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When your insurance policy expires while you are still alive, you will no longer get the benefit of life insurance coverage through the policy. However, you will have the option to convert to a permanent policy or buy fresh term insurance.
Life insurance forms an important aspect which should be considered by one and all. Two very basic life insurance plans available are - term life insurance and permanent life insurance plan. Term insurance refers to an insurance which is for a specific time period while a permanent life insurance plan covers your entire life period.
Term life insurance refers to a pure life insurance plan that gives financial security to the policy holder. In the time of untimely death of the policy holder during the term of the life insurance policy, death benefit is given to the policy holder’s beneficiaries as per the chosen term plan.
Life insurance is a financial buffer for family members, in the event of the sudden death of the insurance policy holder. Term life insurance, especially, gives adequate coverage at affordable prices for your family members during those stressful times.
Life insurance is an important investment decision, even for people over 60 years, as it gives an assurance of financial security. Various life insurance plans are available to help senior citizens meet their financial goals. In India, there are different types of life insurance plans to help seniors avoid financial stress. All these plans for senior citizens in India normally fall under two major categories – Whole Life Insurance Plan and Term Life Insurance Plan.
When a policy matures, the policyholder can claim the maturity benefits offered by the plan from the insurance company. The insurance company will provide a fixed amount for traditional policies and a variable amount for market linked policies such as ULIPS after the policy matures.
When you borrow money from your life insurance policy, the loan should be repaid during the policy term. Here the borrower has the option of paying back only the interest amount or pay back principal along with the interest. If you choose to pay only the interest amount then the principal amount will be subtracted from the settlement amount at the end of policy during settlement.
If you have survived your life insurance policy tenure and have paid your premiums on time then you are entitled to receive a maturity benefit. However, note that not all life plans offer maturity benefits. Most term plans do not have any maturity benefits.
Life insurance is a benefit in itself. Here are some most common and popular overall benefits of owning a life insurance policy.
Permanent life insurance is also popularly known as whole life insurance plan. As the name implies, a permanent life plan remains valid throughout the insured’s whole lifetime, provided the premiums are paid on time.
Generally an individual can borrow upto 85-90% of the sum assured in a traditional life insurance policy with guaranteed returns. However, note that not all life insurance policies offer loan facilities. Generally, life insurance plans like ULIPs where the returns are market-based do not offer loans.
What happens to your life insurance policy when you quit or retire from your job, depends on how the policy has been set up. Let’s take a look at the possible scenarios
As the name implies, a whole life insurance policy is a type of life insurance plan that covers the insurer for his entire life. Besides providing financial security to the policyholder’s family, it can also be used as an investment tool. As the name implies, a whole life insurance policy is a type of life insurance plan that covers the insurer for his entire life. Besides providing financial security to the policyholder’s family, it can also be used as an investment tool. Let’s check out the top benefits of whole life insurance plans in India: Whole Life Coverage - Unlike term plans that offer life coverage only for a specific period, whole life policies offer life coverage for the entire life of the insured, generally around 99 to 100 years. Death Benefit - In the unexpected demise of the policyholder during the policy term, the nominee(s) receives a bulk sum as death benefit. The death benefit is the total sum assured by the policy. Maturity Benefits and Periodic Payouts - Whole life policies offer maturity benefits that are provided at the time of policy maturity. The policyholder can opt to avail these benefits as a lump sum amount or choose to receive the benefits as regular income at periodic intervals. Fixed Premium - The premium amount remains unchanged for the entire tenure of the plan. For instance, if you’re paying Rs. 2500 per month now, you will continue to pay the same amount for the entire tenure, irrespective of market fluctuations, inflation, etc. Tax Benefits - The premium paid for a whole life plan is tax-exempted under Section 80C of the ITA. Similarly, the payouts received on maturity of the plan are also tax-free under Section 10(10D) of the ITA. Loan Facility - Once the policyholder has completed premium payment for three years, he can avail loans using whole life plans as collateral. A Tax-free Legacy for your Heirs - This is the biggest benefit of a whole life plan. It helps you leave behind a legacy for your children, grandchildren at the time of your death. Tax-free death benefits are the cherry on top. Knowing the benefits of whole life insurance policies can help you make a smart choice. Make sure to go through the features and policy terms, to choose the right plan that best fits your needs.
Generally, it’s not possible to cash out your group life insurance plan. Most employers offer group term insurance coverage to their employees. A term plan is a pure-risk life cover and offers no maturity benefits. It acts as a financial safety net for the family of the policyholder, if the primary breadwinner passes away unexpectedly. Since the plan offers only death benefits, it is not possible to cash out a term plan. The same applies for group term life cover as well.
There is a common assumption that there are three types of life insurance policies but in fact in India we have a total of six types of life insurance policy.
Term insurance is basically a life insurance policy which provides coverage for a certain period of time or years. If the insured passes away during this defined period, then the payable amount is paid to the family member (nominee) of the insured.
A term insurance is a pure life insurance that provides no cash value and pure financial protection the beneficiaries. Term plans are cheaper when compared to the whole life insurance plans. The best term insurance plans depend on various factors and your requirement. You can choose the right term insurance plan that is best for you by comparing multiple plans, their features and benefits. Before buying a term insurance plan, look for the following features.
Life insurance is needed as it offers financial protection to individuals who are dependent on the policy holder after his/her death.
Whole life insurance policy provides cover until the death of the insured. It can be even started after you turn 40. Though the initial premium may be higher, it is constant till the end of the policy, hence providing a cash value as you grow old.
The compensation provided by the insurance company is much larger than you had invested. A life insurance becomes a good support to you post your retirement as you do not have to depend on any one for monetary help.
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