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Overview Life Insurance in Mumbai

Mumbai is the financial capital of the country. It is home to big conglomerates in India and has the highest number of millionaires and billionaires in India. Apart from being a corporate and an industrial hub, the city is also known for its rich culture and has many heritage sites. The city was originally known as Bombay but was renamed Mumbai in the year 1995 after Devi ‘Mumba’ the patron Goddess of the Koli Community.

The city is prominent as a financial, commercial and entertainment capital of the country attracting lakhs of migrants every year. Mumbai was originally a cluster of seven islands that have come together to form the city that is today that is often considered to be the backbone of the Indian economy.

The life insurance industry in Mumbai is one of the major industries in India. There are multiple customers of the Life insurance industry in the city. There are many private and public insurers in the city that provide many types of life insurance products catering to the specific needs of the insurers. There are many factors that make life insurance a very essential investment for every person.

Given below are the details relating to the life insurance in Mumbai and the need for the same.

What is life insurance?

Life insurance is the most popular type of insurance and is often considered to be the only form of insurance by the less informed people. This insurance provides a safety cover for the people in their old age or their family in the time of their untimely demise. Life insurance can be used as a tool to build a corpus fund to meet the financial goals of the family.

Some of the most common types of life insurance available in Mumbai are,

  • Term plans – This is the most common type of life insurance plan with a tenure of 5 years to 50 years. This plan does not offer maturity benefits only death benefits are available to nominees.
  • Term plan with a premium return – This is a modified plan to the plain vanilla term plan mentioned above. Policyholders get the benefit of the return of the premium amount if no claim is made.
  • ULIPs – ULIPS are Unit Linked Insurance Plans and are among the oldest form of insurance. They combine the insurance and investment option providing the benefit of insurance and mutual fund investment.
  • Group life insurance – The owner takes this policy for their staff. It is no longer active when the employee leaves the organization. It provides a standard cover (usually Rs. 5,00,000) and can also be used to cover eligible family members.
  • Child plans – These plans can be bought for children right from birth to secure their future. Money can be withdrawn at maturity of the policy or after attaining adulthood.
  • Whole life insurance plans – This is in the nature of a long-term plan and provides cover for life (usually up to 99 years). Eligible family members can be included under this plan.
  • Endowment plans – These are insurance cum savings or investment plans that provide the dual benefit of insurance and investment. It helps in helping in securing the financial future of the policyholder and their family.
  • Money Bank plans – These plans also provide help in returning the portion of the sum assured to the policyholders at regular intervals. Balance of sum assured is received at maturity or as death benefits.
  • Retirement plans – Policyholders can get retirement benefits in the form of pension or regular monthly income under these plans.

What are the benefits of life insurance?

There are multiple benefits of getting a life insurance policy. Some of such benefits are highlighted below.

Tax benefits

This is the greatest incentive to get a life cover for many individuals. Policyholders can claim the amount of premium paid for life insurance as a tax deduction from their gross total income. The available tax deduction for premium on life insurance is up to Rs.1,50,000 under section 80C of the Income Tax Act, 1961.

Coverage for self and family members

A life insurance policy can be used to provide coverage for self and family members. This coverage can be for a limited period of time or for their lifetime depending on the type of policy. Therefore, customers should check the number of people that can be insured in a single policy before opting for the same.

Option to avail loan 

Many lenders allow the life insurance policy to be sued as collateral for loans. The amount of the loan depends on the lender’s policy. Usually, the amount to be sanctioned is from 70% to 90% of the policy value depending on the lender’s policies in this regard.

Frequency to pay the premium 

Premium is the amount to be paid to keep the policy active. It can be paid either annually or monthly, quarterly, semi-annually as the case may be. The premium amount to be paid for every policy depends on various factors like the age of the applicant, location, medical condition, etc. The frequency to make premium payments is decided as per the agreement between the insurer and the policyholder.

Getting returns through ULIP plans 

ULIPs are Unit Linked Insurance Plans that can offer the benefits of insurance and mutual fund investments. These plans have a minimum lock-in period of 3 to 5 years. Policyholders can earn market returns and get insurance cover too.

Life Insurance in Mumbai FAQs

1. What are the factors affecting premium payment?

A. The factors affecting premium are,

  • Age of the applicant
  • Location of the applicant
  • Marital status
  • Income of the applicant
  • Employment status
  • Existing policy if any
  • Number of members covered
  • Coverage amount

2. What are the important factors to be considered before getting life insurance?

A. Some of the important factors to be considered before getting life insurance are,

  • The reputation of the insurer
  • Tenure of policy
  • Premium amount
  • Amount of coverage
  • Ease of access
  • Additional benefits (riders)
  • Number of family members to be included

3. What is the lock-in period for ULIPs?

A. The minimum lock-in period for ULIPs is 3 to 5 years depending on the insurer.

4. What are some popular types of insurance available to people of Mumbai?

A. The other types of insurances that can be bought by people of Mumbai are medical insurance, health insurance, fire insurance, theft insurance, home insurance, general insurance, etc.

5. Who can buy life insurance in India?

A. Life insurance in India can be bought by any resident Indian for themselves or their family members.

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