains
- Opportunity of a Guaranteed Income via Annuities: Retirement plans helps to provide a steady source of income post retiring from professional life
- Facility of Loan: Choice of availing a loan against the insurance policies help to meet the various requirements without hindering to the benefits offered by the policy
- Facility of redemption of Mortgage: Life insurance policies act as the finest instrument which can be used to repay the loan taken by the policyholder in case of unforeseen situations and the family members do not have the liability of repayment
- Benefit of Tax: Life insurance policies comes with tax benefits and help to save a substantial amount of money
Who Needs Life Insurance?
Everyone needs life insurance; in fact, an individual must apply for life insurance at an early stage of life as a salaried professional, a married person to meet the various expenditures to take care of the family completely.
How Does Life Insurance Work?
Let us understand how life insurance policies work which is very simple and easy. The process involves 5 simple steps. We will give a broad overview of the 5 steps as below:
| Step 1 | Be aware from where to buy Depending on the need and the requirement the details need to be asked with applicable quotes and proposals. |
| Step 2 | Policy To be Chosen It is very important to compare the benefits available and then shortlist some. An advice from the insurance specialist is desirable. Prudent selection needs to be done as per the need which gives the maximum benefits with minimal cost. |
| Step 3 | Get familiar with your chosen policy One must know the key features and benefits, the amount of premium to be paid, the date of the inception of the policy, policy terms, the payment term, the coverage amount, maturity and death benefits, exclusions under the policy, riders’ availability etc. |
| Step 4 | Application filling All required details to be filled in with accurate details and correctly after thorough reading the application form. Also, personal and family health history needs to be declared correctly with the recent reports, if any. |
| Step 5 | Acceptance of the Policy Post the insurer accepts the policy, it is important to check all the details carefully so that at the time of claim there is no dispute arise and one can have a smooth claim settlement. |
Conclusion
From the above article, we can conclude that life insurance is a very crucial requirement in everyone’s life which makes life much easier and fear of unforeseen incidents is reduced to lead a happy and stress-free life. Hence, we can conclude that Sabse Pehle Life Insurance.