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Insurance Plans Best Suited For You
Life insurance offers cover to your life and your family members securing their future financially in the event of an unfortunate incident. Sudden death or critical illness can create a panic situation, stress and loss of income too. While there is no replacement for the life gone, not having to worry about financial stability helps the family a great deal in recovering from the loss. Life insurance is the right instrument to secure your family’s finances after your time. Today, the risk factor in any individual’s life has only increased. It could be due to medical issues, lifestyle concerns, special illness, accidents and alike.
About Life Insurance
Life insurance is a contract or agreement between the insured and insurer that a lump sum will be paid to the beneficiary in the event of a death in exchange for the premium paid. Depending on the contract, the insurance policyholder or the insurer can claim for payment on other events such as terminal illness or critical illness. Other expenses such as funeral expenses can also be covered.
Additional Reading: Why is life insurance useful
Life insurance policy is a legal contract that sites the terms and conditions of the insured events. Certain exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to fraud, suicide, riot, war, and civil commotion.
Life insurance can be bought to protect against such incidents. One needs to pay small amounts of money at regular intervals of time in return for such financial protection. It helps in keeping your family away from financial distress in case something happens to you. The protection starts only after a certain period of premium payment is made. Life insurance has been made affordable to all. The premium depends on many factors like age, gender, medical history, job profile, etc.
Should I take Life Insurance only when I get married ?
Life insurance is not only for people who are married and have children.
Single persons can avail an insurance too to safeguard against any eventuality and use the funds to pay off other debts or help parents.
The younger you are, the lower the premium will be and hence more affordable.
If you have an income, you can use it for saving tax too!
Additional Reading: Should my spouse have life insurance too?
Human life is an income-generating asset. This asset can be lost through unexpected death or made non-functional through sickness or disability caused by an accident. On the other hand, there is a certainty that death will happen, but its timing is uncertain. Life insurance protects against loss. Here are the main key features or characteristics or aspects of life insurance:
Additional Reading: 5 Tips When Considering A Life Insurance Plan
The other features are:
Life insurance is an essential part of your financial strategies, helping to ensure a more secure financial future for your beloved ones when you're gone.
Not only does life insurance help cover unexpected final expenses, it can also provide your family with a financial safety net or even serve as an inheritance.
Financial security and protection are what an individual long for, and life insurance is a perfect answer to that. There are many advantages of availing life insurance, financial security and protection are the most important ones. Others are:
Life insurance provides you with high protection as in terms of financial help that keeps you and your family protected in case of an unfortunate event. For example, your family may have to find the money for mortgage, debt, funeral expenses, bills, income replacement and more.
2. Death Benefits
Investment in a life insurance policy is a safe and better option for you and your family. At the time of contingencies and emergencies, the beneficiary will be able to get the sum assured to compensate for the future need or current expenses i.e. the sum assured plus the bonus to the bereaved family. Life insurance also protects the interest of people who have decreasing incomes with advancing age, people who meet with accidents or for retired people. There are a number of policies available and you can choose the policy that will best suit your requirements.
3. Return On Investments
In this benefit when the policyholder is still alive after the term of their life insurance policy is up, they can get the amount they put in as premiums, tax-free. It basically refunds your premiums if you outlive the policy. Consider a policy with Rs 5 lakh cover for 20 years for which the yearly premium is Rs 500. If the policyholder dies, the family will be paid the sum assured, that is, Rs 5 lakh. However, if the policyholder survives the term, the insurer will return the premium of Rs 10,000 (Rs 500 x 20).
Life insurance schemes are a better investment when compared to other investments because it yields more. It offers bonuses that no other investment scheme can offer. The money invested in life insurance covers risks and is very safe. The money invested will pitch good returns and will be sorted out fully as the sum assured either after the completion of the term or after the death of the policyholder. Both ways the money invested, and the returns are paid back safely.
4. Tax Benefits
To reduce tax liability, Section 80C of the Income Tax Act is an effective way for the salaried person. Under this section, investments made in the specified instruments are subject to rebate. Currently, the amount available for rebate under section 80C is Rs. 100,000 which can be invested in life insurance premiums, pension superannuation fund, employee provident fund, equity-linked mutual fund schemes, National Savings Certificates and public provident fund (maximum Rs 70,000). The amount invested in these instruments is eligible for a rebate through deduction of the amount from gross taxable income.
5. Loan facility
Life insurance provides you with the advantage of taking a policy loan in case you are urgently in need of money. The loan can be borrowed against permanent or whole life insurance only. Interest rates on loan against the insurance policy are usually much lesser than a personal loan. If the interest due on the loan exceeds the surrender value, the policyholder runs the risk of losing the insurance cover.
6. Financial Planning
Financial planning is the process of achieving your goals in life through strategic planning of your finances. It includes components like wealth creation, protection, emergencies and contingencies, as well as life planning for specific milestones. It is often observed that people tend to focus more on ‘wealth creation’ feature than on ‘protection’.
Through life insurance, you can meet your goals, for example, your children's education, their marriage, building your dream home or planning a relaxed retired life, according to your life stage and risk factors.
7. Assured Income Benefits
A family stays secured due to the assured income they receive at regular intervals. This income helps in paying for all rents, loans and other expenses like house rent, telephone and electricity bills, child education, etc. This income recoups for the income that will not be made available after the loss of the earning person.
Another great advantage of a life insurance policy is that you have flexibility over the choice you make to choose among different companies, the policy, duration, the coverage, beneficiary, and more.
Even after you have passed away, most insurers will allow the death benefit to be spent on whatever is required rather than forcing your loved ones to spend it in certain areas.
Changes or adjustments can be made in lowering the premiums and various other things depending upon the insurance after the policy is in action for many years. You can decrease your premiums and death benefits if your income is decreased and can raise it once again in the future.
Riders are additional benefits that can be added with your current insurance policy for extra provisions. Riders come at an extra cost along with the premium an insured party pays. But most riders are cheaper as they require less underwriting. Riders are also known as Insurance endorsement. The purpose of riders is to cover additional policies or customize policies according to the insurance policy holder’s needs. For example, in some cases, the policyholder's needs may exceed the total benefit of the life insurance policy. So, it may be more advantageous to purchase a stand-alone Long-term Care (LTC) policy. If the LTC rider is unused, the policyholder receives a cost-saving compared to the costs associated with purchasing a stand-alone LTC policy.
Additional Reading: What Are The Benefits Of Life Insurance
The other benefits or advantages of life insurance are:
All the life insurance schemes are a combination of the two plans namely, term plans and endowment plans.
The term insurance plan is a very simple, easy to understand and the most affordable life insurance plan. This life insurance plan provides cover against the risk of death for a specified period, and the beneficiary gets the sum insured only at the death of the policyholder within the tenure. It is a pure risk cover that provides high coverage at lower premiums. If the insured survives the tenure, no benefits shall be given to the nominee. The rider can be added to widen up the coverage of policies. The death benefit can be paid in a lump sum or on monthly basis or the combination of both.
If the policyholder outlives the policy term, then there won’t be any pay-out. However, these days insurance companies have come up with innovative policies where the best interest of their customers can be met i.e. Term Plans with Return of Premiums (TROPS), where insurance companies pay back all the premium money if the policyholder outlives the term period. But such plans are costlier than the usual term plans.
Endowment plan is a type of life insurance policy, which is a combination of insurance and savings. A certain amount is kept for life insurance while the rest is invested by the insurance company. In this plan, if the policyholder outlives the term period, then the insurance company will offer him the maturity benefit. Moreover, the endowment plan may offer bonuses from time to time, which are paid either on the maturity of the policy or on the death of the policyholder to the nominee. Before that, no payment is made to the nominees. This policy provides cover against the risk of living a long life. The benefits are smaller than the term plans.
This plan is also commonly known as a traditional life insurance plan although, there is an investment element, the risk is lower than the other investment products and also the returns. This type of plan is best known for long-term saving option with lower risk on investment.
Unit Linked Insurance Plan (ULIP)
Unit Linked Insurance Plan (ULIP) is the blend of insurance and investment. Through a Unit Linked Insurance Plan, the goal is to provide wealth creation along with life insurance policy cover. The insurance company keeps a part of your investment supporting life insurance while the rest will be invested in a fund that is stationed on equity or debt or both and blends with your long-term goals. These goals could child’s education, or retirement plans or any other important plan you wish to save for.
A part of the premium is invested in shares, bonds, etc. when you make an investment in ULIP, and the balance amount is used in giving an insurance cover. The investors are spared the hassle of keeping tabs on the investments by the fund managers in the insurance company who manages the investments.
ULIPs allows you to shift your portfolio between debt and equity considering your risk handling capacity as well as your knowledge on the market’s performance. Advantages like these which offer investors the flexibility of shifting is a huge factor contributing to the popularity of these investment instruments.
Whole Life Insurance Plans
A whole life insurance policy or permanent life insurance gives life coverage until the death of the policyholder. The policy stays in force throughout life as long as the policyholder pays the premium. The sum assured or the coverage is decided at the time of policy purchase and is paid to the beneficiary at the time of death claim – when the life assured dies. Usually, the maturity age is 100 years. If the policyholder dies before the age of 100 years, the beneficiary receives the sum assured. However, if the policyholder outlives the age of 100 years, the insurance company pays the matured endowment coverage to the life insured.
A whole life plan is a very exclusive life insurance plan. The main aim of whole life insurance is to help the policyholder live a stress-free life while being able to create a secure life for their family. The reason being, it comes with not only death benefits but also with maturity and survival benefits along with bonuses, if any. The policy is covered until the death, and also has the maturity benefit feature.
There are different types of whole life insurance policies. The policyholder can choose for a traditional whole life plan or a unit-linked plan. Traditional whole life plans are later categorized as participating and non-participating.
Additional Reading: What Are The Different Types Of Life Insurance Policies
Term Vs. Whole Life Insurance Plan:
Child plans are offered by the insurance company for the welfare of an individual’s children even if they are not around. A child plan is proposed mainly to provide financial support to the family for the children’s future if the parents meet with an unfortunate situation. Insurance plans formulated for the children do not usually insure them adequately. The life insured under this plan is for the parent who has dependent children. The underwriting is done on the life of the parent and the details of the children are provided by the parent to the insurance company in the policy.
Simple monthly savings might not be enough for the growing higher education costs. For your children to shine in the competitive surrounding, education fees should be the last constraint. Child insurance plans provide you with the elasticity to invest based on your children's education needs, your current financial status and other financial goals. Typically, child insurance scheme provides a life cover of around 10 times the annual premium. Additionally, these plans give you partial withdrawal facility as needed. Along with this, you can also avail tax benefits for the premium paid.
Money Back Plans
Most of us want to invest in a traditional life insurance policy for a long tenure to create a guaranteed collection. However, we face a problem when we need funds before the tenure is over. A budgetary crisis might strike anytime, and we need reserves to tackle it. But a traditional life insurance policy is of no help if the term of the plan is not over. We can avail a loan, but it might be limited in amount. What to do? Is there a plan which pays benefits during the plan tenure?
Yes, there is. A money-back plan cracks the problem of liquidity during the policy term by paying a percentage of the Sum Assured regularly through the policy term.
Money-Back plan is a kind of savings plan. Also, you get survival benefit along with maturity benefit and bonus, if any.
The reason why this policy is important is because it provides monetary funds on regular intervals after a certain period of time till the end of the policy term.
In this unpredictable world, where things change rapidly, one may face ups and downs without any prior notice.
There's no problem when everything is going smoothly. It’s when things all of a sudden take a turn and you are financially down. You may want to build a collection of sources for your growth and prosperity. There can be a number of reasons for you to build funds such as investing in your business every few years, child’s education, etc. The money back plans are the best saving plans on which you can rely on.
Besides, money back plans come with a life insurance cover.
Everybody works hard and tries to save money for one of the key stages of life i.e. ‘Retirement’. It is very important to have enough savings post your retirement in order to sustain your lifestyle if you want your life the way you’ve always been living. Therefore, “Retirement Plan” plays a very essential role in your financial planning.
Everyone would like to continue living a lifestyle the way you have been living during your working life, which is why Retirement Plans are also known as ‘Pension plans’. A certain amount of your current income is transferred and stored for your future by your employer. This amount is then given to the employee as pension fund on their retirement.
Pension Plans are known as retirement plans that require you to make contributions into a pool of funds set aside for your benefit in future. This accumulation of fund is invested on your behalf, and the earnings on the investment generate income on your retirement.
For your retirement plan, there are piles of pension plans available in the market. These plans are different from each other. Their benefits, features, exclusions etc. are different too. Pension plans are basically an investment or saving device to provide for your future retirement needs.
All the pension plans are divided into two parts.
The first part is accumulation where you (insured) pays the premium.
The second part is distribution.
Here, you are paid a regular income through an annuity plan after your retirement. Annuity Plan is a type of insurance which starts paying you an income from the start as per the options chosen by you.
People who are above the age of 60 years and qualify as senior citizens can also purchase various types of insurance products such as term insurance, whole life insurance, etc., based on their various financial requirements
Life insurance for senior citizens is extremely important to make them feel protected. The elderly population in India is rising with an improved life expectancy rate. Everybody wants to be cared for in their old age. Senior citizens tend to feel very lonely and helpless as they are not in a position to help themselves, either financially or physically. So, one of the best ways to take care of them and make them feel financially and mentally secure is to buy insurance policies for them.
Senior citizen policies are devised to offer protection to your near and dear ones; they also provide complete peace of mind to you by ensuring that your ageing parents will be taken care of in the future. By offering your seniors a good insurance policy, you take the responsibility of saving your loved ones from running into financial trouble. Even in your absence, these policies will take care of your seniors’ financial requirements.
Additional Reading: What Is A Life Insurance Plan
There are numerous reasons why seniors feel the need for insurance policies. However, the main reason is that these policies can serve as a replacement for their income to support them and their family. Because, after retirement, the inflow of money suddenly stops. Sometimes, upon the death of a senior member, the spouse and children may suffer a lot due to the lack of money. So, to avoid such financial tension, insurance policies are very important as they act as a channel for savings and an income source at the end of the policy term. Also, cash received from these policies can be used to pay off any other existing debts like outstanding loans, medical expenses, etc.
Additional Reading: Senior Citizens Health Insurance 10 Things To Keep In Mind While Buying Mediclaim For Your Parents
There are different types of life insurance plans to help senior citizens avoid financial stress. All these plans for senior citizens in India normally fall under two major categories namely “Whole Life Insurance Plan” and “Term Life Insurance Plan”. Apart from these two major plans, there is another type called “Guaranteed Life Insurance Plan” for senior citizens.
Term Life Insurance
Term insurance plans for senior citizens provide coverage for a specific period of time. When the policy period ends, coverage does too. Death benefits are paid out in the event of death during the policy period. They are pure protection plans and since they do not have any additional frills, term life policies are generally more affordable and flexible than whole life plans. You can choose the tenure, the sum assured, and payment frequency based on your needs. Some term policies come with renewal facilities to renew your policy for a new period when the term is over. This extends coverage even with a progression in age.
When it comes to buying term insurance plans for senior citizens, it is always advisable to spend some time and consider the quotes offered by the insurance company and compare them to choose the most appropriate plan based on affordability and coverage. Also, you need to keep in mind that some companies tend to adjust premiums for seniors after every few years which should be kept in mind when assessing costs.
Whole Life Insurance:
This is a comprehensive form of insurance which provides insurance coverage to the policyholder for his/ her entire life i.e. there is no fixed policy period. Upon the death of the contract holder, the insurance pay-out gets transferred to the designated nominees/ beneficiaries. Age is no bar when it comes to buying whole life insurance policies. These policies come with a savings component, along with the original insurance coverage. That is why whole life plans are priced higher than term insurance plans which don’t have a savings component. Whole life policies come with many other attractive features, for e.g., consistent premium payments over the whole tenure of your policy, tax redemptions, cash value growth, and permanent protection. With guaranteed cash value offered by these plans, you can access your cash through loans and other withdrawal options.
Retirement plans for senior citizens
All throughout the employment period of an individual, he/she would have been saving for retirement. But there would always be concerns about outliving this retirement corpus. Life insurance companies offer immediate annuity plans specifically suited for senior citizens so that they can live without having to worry about finances in their sunset years. The income provided by these plans will continue throughout the life of the customer, and in his/her absence, will be offered to the spouse.
Some of the key features of a senior citizen retirement plan are:
Benefits of Senior Citizen Life Insurance Policies
Senior citizens insurance policies come with many added benefits apart from providing financial security. The benefits of insuring senior citizens’ lives include:
Choosing the right insurance plan for the elderly is a difficult task given the number of choices and plans offered by various insurance providers. These plans are easily accessible, but how you compare the different policies and zero-in on the right plan to suit needs and budget can be tedious.
It is always important to compare the various policies offered by different companies and find out the pros and cons of each and every policy, keeping in mind that the senior citizens often face different and unique challenges. Some senior citizens might have problems finding the right policy because of their age and some others may not be covered under good policies because of poor health. So, after assessing and understanding the various needs and challenges faced by seniors along with the advantages and disadvantages of the senior citizen life insurance plans, you need to compare costs and benefits to arrive at the right choice.
Applying for senior citizen insurance plans is not difficult, once you finalize the policy you are going to buy. Either you can apply online (if the service is available) or you can contact a particular insurance company for the same. Your insurance company will send a representative to help you get the right policy for your loved ones.
However, there is an easy way to compare senior insurance policies, i.e., through the online portals of different insurers can help you compare and choose among a variety of insurance plans dedicated only for the senior citizens. You can then go ahead and apply for the policy at the insurer’s website. This helps save time, money and effort; it also lets you make informed choices by reading through reviews of those who have already availed different policies.
Rates for Senior Citizens Insurance Plans
The rates of senior citizen insurance policies differ depending on age. Also, factors such as health, lifestyle, family history, etc., affect the rates of these policies. Senior citizens with healthy lifestyles can avail better coverage at lower premiums.
Life Insurance Policy for Women
With changing times, more and more women have started to enter the general workforce, and are increasingly being employed in various sectors. Many times, women also play the role of the primary breadwinner and support various members of the family financially. Given how invaluable the role of a woman can be in providing for her family, it is a must for all women to purchase life insurance plans for themselves. Life insurance plans, in addition to providing financial security to one’s beneficiaries, can also act as a savings or investment instrument, thus helping you reach your financial goals faster.
Life Insurance Plans for Women
All life insurance policies, including term life plans, whole life plans, ULIPs (unit-linked insurance plans), endowment plans, annuity plans, etc. can be purchased by women and men alike. Many insurance providers also offer preferential premium rates to women policy buyers. However, we have listed 2 life insurance plans that have been exclusively designed for women.
Life Insurance Policy For Smokers:
Know the best term life insurance products offered by top insurers in the country for those categorised as smokers. Listed below are the preferable plans, plus the penalty for giving incorrect information to the insurer - whether one is a smoker or not.
Individuals who have an addiction to smoking can avail of term insurance policies specially designed for smokers. Smokers looking to avail of term insurance are required to provide the insurance company with all relevant information regarding their smoking habits.
Categories of Smokers
Generally, most of the insurance companies have differentiated smokers by placing them into three separate categories:
Of these categories, typical smokers are considered to be ones with small health issues while preferred smokers are generally considered to be fit. However, table rated smokers are considered to be ones with notable physical issues. Premium given out to smokers are typically higher than regular insurance premiums due to the higher level of risk involved.
While term insurance for smokers differs from company to company, these are some of the general features of these policies:
Consequences of Not Providing Correct Information
Clients withholding information regarding their smoking habits as well as state of health could face the charges below:
If you are a non-resident Indian (NRI), you can purchase insurance plans specifically designed for people who reside outside India. You can purchase a plan which would protect the future of your loved ones and secure them in your absence.
Term insurance are offered to the NRIs. Most of the policies are available online and do not require you to undergo medical tests. Term Insurance plans are pure protection plans. Most term insurance policies can be purchased by NRIs. Some companies have simplified their process to issue the term insurance to the NRIs.
Additional Reading: How Much Life Insurance Do You Really Need
The insurance premium depends on many factors such as age, gender, smoking habits, personal medical history etc. There is a perceived risk factor in everyone as seen by the insurance provider. Life expectancy is another big factor in determining the premium amount. A life insurance premium calculator helps in finding out the monthly outflow or the annual expense on maintaining the insurance policy. This can be calculated online at the official website of life insurance companies by feeding in the annual income, assured sum of insurance and age cover. The premium amount is generated instantly.
Additional Reading: How much does life insurance cost
Life Insurance Riders
Riders in a life insurance policy are additional benefits provided over a primary policy, which come into action in case of a specific situation. Even with the occurrence of the event, the policy cover will remain intact. They offer financial protection over and above the sum assured. Following are the different types of rider provided along with the life insurance policy.
1. Disability Rider:
In our life journey, we come across many twists and turns. Life is full of unexpected events and one can never know how his journey will come to an end. One could die peacefully in his sleep or due to an accident.
Simply buying a term insurance plan will give you normal death benefit (the sum assured amount only). Also, in today's fast-paced world, the number of instances of accidents have increased drastically, and hence it is time to provide an additional layer of security to your family's future. Disability riders will offer your loved ones a supplementary sum assured if you are disabled due to an unfortunate incident which may hinder your income.The policyholder is entitled to get an additional financial cover on being afflicted with a disability.
2.Critical Illness Rider:
Major illnesses like Cancer, heart attack, kidney failure, coronary artery bypass and paralysis can affect you temporarily or permanently. You will require higher medical costs and your financial worries can go high. These diseases are very expensive, and a normal individual cannot create much funds in a short time. Although basic life insurance policies cover these illnesses, the sum assured offered are highly inadequate. For example, most of the life insurance or health insurance policy offer a sum assured of Rs. 1 to 5 lakhs (family floater), while the treatment for stroke itself costs Rs. 6 lakhs. Critical Illness Rider can compensate you with a lump sum amount if you are diagnosed with a medical illness that has been pre-specified in the policy. The insured is entitled to get financial protection on being diagnosed with a critical illness.
3. Accidental Death Benefit Rider
How often do we see a family’s finances come under tremendous stress because the primary breadwinner met with an accident? Treatment of the accident involves considerable expense and if it turns out to be deadly, the family must also deal with loss of life and future income. The double jeopardy of medical expenses and permanent loss of income from the death of the breadwinner can be financially as also emotionally devastating for the family.
This is where the accidental death benefit rider can prove helpful.
How does the rider benefit you?
The rider safeguards the family from accidents / unfortunate situations resulting in death which can affect the family’s income for several months or even years.
In an event of death, the ensured gets additional amount - usually twice the sum assured.
If you are suffering from terminal illness, your grief-stricken family would have to bear huge medical expenses for your treatment. With this rider, your will get partial advance amount of your sum assured when you are critically ill. If you have less than 12 months left to survive, the advance payment can be used for the treatment and costs required to stay alive. The remaining amount is paid to the family/nominee once you are no longer in this world to support your family emotionally and financially. Financial cover against the risk of death through accident.
Want to know ways of boosting your life coverage to support your precious family? This is the rider for you. By adding this extra security you can boost your coverage plan, but for that you must pay a slightly higher premium. Your family/nominee gets additional income for the next 5-10 years along with the sum assured amount.This rider guarantees a monthly income to the nominee on death of the life insured. You can get more perks from your term insurance policy other than death benefits. By your basic term insurance plan, you can get the additional privilege. For that, you need to shack extra few incomes.
5.Waiver of Premium Rider
You have been paying term insurance premiums, but due to a disability, you stop earning and are unable to pay premiums for the entire term. Generally your policy expires and you gain no-death benefit due to non-payment of premiums.fortunately, if you have this rider, then your premiums are waived off in the event of disablement during the term of your premium. This rider enables the policyholder not to pay any premium in the event of accident or disability. This rider is an optional benefit which helps to pay off your premiums due when you are unable to pay them. This is by far the most popular rider opted for. This rider is available on all forms of life insurance policies and also on permanent forms of insurance coverage.
While this rider may already be added with few policies as part of the policy, usually it costs extra and it must be added only at issue. Adding the rider at the issue of the policy can be risky as the cost of the insurance may increase but it’s up to the policyholder to balance the payment of premiums at the time of disability.
6. Permanent or partial disability:
You meet with an unfortunate accident causing you to lose your body part or senses. Due to this, you are disabled for the rest of your life, and your livelihood is snatched from you. Regardless of whether you succumb or survive disabled in the accident, your family would equally be left in the lurch. Your financial burden needs to be borne by someone, right? That is exactly what a disability cover does. It covers that risk and substitutes your income for the family’s future.
Life Insurance is the financial ladder when your life support structure collapses. A wise financial planning will include investing in life insurance. It secures your family’s needs during bad times and ensures that children are taken care of. Life insurance is helpful when there is an unfortunate incident or a sudden death in the family. The dreams and needs of the family are taken care of during such times. Today, there is a plethora of insurance policies in the market. Some policies have investment options and earnings from them. Some have life coverage and critical illnesses coverage. One needs to assess the best suitable policy to one’s needs and invest in it. Tax benefits can also be availed through life insurance policy. It is, therefore, a wise decision to take a life insurance policy and include it as an investment.
Though human life cannot be measured, you might be sure of your income now, but you can’t be sure of your future. Unpredictable things happen and you can’t expect help at a sudden unfortunate situation but with the help of insurance policies you can always rely on them for help. There are a variety of Insurance policies to choose from. You can choose a suitable policy or more depending on your capacity of balancing the premiums.
Additional Reading: Why Do I Need Life Insurance
Risks when life insurance is a must:
Life insurance is needed:
Buying life insurance is a necessary investment in today’s world. The earlier the better holds true in this case. There are multiple benefits if you purchase life insurance when you are younger.
When you are in the 20s and 30s, it is the right time to invest in life insurance. The policy will be cheaper, premiums will be lower, the corpus can be built more effectively, and investment benefits can be earned. Family insurance is more or less decided during this phase.
The 40s are a crucial period as one is at their peak earning capacity. More responsibilities are shouldered in terms of dependent parents, family, medical problems and liabilities. It is, therefore, a good time to plan for your retirement through an apt insurance policy.
In the 50s and 60s, one needs to plan for a source of income post-retirement. There may be outstanding debts or loans to be paid off. Hence, retirement insurance and related policies can be considered for investment.
Most of the people qualify for life insurance. In common, it is simple for a young person in good health to get life insurance at an affordable rate. And since there are so many different types of life insurance schemes, you can probably be eligible for life insurance no matter what stage of life you are in.
To buy the life insurance that you can afford, you should learn how life insurance companies process your application. Life insurance companies make use of a process called underwriting to determine your risk for dying. Every company has different ways of assessing your risk; some are too involved than others. Most of the companies ask you to complete certain steps to decide if you qualify for their life insurance policies.
Step 1: Fill out an application
What life insurance companies ask on the application:
It is very important to answer these questions honestly because if the company finds out that you have lied on your life insurance application then they can cancel your policy and keep any premiums you have paid.
Step 2: Undergo in-person medical exam (for some policies)
Some life insurance companies may just ask health-related questions on their application. But others may require you to undergo an in-person medical exam to evaluate your overall health. An insurance company agent will likely arrange for a paramedical for your in-person medical exam. What might be included in the medical exam:
Step 3: Payment of premium for your desired policy
To get life insurance, you have to select a death benefit that will be equal to your prospective lost income and you also have to select a insurance policy that you can afford, meaning that the premium is something you can pay on time for the duration of the policy. You will probably not qualify for a life insurance policy if you try to get a death benefit that is too huge in comparison with your risk level. If you stop making premium payments for the policy that you have selected, then your policy will be canceled.
Things that might make it harder for you to get a life insurance would include:
If you reside in one of the above categories, you might still be able to get life insurance, but you will have to pay a higher premium. And there may also be a limit on how much coverage you can get. If you are a survivor of a deadly disease like cancer or have experienced other health issues in the past, you may qualify for life insurance, as long as a certain amount of time has passed and currently you are in good health.
And remember, if your life insurance from one company has been rejected that does not automatically mean that you won’t qualify for life insurance from another company. It’s important to refer to different schemes.
Applying online :There are multiple ways to apply for a life insurance policy. The easiest and fastest way to get a policy is through the online mode. Every life Insurance company has a comprehensive website that offers all details on each insurance plan and can be applied online as well. Once the application is submitted, one can create an online account to track the application, status of the policy, managing the policy and many other services. One can also download the forms for specific insurance policy and submit the duly filled document at the closest life insurance company’s branch.
Applying at branch :Every life insurance company has branches all across the country. You can drop into the closest branch and discuss details of the best suited insurance policy. Thereafter, application form can be submitted, and policy account can be opened.
Toll-free Numbers :The insurance companies have toll-free numbers that operate on all 7 days of the week. This channel can also be used to enquire about various insurance plans and place your interest.
Underwriting is a facility provided by banks, insurance companies, investment houses and other financial institutions. Here, they guarantee payment in case of financial loss or damage and accept the financial risks and the liability arising from such guarantee. Financial bankers who accept such financial proceeding in return for premiums are called the underwriters. In short, It is the process through which an individual or institution takes on financial risk for a fee. The risk in most cases involves loans, insurance, or investments. The term underwriter emerged from the practice of having risk-takers write their name under the total amount of risk they were willing to accept in exchange of a specified premium. Although the workings have changed over time, underwriting, today plays a key function in the financial world.
Insurance underwriters assess the worth of the risks and exposures of potential clients. They estimate how much coverage the client should receive, how much they should be paying for it, or whether to accept the risk and insure them or not. Underwriting involves ascertaining risk exposure and evaluating the premium that needs to be charged to insure that risk. The main role of the underwriter is to guard the company's book of business from risks that they feel will make a loss and issue insurance policies at a premium that is equivalent with the exposure presented by a risk.
Each insurance company has a different and unique set of underwriting guidelines to help the underwriter estimate whether or not the company should accept the risk. The information used to evaluate the risk factor of an applicant for insurance will depend on the type of coverage they choose. For example, in underwriting automobile coverage, an individual's driving record is uncertain. However, the type of automobile is actually far more uncertain. Medical underwriting may be used to examine an individual’s health status as it is a part of the underwriting process for life insurance or health insurance (other factors may be reviewed as well, such as age & occupation).
The factors that insurers use to classify risks are generally objective, clearly related to the likely cost of providing coverage, practical to administer, consistent with applicable law, and designed to protect the long-term flexibility of the insurance program.
The underwriters may decrease the risk factor or may give a quotation in which the premiums have been loaded (including the amount needed to generate a profit, in addition to covering expenses) or in which various exclusions have been stipulated, which restrict the circumstances under which a claim would be paid. Depending on the type of insurance plan (line of business), insurance companies use automated underwriting systems to convert into a coded form of these rules and reduce the amount of labouring work in processing quotations and policy issuance.
This is especially the case for certain easier life or personal lines (auto, homeowners) insurance. Some insurance companies, still, rely on agents to underwrite for them. This setting allows an insurer to operate in a market in close range to its clients without having to establish a physical presence.
Two main categories of exclusion in insurance underwriting are moral hazard and correlated losses. With a moral hazard, the result of the customer's actions are insured, making the customer more likely to take costly actions. For example, bedbugs are commonly not taken into account from homeowners' insurance to avoid paying for the consequence of recklessly bringing in a used mattress. Insured events are normally those outside the control of the customer, for example (typical in life insurance) death by car accident, contrasted with death by suicide. Correlated losses are those that can affect a large number of customers at the same time, thus possibly bankrupting the insurance company. This is why most of the homeowners’ policies cover damage from fire or any other situations (usually affecting an individual house), but not earthquakes or floods (which affect many houses at the same time).
Below are the steps the nominee of the policyholder is supposed to take to file a death claim. No matter what is said, the grief of losing a loved one is undoubtedly one of the most painful experiences that anyone can have in life. This personal loss can cause much emotional distress for a prolonged period. No matter what anyone says, the grief can affect the sufferer’s ability to think clearly and take decisions. However, in some cases, the emotional distress isn’t the only consequence arising from the loss of a loved one. Many times, the death of a close family member can also give rise to legal and financial issues, which can be quite a challenge to resolve at times.
The purpose of taking life insurance is primarily to provide financial protection to your loved ones in case something untoward were to happen to you. Life insurance ensures financial stability to your loved ones in a time when you cannot provide for them anymore. This is especially true if the primary income earner of the family happens to pass away, in which case, chances are high that the family may go into financial turmoil, given the lack of income to sustain their needs.
However, more often than not, the beneficiaries of a policyholder may not be fully aware of the process of making a death claim on the life insurance policy, which can further add to the general grief and distress of those mourning the loss. When it comes to insurance, the beneficiary appointed by a policyholder is entitled to receive the sum assured under a policy. However, if the beneficiary is not aware of the claim process, they can end up losing valuable time which can further prolong the financial distress that the family may be undergoing. This is one of the major reasons why it is important that all beneficiaries who have been nominated under a life insurance policy be aware of the claim settlement process in detail.
Steps For Filing A Life Insurance Policy Death Claim
The process of claim settlement will more or less be the same for most insurers, barring a few minor changes. To ensure that you lose no time in filing a death claim, it is important to be familiar with the complete claim settlement process. Mentioned here are the basic steps involved in filing a life insurance death claim.
Step 1 – Notify the Insurance Company
The first step of the claim settlement process is to inform the insurer about the claim having occurred. The nominee or claimant must immediately inform the insurance company about the policyholder’s death. This is the first step in the claim settlement process following which the claimant must register a claim either by calling the insurer’s helpline number, or by sending an email to the designated email ID provided for this purpose.
Step 2 - Claim Processing
After the insurer has been duly informed about the policyholder’s death, the next step of the claim process involves the submission of claim supporting documents. The claimant/nominee must provide documents which have been requested by the insurer in support of the death claim. This is required if the death has occurred due to natural or accidental reasons. After the insurer has received all the requested documents, the Claim Assistance team will begin assessing the claim. They will assess not only the claim but also other things like the supporting documents, the nominee’s declaration and verify the same. In some cases, the nominee may be asked to provide additional documents to support the claim further.
Step 3 – Claim Processing & Pay-out
After the Claims Assistance team has reviewed the claim and related documents/evidence, they will make their decision to either approve or deny the claim. If the claim is approved, the insurer will proceed to settle the claim which means that the sum insured will be paid to the nominee in the mode chosen by the policyholder. Life insurance claim pay-outs are mostly paid via ECS. For this, the insurer will ask the beneficiary to submit their bank account details, a photocopy of the bank account passbook, and a cancelled cheque.
Additional Reading: How To File a Complaint About Your Insurance Company?
For registering a death claim, the insurer will require the nominee to provide multiple documents to support the claim being raised. Here is a list of the basic documents which an insurer is likely to request. The requirement may differ from insurer to insurer.
In case of death caused due to an accident, here are the documents to be provided for filing a claim.
Whenever anyone buys a life insurance policy, he would always want to know how much money would be due to him and when. That is exactly the reason behind purchasing the same. The most common types of claims are maturity Claim and death claim. This is applicable in all life insurance policies except traditional term insurance plans which do not have a maturity benefit.
Maturity Claim is linked with the maturity benefit of the Policy that is the claim which arises when the policy matures. It easily means that when the policy completes its term period, a certain amount of money called maturity claim amount is settled towards the policyholder. It is paid only if the policy completes its term period of time and the policy has been continued properly, i.e. all the remaining premiums have been paid on time.
The procedure of paying maturity claim is the easiest among all claims, where the life insured needs to fill up a form called the policy discharge form and the maturity amount is paid out without much stress. The money is usually paid out before the maturity period once the policy discharge paper is duly filled and submitted before the date of maturity. Usually, the insurance company will send you the claim form well in advance of the policy maturing.
Money disposed of maturity claim is tax-free as per the current income tax laws.
Life insurance helps you to save taxes in numerous ways.
Are Premiums Paid on Life Insurance Tax Deductible?
Yes, then you are right.
Tax can be deducted on Premiums Paid for a Life Insurance Policy under Section 80C
You can take advantage of tax benefits on premiums paid for a life insurance policy. Tax deduction under Section 80C of the Income Tax Act, 1961, allows exemption up to Rs.1.5 lakh per annum.
How can you avail this benefit?
You can claim for deductions on premiums paid towards life insurance policies of:
Moreover, a member of the Joint Hindu Family can also avail the above tax benefits under this section.
Life insurance payouts are nothing but sum assured or coverage. They are received as a death benefit to the nominee or on maturity as a survival benefit to the insured, including bonuses (if any) is exempted from tax under Section 10 (10D) of the Income Tax Act, 1961.
Notes to keep in mind about tax exemption in life insurance under Section 10(10D):
Payouts are not tax exempted under the following cases:
1. A Keyman Insurance Policy is a special type of life insurance policy offered for companies and organization, willing to provide life cover to Key People in their organization. The death benefit under such conditions goes to the company.
2. Under Section 80DD (3) and 80 DDA (3) if the handicapped dependent dies before the payment is done by the member on the premium then such amounts will be treated as income and are taxed accordingly.
Under Section 80D of the Income Tax Act, 1961 validates tax benefits on health insurance premium. So, if your life insurance plan has health-related connate or add-on cover such as Surgical Care Rider, Critical Illness Rider, Hospital Care Rider, etc. you can avail tax benefits.
You can claim deductions for premiums paid towards health insurance policies of:
Notes to keep in mind about tax exemption in life insurance under Section 80D:
Moreover, a member of the Hindu Undivided Family (HUF) can also avail the above tax benefits under this section. Don’t have life insurance?
List of Life Insurance to Help You in Saving Taxes
How to buy a Life Insurance and get tax benefits?
Why Buy Life Insurance Online?
1. Is it possible to increase the sum assured during the policy tenure?
Yes, it is possible to increase the sum assured during the policy tenure. The policy holder needs to submit a letter requesting for it with application copy, premium amount, all medical and other requirements to be fulfilled.
2. How can I change the contact details on the policy?
The policyholder must send a request to the insurance provider including a policy service request form.
3. What does Policy Term mean?
Policy Term means the number of years for which the insurance policy and life cover is active. It starts with the issue date and ends with maturity.
4. How many types of life insurance policies are generally provided?
5. What is a life insurance rider?
It is an additional feature over and above the insurance policy taken. Riders upgrade your current insurance policy with more benefits if you can afford it.
6. Is it Possible to Get Insurance Cover for Seniors Over 80?
Yes, it is possible to get insurance cover for elders even after the age of 80 years. Life insurance for senior citizens is available for different age categories, viz. over 85, life insurance for seniors over 65, 65 plus life insurance plans, old age life insurance, 50 plus life insurance, life insurance for seniors over 70, etc. However, the availability of life insurance at this age depends on the state of your health.
7.What will I get on maturity under Term insurance?
You will not get anything on the maturity of term insurance. The only benefit you will get is the death benefit. Your family will gain the sum assured on your death.
8.How much life cover should I buy in a Term plan?
There is a general formula to understand how much life cover you should buy in a term plan. Minimum sum assured = Annual Income x 10 times + Loans/Liabilities. Based on this formula, you can calculate your required life cover.
9.What if I become NRI after purchasing term plan?
Your plan will continue even after you become an NRI. Note that your term insurance won’t be valid for the first two years, if your status change is not intimated to your insurer. You need to update your KYC status as Non-Residential in all your existing policies. If you fail to do that, you won’t be able to renew your policy that you had once purchased when you were a resident. Claims will be settled in the account from where the premiums were being received. They can be denominated in both Indian and foreign currency.
10.What will happen if death occurs within one year of purchasing the policy? Will the claim be settled still?
Usually, once the policy is issued, even if death occurs within one year of purchasing the policy, the claim will still be settled. Once again, this depends on the terms and conditions of the insurance company. You will have to carefully note it in the policy document and clarify it with the insurer.
11.What mandatory documents are required to buy Online Term Plan?
A following list of documents are needed to purchase term insurance online. They are listed below.
12.How can I be sure that my family will not face problems while making a claim?
According to section 45 of the Insurance Act, 1938, an insurer cannot reject any life insurance claim after 3 years of issuing the policy. This ensures that your family is financially protected in case of your death.
Having said that, it is important that you keep your side of the promise. While buying a policy, you are expected to fill the proposal form with correct information, to avoid rejection.
Through a medical exam the insurer ensures that your health status is accurately recorded. This reduces the chance of a claim getting rejected to a great extent.
13.How much time does it take for a claim settlement?
Your loved ones can stay hassle-free when it comes to claim settlement. The procedures vary from one insurer to another. The claim settlement can take anywhere from 8 – 15 days depending on the prevailing conditions of your medical claim.
14.Why should I buy an Accidental Death Benefit cover if accidental deaths are already covered under base plan?
No doubt accidental deaths are covered under base plans but having an additional accidental death benefit cover serves as a great benefit. In case of an accident, an additional amount will be paid to you by your insurer along with the base life cover during the term of the policy.
15.Will my premium amount change during the tenure of the policy?
Once the policy is issued to you, the premium amount stays the same throughout the entire tenure of the policy. This also depends on the tax regulation declared by the Government of India.
City Union Bank Partners with TATA AIA Life Insurance12 Jul 2022
India’s leading company Tata AIA Life Insurance has partnered with City Union Bank (CUB) to provide life and health insurance solutions to City’s consumers. This partnership will help City Union Bank’s existing & new consumers to get benefited from T...
India’s leading company Tata AIA Life Insurance has partnered with City Union Bank (CUB) to provide life and health insurance solutions to City’s consumers. This partnership will help City Union Bank’s existing & new consumers to get benefited from Tata AIA Life's diverse and innovative products and services spanning term insurance, savings and investment, retirement, and health. It allows Tata AIA Life to grow its distribution via various CUB’s 700+ branches. The partnership aims to contribute toward improving life insurance penetration in the country. Now, the new partners plan to provide hassle-free access to best-in-class life insurance solutions to City bank’s consumers.
Tata life Insurance introduces the AIA Life Insurance Smart Value Income plan1 Jun 2022
The Tata AIA Life insurance has introduced the Tata AIA Life insurance value income plan. Tata AIA is a non-linked, participating life insurance savings plan that provides several features like regular and consistent income options. It allows policyh...
The Tata AIA Life insurance has introduced the Tata AIA Life insurance value income plan. Tata AIA is a non-linked, participating life insurance savings plan that provides several features like regular and consistent income options. It allows policyholders to adjust bonuses against the premium. Tata AIA can be purchased by people from age 1 to 65, with the maximum maturity age being 100 years. The feature of this new plan is earning a cash bonus from the first month, life protections, and exclusive rights for SMEs and woman entrepreneurs. The woman entrepreneurs can avail 1% discount on the loan interest rate.
SBI updates its MoU with the Indian army16 Dec 2021
The State Bank of India updates its memorandum of understanding with the Indian army to aid all its serving & non-serving personnel through its Defense salary package scheme. The DSP scheme provides enhanced benefits in personal insurance, accidental...
The State Bank of India updates its memorandum of understanding with the Indian army to aid all its serving & non-serving personnel through its Defense salary package scheme. The DSP scheme provides enhanced benefits in personal insurance, accidental death cover insurance and disability insurances. Bank provides captivating concessions on house loans, vehicle loans and platinum debit cards to all higher officers. It assists the educational needs and the marriage of the girl child of the deceased army personnel.
Rise in the Number of NRIs buying Life Insurance in India 21 Sep 2021
Post the pandemic, there has been a huge increase in the number of NRIs opting for life insurance cover in India. Lower premium rates are one of the primary reasons why NRIs choose life insurance companies in India. On average, the premium rates in I...
Post the pandemic, there has been a huge increase in the number of NRIs opting for life insurance cover in India. Lower premium rates are one of the primary reasons why NRIs choose life insurance companies in India. On average, the premium rates in India are 20% lower than offered by overseas insurers. The premiums paid by NRIs for life insurance in India has increased from Rs. 115 crores in 2020 to Rs. 182 crores in 2021. Bajaj Allianz Life, Exide Life Insurance are some of the insurers that have seen an increase in their NRI income in the last year. The majority of the demand comes from NRIs in the Middle East, followed by Europe and the rest of Asia.
HDFC Life Acquires Exide Life Insurance Company 14 Sep 2021
HDFC Life Insurance company has acquired the Exide Life Insurance company for a deal of Rs. 6,687 crores. With the acquisition, HDFC Life aims to increase its presence in South India, especially in the smaller towns and rural areas. The transition is...
HDFC Life Insurance company has acquired the Exide Life Insurance company for a deal of Rs. 6,687 crores. With the acquisition, HDFC Life aims to increase its presence in South India, especially in the smaller towns and rural areas. The transition is expected to be completed in June 2022, following regulatory approvals. Customers of Exide Life Insurance need not panic as they can continue to pay premiums for the policies, submit claims as usual until the acquisition is formalised. Once the acquisition is completed, HDFC Life will help customers with the transition.
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