Life Insurance

Life insurance is an absolute necessity these days. Due to the ever-increasing rate of death in India, you need to consider your work life and your family members. A life insurance policy covers your immediate family in case of unfortunate death and gives them financial relief as well. To be in a good situation to choose a policy that will best suit your needs, you should be aware of precisely what a life insurance plan is before you buy one for yourself.

This article breaks out everything you need to know about Life Insurance in India.

What exactly is Life Insurance?

Life insurance is described as a legal agreement/contract executed by the insured and an insurance company. The amount of money that will be provided to the beneficiary or nominee upon the policyholder’s passing is determined under this agreement. These plans are well recognised for giving total peace of mind to the policyholder.

What are the types of Life Insurance?

Every individual has a different set of requirements from an insurance policy. To cover all those requirements, a wide range of health insurance is available.

Term Life Insurance Policy is among the country’s most popular life insurance plans. As the name suggests, you receive life insurance coverage for a period of time – “term”. This term usually covers 10, 20, 30 or even more years. The premium amount of these plans increases with the number of years covered under this policy. If you pass away unexpectedly, your nominees will be paid an 8-figure death benefit.

In contrast to its counterpart, Term Life Insurance with Return of Premium is a form of term life insurance plan that provides maturity benefits. You may get coverage for up to 20 years or more, and you will get the premium sum if you live out the policy period. The candidates specified on the insurance are provided death benefits if something tragic happens to them.

Whole life insurance plans, sometimes referred to as traditional full life insurance policies, provide a death benefit for the duration of the policyholder’s life. Whole life insurance policies are specially designed life insurance products that aim to provide the insured with entire life coverage so they may lead a financially secure life and provide a backup net in the case of sudden death.

Endowment life insurance plans offer the policyholder a unique solution of both insurance and savings. In addition to the regular life coverage, these life insurance policies also enable regular savings over time in order to get a lump payment at the time of maturity.

Many individuals face the dilemma of choosing between insurance and investment. ULIP Life Insurance makes your decision-making easier by offering two-in-one coverage as it provides both investing options and life insurance. It is a form of life insurance with a minimum of a five-year lock-in term, making it an instrument for long-term investments that offer risk mitigation.

As the name implies, money-back life insurance policies are among the well-liked categories of life insurance plans that consistently return money to the policyholder in India. Unlike other forms of life insurance policies, which give no returns until maturity, it returns a portion of the total insured sum during the course of the plan.

As one of the most popular components of employee benefit packages, Group life insurance currently offers coverage to a huge number of working individuals in India. These plans can be further divided into group term life insurance and group whole life insurance plans.

A child insurance plan is a sort of life insurance that combines investment and insurance to assist you in providing for your child’s financial requirements. Your ability to build wealth for your child’s future requirements, such as schooling, will be aided by a child insurance plan.

One life insurance policy that offers financial stability and aids in wealth growth after retirement is retirement plans. Depending on the annuity option selected, these plans will pay you a certain amount as a pension in the vesting tenure.

What is Saral Jeevan Bima?

Saral Jeevan Bima is a type of term life insurance plan which is popular in India. This product is made available to everyone without regard to their residence location, level of education, or line of work. This term plan is accessible to buyers of all income levels and educational backgrounds. When the policyholder passes away within the term of the plan, this insurance policy pays a lump sum settlement of a specified amount (sum insured) to the designated nominee. It is a fundamental life insurance strategy that gives your family stability financially. Saral Jeevan Bima’s terms, conditions, and coverages for all life insurance providers are the same.

Why should I buy Life Insurance?

Here is a list of all the benefits offered by life insurance plans, which makes it a necessity for every household:

Peace of Mind: As the sole breadwinner of your family, you must make sure your dependents are financially stable. With a proper life insurance plan in place, you can rest easy knowing that your family members and other dependents will have a financial safety net in case something unfortunate happens to you. The death benefit can act as a replacement for your income for the upcoming days, helping them maintain their daily regimen and pay for your kid’s education or marriage.
Saving Instrument : The policyholder can save money with a life insurance plan, which is its second significant advantage. The insured can gradually accumulate money while still receiving life insurance coverage thanks to endowment life insurance, ULIP life insurance, child insurance, and retirement insurance.
Affordable : Life insurance is a wise investment that can help you cover the cost of your funeral expenses and provide financial relief in case of death. In India, life insurance is available at affordable rates. With minimal monthly premiums, you can get a moderate-sized life insurance plan which offers financial backup to your family in case something happens to you.
Tax Advantages : You may deduct the cost of life insurance premiums for yourself, your spouse, or your kids from your annual taxable income. Under Section 80(C), you are eligible for a maximum tax deduction of Rs. 1.5 lakh. Section 10(10D) of the IT Act 1961 applies to the tax-free settlement of returns from life insurance policies.

What are the life insurance add-ons?

Add-ons or riders are an important component of insurance coverage. It enhances the base coverage of a plan in exchange for an additional premium amount. Here are the 4 most common add-ons to life insurance policies in India.

1. Comprehensive Accident:

This add-on offers you a payout if you face death or dismemberment due to an accident.

2. Premium Waiver :

This add-on offers you a period of waived premium payments if you face dismemberment or disability.

3. Accelerated Critical Illness :

This add-on provides you with periodical or lump sum payments if you are diagnosed with any kind of critical illness listed in the policy.

4. Life Stage Pay-out :

This rider enables you to subsequently enhance the coverage level in accordance with the terms and conditions of the insurance policy without providing any proof of insurability.

How to file a Life insurance claim?

Here is a step-by-step breakdown of the claim filing procedure for life insurance plans

Get multiple copies of the policyholder’s death certificate
Contact your insurance provider.
Fill up necessary documents.
Attach a certified photocopy of the funeral director’s signed death certificate with the insurance claim.
You should get a payout soon after submitting the claim.
Once the claim is approved, you need to decide how the payout will be made. You can choose from monthly and lump-sum payments.

Life Insurance Exclusions

Like every other insurance product in India, life insurance plans come with a set list of situations which are not covered under the policy. Here is a list of all the common exclusions of life insurance plans.

Suicide
Death from life-threatening activities
Death from illegal activities
Pre-existing health conditions that are not covered

The Bottom Line

The greatest factor in choosing the best plan is your health. With this in mind, you should research and compare many different plans to find the one most aligned with your needs. Incorporate what you have learned from previous medical care, family history, age etc. Make sure that you take these into consideration before making a final decision.

Frequently Asked Questions

There is no ‘best’ term insurance for spouses, you need to do proper research and purchase a policy which meets your requirements and budget appropriately.

The premium is a sum that the policyholder pays to the insurance company monthly or annually.

Suicide is generally not covered under any whole life insurance policy. However, some companies offer suicide coverage after a small waiting period. This period can vary somewhere between 1 to 3 years, depending on the policy terms.