Life Insurance Plans

What is Life Insurance?

Life insurance is a contract between an insurer and an insured, under which the insurance provider promises to pay an assured amount to the nominated beneficiary in the unforeseen event of the demise of the insured during the policy term. In exchange for this, the insured consents to pay a pre-defined amount of money in the form of premiums either in a lump sum or on regular intervals. If the contract includes it, some other emergencies, like a terminal illness or a critical illness can also set off the payment of benefit. If included in the life insurance policy, some other things, like funeral expenses may also be covered as benefits.

The basic purpose of life insurance is to provide financial security to the surviving family members of the insured in case of her/his unfortunate demise. Therefore, it becomes vital for the applicants to analyses their financial situation and determine the living standard of their family members before finalizing the life insurance plans.

Again, the life insurance plan should be choose based on the needs and goals of an individual. One can assess (calculate) her/his financial needs and goals with the help of different online life insurance calculators that are available on life insurance aggregator websites. It always a smart step to include different life events like marriage, the birth of kids, divorce, buying a house, etc. before making the final decision.

These days, there is a plethora of life insurance channels available for the interested buyers, including term insurance, whole life policy, etc.  A term insurance will provide the policyholders with protection for a set term (period of time); whereas, a whole life insurance policy will provide them with lifetime coverage.

Life Insurance: Statistic and Facts

The life insurance domain has witnessed a remarkable growth. The insurance industry in India consists of 57 life insurance companies. Out of these 57 providers, 24 are life insurance providers and 33 are general insurance providers.

There has been an increase in insurance penetration in India. This has risen to 4% in FY 2017. The insurance penetration was 3.4% in FY 2016.

The main trends for the Gross Premium written in the Indian economy are illustrated in the graph below:

*CAGR: Compound Annual Growth Rate

The graph above illustrates the overall Life Insurance growth.

Why is Life Insurance Important?

Everyone knows the importance of life insurance but mostly they choose to ignore the reality of what would happen to the loved ones in case of his/her sudden demise. Studies say only 10% of Indians are insured, where the average life expectancy was 68% in the year 2016-17. When a considerable amount of accidents lead to many deaths on a daily basis, with an adequate life cover, one can ensure the financial security of the family in his/her absence. Below are the reasons one must be insured with a life insurance cover:

  • Peace of Mind – With a life insurance policy the insured can ensure peace of mind, knowing that the future of the family is secured. This allows one to live his/her life fullest without worrying about what future stores.
  • Fulfillment of Financial Interests –Life insurance takes care of the financial interests of the nominee/beneficiary in case of an unfortunate demise of the insured. The offered sum assured can be used for child education, marriage or to pay off the debts. Sometimes, by utilizing the utility benefits, one can take up a loan to fulfill the life goals.

Additional Income Benefit – Some of the life insurance plans of with an additional income benefit for a lifetime. This ensures decent returns as well. These also help in developing a habit of saving.

Best Life Insurance Plans in India 2018

Since every life insurance buyer has different insurance expectations, the insurance providers offer an array of life insurance policies to cater the requirement of the insurance buyers.

Here are the best life insurance plans in India.

Life Insurance Plans Entry Age Maturity Age Policy Term Premium Payment Term Sum Assured Premium Payment Frequency  
Aviva I-Life Plan Minimum-18 years

Maximum- 55 years

70 years 10 years -35 years Equal to the policy term Minimum- 25 lakh

Maximum- no upper limit

Annually, Half- yearly
Bharti AXA e-Protect  Term Plan Minimum- 18 years

Maximum-75 years

60 years 10 years-30 years Equal to the policy tenure Minimum-25 lakh

Maximum- no upper Limit

Annually, Half- yearly
HDFC Life Sanchay Minimum-30 years

Maximum-45 years

70 years 15years- 25 years 5,8 and 10 years Minimum- Rs.1,05,637

Maximum- No upper Limit

Annually, Half-yearly, quarterly, monthly
ICICI Pru i-Protect Minimum-20 years

Maximum-75 years

75 years 10 years-30 years Single Pay, Regular Pay, Limited Pay Minimum- 3 Lakh

Maximum-no Upper Limit

LIC Amulya Jeevan Minimum-18 years

Maximum-60 years

70 years 5 years-35 years Single Pay, equal to policy term Minimum- 25 lakh

Maximum-no upper limit

Yearly, half-yearly and single
Aegon Life I-Term Plan Minimum-18 years

Maximum- 75 years

75 years 5 years- 40 years Equal to the policy tenure Minimum-Rs.10,00,000

Maximum- no upper limit

Annually, single pay
Bajaj Allianz I-secure Minimum-18 years

Maximum-70 years

70 years 10 years- 30 years Equal to the policy tenure Minimum-20 lakh

Maximum-No upper limit

Annually, Half-yearly, quarterly, monthly
HDFC Click 2Protect Plus Minimum-18 years

Maximum-65 years

75 years 10years -30 years Regular, limited and single Minimum-10 lakhs

Maximum-10 crore

Annually, quarterly, half-yearly, monthly
HDFC SL Crest Minimum-14 years

Maximum-55 years

75 years 10 years-40 years Regular, limited and single Minimum-Rs.1,05,673

Maximum-no upper limit

Annually, quarterly, half-yearly, monthly
Kotak Life Preferred e-Term Minimum-18 years

Maximum-75 years

75 years 10 years-40 years Regular, limited and single Minimum-25 lakh

Maximum-no upper limit

Yearly, monthly

Types of Life Insurance Policies

As there are a plethora of life insurance policies available in the market, it is important to know what are the basic coverage offered by the various life insurance policies, before zeroing in on one. Let us give a look at the coverage offered under different life insurance plans.

Sr No Types of Plans Coverage
1 Term Insurance Plans Pure risk cover
2 Endowment Plans Insurance cover + Savings
3 Unit Linked Insurance Plans Insurance + investment benefits
4 Whole Life Insurance Plans Coverage for a lifetime
5 Money Back Insurance Policy Insurance cover with periodic returns

Here are the details of the above mentioned types of life insurance policies.

Term Insurance Plans

Term insurance plan is the most basic type of life insurance. It offers life cover but without any savings or profits element. It is the most affordable insurance as its premium is cheaper as compared to different life insurance policies. This is what makes it the best life insurance policy.

Buying online life insurance offers various benefits. Moreover, one can also compare life insurance plans online and choose the most beneficial plan in an affordable premium amount. Online term life insurance plans offer pure risk cover. Under this plan, a stipulated amount of money- sum assured – is offered to the nominee in case the policyholder passes away during the policy duration. In case the policyholder outlives the policy term, he/she is not entitled to get any survival benefit.

In order to be financially secure, one must buy life insurance.

Endowment Plans

Endowment plans are the savings plans that provide an opportunity to the policyholders to create corpus along with the benefit of life insurance. As compared to other life insurance policies, the premium of endowment plans is higher as it offers both maturity benefit as well as death benefit to the insured.

Endowment plans are generally offered in two variations viz., i) with-profit endowment policy ii) without-profit endowment policy. These plans are suitable for individuals who want to avail the dual benefit of savings cum risk coverage.

Unit Linked Insurance Plans

Unit Linked Insurance Plan is a variety of traditional endowment plans. A ULIP is the perfect combination of insurance and investment. In order to get a better understanding, a life insurance buyer can compare life insurance plans with ULIPs.

It provides the assured sum as a death benefit or maturity benefit. The performance of ULIP depends on market performance. The policyholder can allocate funds for investing in stock or debt markets as per his/her preference. The value of investment portfolio of an insured depends on net asset value (NAV).In order to be financially secure, one must buy life insurance.

Whole Life Insurance Plans

The whole life insurance plans provides insurance coverage to a policyholder over his/her life. The USP of a whole life insurance plan is that its validity isn’t pre-defined. It enables the policyholder to enjoy the insurance coverage throughout his/her life. Under this plan, the policyholder pays pre-stipulated life insurance premiums till he passes away. In case of his/her demise, the corpus is paid to his/her nominee.

In order to be financially secure, one must buy life insurance.

Money Back Policy

A money back plan is a type of the endowment plan that provides periodic payments over the duration of the plan. To enjoy the benefit, the policyholder must pay the life insurance premium regularly. In case the policyholder outlives the policy term, he/she gets the remaining sum assured. Money back policy is best life insurance policy as in case of sudden demise of the policyholder, it provides the full assured sum to the nominee.

In order to be financially secure, one must buy life insurance. Additionally, an insurance buyer can compare life insurance plans with money back plan to have a better understanding.

Which Type of Life Insurance Should you Buy?

With the wide range of life insurance products available in the market, it might be very confusing for life insurance buyers to choose the best life insurance plans for purchase. Most of the leading life insurance companies offer an array of plans ranging from while life plan, term life plan, ULIP plans, endowment plans, money back plans, etc. to the customers. Based on the requirements of an individual like financial goals, coverage need and premium paying ability, they can choose any one of these policies. Let’s take a look at few types of policies with their related purpose.

Types of Policy Purpose of Policy
Pure Term Insurance Policy A term life insurance policy is the simplest and most basic type of life insurance policy available in the market. These policies do not have any maturity benefit and provide an only death benefit. Term insurance plan is best suitable for individuals who want to provide life protection to their family at an affordable premium rate.
Whole Life Policy Whole life insurance policies provide life protection for the entire lifetime of the insured.  Level premium is charged for the entire tenure of the policy. Along with the array of benefits offered by the policy, it also offers maturity benefit. This policy is beneficial for individuals who want to have long-term insurance coverage.
Endowment Policy Endowment plans provide the dual benefit of risk coverage and savings to the insured. Moreover, these plans also offer the maturity benefit. Endowment plans are best for individuals who want to create corpus along with the benefit of life protection.
Money Back Policy Money back policy provides income to the insured at regular intervals as survival benefit along with the benefit of life coverage. This plan is suitable for individuals who want to gain regular income in order to achieve their short-term financial goals of life.
Unit Linked Insurance Plans ULIP plans provide the combined benefit of life insurance coverage and investment to the policyholder. This plan is best suitable for individuals who want to create corpus by making an investment in market-related instruments like equity, debt, stocks along with the benefit of life protection.
Pension Plan Pension plans also known as retirement plans or annuity plan helps to secure the life of an individual after retirement. This plan is best for individuals who want to avail a regular source of income after retirement and secure their life after retirement.
Group Plan Group life insurance plan provides life protection to the group of people under one single plan. This type of plans is generally offered to affinity groups or employees of an organization.

Group Life Insurance Plans

Group insurance plans are a type of life insurance which provides life protection to a group of individuals under a single policy. The employers of any organization can buy group life insurance plan to provide life coverage to their employee.  Along with the employees of the company, other group members like housing societies, business groups, bank customers, etc. can also get the group life insurance coverage. There are different types of group life insurance policies offered by the different insurance company.

Types of Group Life Insurance

Some of the common types of group life insurance plans available are as follows:

  • Group term insurance plans
  • Group investment-linked insurance plans
  • Group gratuity plans
  • Group critical illness riders

Features of Group Life Insurance

Some of the salient features of group life insurance are:

  • The policy documents should include the name of all the members in a single document. The company can share the coverage details with their employees.
  • As per the requirements of the employees, the company can select the sum assured amount. The amount of sum assured selected by the employer will be valid for all employees in the organization.
  • Before starting the employment service in the company, the nominee of the policy can provide the beneficiary details to the organization.
  • The life insurance provider will pay compensation to the beneficiary in the event of the demise of the employee during the tenure of the policy
  • The group life insurance provides coverage to the employee till the time he/she remains employed with the organization. The coverage of the policy will terminate in case the employee resigns, get retire, or is terminated from the company.

Benefits Offered by Group Life Insurance

The various benefits offered by Group Life Insurance are:

  • As compared to individual life insurance policy, the premium rate of group life insurance policy is much affordable. In group insurance policy, the premium amount is basically paid by the company as a part of the employee’s salary package.
  • Group plans do not offer any waiting period to the employees while availing the policy.
  • While availing the group life insurance policy, the employees do not need to give any medical test. Thus, individuals with the pre-existing medical condition can also avail group life insurance policy.
  • Tax benefit can be availed on the premium paid by the employers towards the group life insurance policy. Moreover, the benefits offered by life insurance policy is also eligible for tax exemption.

Group life insurance policy offers a very simple and easy process of claim settlement. In order to file a claim, the beneficiary of the policy can simply reach to the employer and provide all the important details. Once the employer verifies the details, the claim amount is provided to the beneficiary of the policy.

Group Life Insurance Plans Limitations

As there are numerous benefits offered by Group Life Insurance, it also has some limitations too. Let us take a look at some of the limitations of group life insurance.

  • One cannot customize the group life insurance plans according to their requirement, as the plan provides coverage for the entire group of employees. Besides this, the beneficiary of the policy cannot opt for separate rider benefit under the plan.
  • The policyholder i.e. the employer decides the sum assured amount given to the employees under a group life insurance policy. Thus, in this case, the employee/beneficiary does not have the right to choose the sum assured.

There can be some uncertainty related to the coverage of the policy since the benefits of the policy cease as soon as an employee leaves the company.

Life Insurance Riders: Importance

Riders are one of the most helpful features of life insurance. Rider plans offer extra protection and coverage which can be availed by paying slightly a higher premium. Riders can be bought for various insurance needs of the policyholder along with the base life insurance policy. One can reap extended policy benefits with riders, which can be useful in mitigating the unplanned out-of-pocket expenses.

As adding a rider may inflate the premium, an individual should choose one only after analyzing one’s financial needs. This way the insurance seeker can zero down on the perfect type of plan that meets his/her requirements. Here’s why it is always recommended to compare life insurance policy before deciding on riders. When different insurers offer various riders at different prices, the below are some of the essential rider plans one can consider to buy:

Waiver of Premium

Waiver of premium is an outstanding rider for protecting the insured against a policy lapse in the event that the insured is unable to pay future life insurance premiums. Most life insurance policies stop covering individuals when they unable to pay regular premiums for an extended period of time. One may not be able to pay the premiums due to joblessness or some other financial crisis. In such situation, with this rider, one can be assured that the policy will be in force even if the insured is unable to pay the premiums. With this, all the future premiums payable towards the base plan will be waived off and he/she can enjoy policy benefits.

Critical Illness Rider

Expenses incurred towards treating a critical illness can cost an arm and a leg. With inflation growing day by day, quality healthcare expenses are skyrocketing. In such a situation with a critical illness rider, one can mitigate the extra financial burden on him/her. Since one can’t ignore such illnesses which require immediate medical attention, it is beneficial if one gets a lump sum at the time of diagnosis of the ailment. Usually, critical illness riders offer medical coverage for diseases like cancer, heart attack, kidney failure, paralysis, stroke, and certain other illnesses. This helps the insured avail a lump sum amount for the aforementioned illnesses. The base life insurance policy may carry on or may terminate based on the term and conditions of the insurer.

Accidental Death Rider

This rider is meant for individuals who want to protect their families with a substantial sum of money in the event of an accidental demise. Since accidental deaths usually involve higher medical expenses (in case it is not a spot death) and unsettled financial liabilities, this rider comes as a saviour by offering an additional payment to the family during the financial hardship. However, the beneficiary is still eligible to get the basic sum assured in case of the death of the insured, even if this rider is not owned by the insured. But one can buy this to get comprehensive coverage.

Partial and Permanent Disability

Possibilities are that the policyholder may suffer from partial or permanent disability due to an accident that leads to unemployment. In such a situation, this rider will offer a substantial amount of a total sum assured. Usually, insurance companies offer 10% or more of the assured amount every year in order to compensate the regular earnings that may happen due to the permanent or temporary disability of the insured.

Income Benefit Rider

With this rider, the family of the insured can avail a monthly income benefit in case of the sudden demise of the insured. A percentage of the total sum assured is paid to the deceased family in a lump sum, which can be used to bear the regular expenses, paying the debt and so on.

Benefits of Life Insurance Plans

Life insurance policies not only help your family secure a lump sum in case of unfortunate eventualities, but also make sure that they get a regular flow of income. There is a long list of advantages associated with availing life insurance policies. Few of them are:

Loan Options

With a life insurance policy, one gets the option to avail a loan amount in case s/he is desperately in need of money. The loan amount that an individual is eligible for is calculated on the basis of one’s sum assured and the provisions mentioned in the policy. The policyholders can get in touch with their sales representative to know more about it.

Investment Returns

Life insurance policies yield much better investment results as compared to other investment tools. Moreover, the money invested in these policies is safer and covers the policyholders’ risks as well. The invested amount fetches good returns and is returned to the policyholder once the policy has attained its maturity or after the death of the policyholder.

Death Benefits

It is one of the most important benefits associated with a life insurance policy. With a death benefit, the dependents/nominees of the policyholder are able to get the sum assured along with accumulated benefits in case of the unfortunate and untimely demise of the insured.

Maturity Benefit

The maturity benefit comes in handy when a policyholder is able to survive his policy tenure. Under this benefit, the sum total assured is paid to the survival (policyholder) along with the accumulated benefits.

Rider Benefit

The accidental death benefit is often offered as an additional benefit (rider) in life insurance policies. Under this benefit, the nominee of the policyholder is usually paid an amount in addition to the normal benefit payable, if the policyholder dies due to an accident.

Tax Benefits

Under section 80C of the Income Tax Act, the investments made within a life insurance policy are subject to tax rebates. A policyholder can get a rebate on an amount of up to Rs 1 lakh under this act.


The modern-day and evolved insurance products flexibility to the policyholders in terms of asset allocation to meet their specific risk appetite, premium paying terms, policy duration, etc.


Nowadays, there are different variants of life insurance products come with liquidity feature once the lock-in period is over. One example is ULIPs (Unit Linked Insurance Plans).

Thus, on one hand getting a traditional life insurance policy works as a financial cushion for your family when needed the most and on the other it also works as a great investment tool.

Important Things to Know Before Buying a Life Insurance Plan

Life insurance can be the greatest asset if one selects it wisely. With many options available in the market finding a right plan can be tedious. The main concern is what if the policy doesn’t fulfill the requirements and stands insufficient. In this regard, one must consider a few things before zeroing down on a plan:

  • Analyse Your Needs: Before analyzing the actual needs of buying a plan, one can’t reach a proper decision. The first thing one needs to consider is asses his/her needs. One must ask some questions like ‘Am I able to provide complete ?’ how much money do I require to buy an adequate plan?’ etc. This way one can analyse his/her needs to buy a plan accordingly.
  • Try Buying Within the Budget: There is no hard and fast rule of buying a plan by exceeding the budget. It is imperative to consider the budget before buying a plan. It is an especial requirement if the policy comes with a provision of paying the premiums at regular intervals. Always select a plan that is affordable.
  • Opt for a Sufficient Cover: the cover should meet the requirement of the insured and his/her family. There is no use of opting for a limited policy and remain insufficiently covered. A cover may seem sufficient at the time of buying but may not be sufficient after a few years. That’s why it is essential to consider the cover amount and stick to the right
  • Comparison is the Only Mantra: Gone are the days when one had to depend on the insurance agents to buy a plan or had to believe whatever the agent said. With most of the insurers making their products and services available online, choosing an insurance plan has become quite easier. One must compare the plans before buying which enables him/her to get a fair deal at an affordable price as well. This way one can compare the features offered under various plans and buy the right plan that matches the requirements.
  • Reputation of the Insurer- One must consider the background of the insurer. An insurer with a poor record will surely not satisfy one’s expectations. The insurance seekers must look for the claim settlement ratio which indicates the insurer’s ability of paying the claims. Moreover, one should consider premiums as well. However, premium should not be the only concern as cheapest is not always the best.
  • Don’t Skip the Premiums– Once a policy is bought the insured is ought to pay the premiums on time. The non –payment will lead to lapse of the policy and the insured will remain uninsured. It is recommended to remember the policy renewal date and keep a constant eye on the policy.
  • Read the Policy Wordings Thoroughly– We hardly spare a time to read the policy document carefully, as we blindly believe on whatever is saying by the agent or the executive. Most of us even skip this part. Life insurance policies come with some hidden clauses that need to be understood to avoid any consequences at the time of claiming a policy. Hence, reading and understanding the policy wording is imperative.
  • Get a Second Opinion – As buying life insurance is a lifetime commitment, one must consider getting a second opinion.  However, it matters from whom the opinion is being taken. The person should be aware of every aspect of the insurance sector and can guide in a positive way. One can approach someone who has previously invested in a plan or can go for the reviews as well.

Life Insurance Plans – Exclusions

Although life insurance plan provides financial protection to the family of the insured against different scenarios, there are certain conditions in which the insurer can decline the claim of the insured. Thus, it is very important that before zeroing in on a plan the insurance buyer should compare life insurance plans and thoroughly check all the limitations mentioned in the policy terms and conditions.

Let’s take a look at some of the common exclusions of life insurance policies-

Death Related to Lifestyle Disease

Don’t forget to mention any health-related information while entering details on the application form. Habits contributing to an unhealthy lifestyle like drinking, smoking or health-related risks are some of the important deciding factors.

People with blood pressure, coronary heart disease, obesity, diabetes, etc. are more prone to health-related complications. Thus, they have to pay the higher premium amount as compared to a healthy person as they enforce high risk on the insurer. Even the driving history of the insured is also accounted for.

Based on the lifestyle habits of the insured the insurer decides whether to reject or accept the application.

Self-inflicted Injuries

The life insurance policy does not provide any coverage in case of a demise due to deliberate self-abuse, self-harm, suicide or psychological disorders. In case, the insured dies due to any such reasons then the nominee of the policy cannot make a claim.

Involvement in Risky Sports Activity

Life insurance policies do not provide any coverage against death due to participation in extreme sports activities like trekking, scuba diving, paragliding, rock-climbing, water sports, sky-diving, etc. However, looking at the increasing popularity of adventure sports, some of the life insurance policies have started providing coverage for these types of sports activity. But, this comprehensive coverage comes at a higher premium rate.

Man-Made Disasters

Any loss of life, due to riots or wars is described as a man-made disaster. Any damage or suffering caused due to the carelessness of an individual will not be counted. Therefore, no coverage is offered by the policy in such situation.

Death Due to STDs and HIV

The insurance company reject claims made by nominees in case the insured dies due to any sexually transmitted diseases like HIV/AIDS.

Overdoes of Drugs and Intoxication

Overconsumption of alcohol or consumption of drugs and medicine can cause serious health complications and even result in death. If the insured dies due to a drug overdose, then the claim made by the beneficiary will be rejected by the life insurance company. Therefore, the insured should be responsible; else the beneficiary of the policy will not receive any death benefit from the life insurance company and there will be no use of buying a life insurance policy.

Criminal intent/Illegal Activities

Any casualty arising due to involvement in any intentional unlawful activities or law violation is beyond the possibility of coverage. The insured will be eligible for the claim only if it is an unintentional and sudden act.

Tax Benefits of Life Insurance Plans

A report by PWC reveals that the demand for life insurance plan will increase manifolds by 2030 owing to the fact that middle class population (with income over $10 daily) is likely to reach 1.2 billion by 2030. In fact, several reports floating in the online media reveal that the annual premium growth for the best life insurance policy in India in 2018 is likely to grow substantially.

There are plenty of good reasons behind the ever-growing demand for life insurance plans in India. Most life insurance plans don’t just offer comprehensive financial coverage to the family/nominee of the insured, but also provide attractive tax benefits. In this post, we will cover the tax benefits of life insurance plans.

Under Section 80C of the Income Tax Act, 1961, one can save tax by investing in Life Insurance. Under this section of the Income Tax Act, the paid premiums towards a life insurance qualify for tax exemption. Furthermore, the insurance plans, which provide maturity benefit, are also eligible for tax exemptions on the earnings from maturity of the plan under the Section 10 (10D) of the IT Act, 1961.


Section 80C :-

There are a lot of investments that help you save taxes under Section 80C. Individuals and Hindu Undivided Families (HUF) can avail this tax deduction.

A tax exemption up to a maximum of Rs. 1.5 Lakh can be availed under Section 80C, 80CC, and 80CCE.

Premiums paid up to 20% of the Sum Assured of the policy are eligible for deductions. If the amount of paid Premiums, in a specific fiscal year, is more than 20% of the actual sum insured, it does not qualify. However, only the policies, which are issued before March 31, 2012, are eligible for such deductions.

In case of insurance policies that are issued on or after April 1, 2012, the tax deductions are only relevant for the payable premiums not exceeding 10% of the actual capital Sum Insured.

If an individual claims tax benefits under Section 80C, and the life insurance policy has been annulled or terminated within a tenure of 2 years from the inception of the policy, the tax benefit received by the policyholder will be reversed. This type of deduction is applicable to all the life insurance plans, except ULIPs.

If the policyholder claims a benefit under Section 80C, and the Unit-Linked Investment Plan has been annulled or terminated within a tenure of 5 years from the inception of the policy, the tax benefit received by the policyholder, will be reversed.


Section 10 (10D):

Any sum of money received under the life insurance policy is eligible for this deduction. The amount received could be:

  • Death Benefit
  • Maturity Benefit
  • Survival Benefit
  • Surrender Value
  • Sum accrued through bonus

This deduction is applicable to the incomes and gains from ULIPs.

The income from the policy is taxable under the following scenarios:

  • Pay-outs on pension plans or annuity
  • Group life insurance policies sponsored by the employers
  • Policies that are purchased between April 1, 2003 and March 31, 2012, whose premiums in any year exceeds the 20% of the Sum Assured
  • Policies that are purchased after April 1, 2012, if the policy premiums in any year exceeds 10% of the Sum Assured
  • Policies that are purchased after April 1, 2013 for those who suffer from diseases or disability under Section 80DDB, if the premiums on such policies exceeds 15% of the sum insured.

The aforementioned conditions do not apply to the death claims, or any sum of money that the beneficiary receives in the event of untimely demise of the insured.

No cap on the highest amount of deduction is allowed under Section 10 (10D) of the Income Tax Act, 1961.

NOTE: The data aforementioned is taken from the IT Act, 1961, and the tax laws can change. Please check the updated information of tax saving tools under the aforementioned sections before the insured makes any fiscal decision.

Claim Settlement Ratios of Life Insurance Companies

The Life Insurance providers with their respective Claim Settlement Ratio are listed in the table below in the ascending order. On basis of these claim settlement ratio the insurance seekers can compare life insurance policies and choose an apt plan according to their requirements.

Life Insurance Provider Claim Settlement Ratio No. of Received Death Claims No. of Paid Death Claims No. of Rejected/Repudiated Claims No. of Claims Written Back No. of Pending Claims
Shriram Life 63.53% 2,926 1,859 774 0 293
India First Life 82.65% 1,741 1,439 273 0 29
Star Union Daichi 84.05% 1,473 1,238 200 16 19
PNB MetLife 87.14% 3,879 3,380 357 34 108
Future Generali 89.53% 1,366 1,233 126 0 17
Sahara Life 90.21% 725 654 45 0 26
IDBI Federal Life 90.33% 1,065 962 96 0 7
DHFL Pramerica 90.87% 471 428 36 1 6
Kotak Mahindra 91.24% 2,831 2,583 99 130 19
Bajaj Allianz 91.67% 16,239 14,887 932 357 63
Bharti AXA Life 92.37% 878 811 33 0 34
Edelweiss Tokio 93.29% 164 153 11 0 0
Reliance Life 94.53% 11,079 10,473 529 42 35
Birla Sunlife 94.69% 6,048 5,727 240 33 48
Canara HSBC 94.95% 653 620 32 0 1
Tata AIA Life 96.01% 2,707 2,599 108 0 0
Exide Life 96.40% 2,973 2,866 107 0 0
ICICI PruLife 96.68% 10,901 10,539 305 21 36
SBI Life 96.69% 17,610 17,027 451 0 132
AEGON Religare 97.11% 588 571 17 0 0
HDFC Standard 97.62% 12,725 12,421 244 0 59
Max Life 97.81% 9,821 9,606 212 0 3
LIC 98.31% 769,386 756,399 7,432 2,352 3,203

How to File Claims for Life Insurance Policies?

Making a claim and getting insurance money is one of the most important aspects of the life insurance plans. There are two different types of claims. They are:

  1. Death Claim: In this type, the claim is meant for the nominee assigned to the policy, in case of the insured’s death.
  2. Maturity claim: This claim is for the policyholder and is given at the maturity of the policy.

How to File a Death Claim?

When a policyholder dies, claim intimation should be immediately sent to the concerned insurance company. The nominee, a close relative, or the agent who is handling the policy, can do this.

The claim intimation should have certain pieces of information such as date, place and reason of death. The insurance agent in charge has to help the insured’s nominee/family to deal with the formalities of the claim.

After receiving the claim, the insurance company will ask for certain documents, which include:

  • Duly filled claim form (shared by the insurer)
  • Policy document
  • Death Certificate
  • Legal evidence for the title, in case the policy doesn’t have a nominee assigned to it
  • Deeds of assignments or re-assignments (if there are any)
  • Discharge execution and witness form

Some other documents such as hospital certificate, medical attendant’s certificate, employer’s certificate, post mortem report, police inquest report etc., may also be asked for, as required.

How to File a Maturity Claim?

Once a life insurance plan is going to attain its maturity, the concerned life insurance company sends an intimation to the policyholder at least 2-3 months in advance. A discharge voucher (receipt) with the details like the maturity amount payable, etc. is also sent alongside the intimation letter.

The insured person has to sign the discharge voucher in the presence of a witness and post the voucher back to the insurer with the original papers of his policy bond. In case the policy is assigned to a third person or entity, such as a housing loan company, it is the assignee who will sign the discharge voucher and receive the claim amount.

Once the insurance company has received all the relevant documents and submitted verified the papers, the claim is settled by the company.

Documents Required to Buy Life Insurance

At the time of buying life insurance, the insurer will ask the insurance seeker to submit some documents for credibility. These life insurance policy documents are required to be submitted before the insurer issues the policy. One can either upload these documents directly by mailing them to the customer service id of the insurer or visit the nearest branch of the insurance provider. The below-listed documents are to be submitted while applying for a life insurance plan.

Income Documents

Income certificates are required to assess the sum assured to be offered to the insured. Usually, life insurance companies calculate this up to 20 times of one’s yearly income, however, this may differ insurer to insurer. The various income proof requested include:

  • Latest 3 months’ salary slip
  • ITR (Income Tax Return) of last 2 or 3 years
  • Six months’ bank statement to check the last 3 months credited salary
  • In case of the self-employed, a CA certificate is needed
  • Latest Form 16

Address Proof

The insurance company also asks for submitting any one of the below documents as address proof:

  • Six months’ bank statement
  • Passbook with six months’ entries
  • Aadhar Card
  • Credit Card statement
  • Voter ID card
  • Leave & License agreement
  • Driving License
  • Last 3 months’ utility bill
  • Passport
  • Ration Card

ID Proof

The applicant can provide below documents as identity proof

  • Passport
  • Aadhar Card
  • Voter Id card

Age Proof

Usually most of the above-mentioned documents can be used as age proof, however, here is the comprehensive list of some documents that one can use as age proof:

  • Aadhar Card
  • Voter Id card
  • PAN Card
  • Driving License
  • Passport
  • Marriage certificate
  • Birth certificate
  • Ration card
  • School/College leaving certificate

How to Calculate Life Insurance Premium?

Life insurance plans offer financial safety to the insured’s’ family in case of he/she passes away. There are a wide range of plans in the insurance market such as endowment plans, pension funds, ULIPs etc. Additionally, policyholders can avail tax benefits on the premiums paid for the life insurance plans.

It is must to pay life insurance premium on time to enjoy life insurance benefits. As per his/her preference, a policy buyer can compare best life insurance plans and decide premium payment periodicity such as monthly, quarterly, semi-annually, annually. The premium is charged as per the opted assured sum by the policyholder. The life insurance premiums are computed as per the risk policyholder is exposed to. This is the reason why insurance premium differs for various insurance buyers. The credentials of an insurance buyer drastically affect life insurance premium.

Typically, a young and healthy insurance buyer would have to pay a low life insurance premium. It is because he/she isn’t exposed to the risk of developing/contracting illnesses. Similarly, a person who is is his/her fifties would have to pay a higher premium.

Note- Apart from age, there are other factors that affect insurance premium of a particular insurance plan.

Life Insurance Calculator

The insurance buyers can use an life insurance premium calculator to compare life insurance plans and come across the plan that fulfills his/her insurance expectations. It helps to search insurance plans that come at an affordable premium. Life insurance premium calculator is designed, especially, to compute the insurance premium that an insured needs to pay for the selected insurance plan.

The premium calculator is a tool that computes and compare life insurance plans premium based on the opted insurance plan and other important elements such as age, plan duration, frequency of premium payment, etc. While using premium calculator, the insurance buyers needs to provide the following details:

  1. Applicant’s age
  2. Applicant’s date of birth
  3. Gender
  4. Policy name
  5. Premium payment frequency
  6. Assured sum
  7. Plan duration
  8. Rider opted (if any)

Once the applicant fills all the required details, a premium estimate is displayed on screen.

Factors Affecting Life Insurance Premium

One of the best ways to secure the future of your loved ones financially is to have a insurance plan. Moreover, with a long-term, a low premium can yield major savings. As purchasing life insurance plans are very important it is equally important to understand how the life insurance policy premium is determined. Regardless of the type of life insurance plan an individual wants to buy, it is important to know that the yearly premium of a life insurance plans depends upon the different aspects of the insurance buyers’ life.

Here we have discussed the major factors that determine the premium rate of life insurance plans.

          1. Age- Age is the first and most important factor that affects the life insurance premium of an individual. It is a simple funda; if one buys a life insurance plan at a young age it poses a low risk to the insurer as younger people are considered healthier and so the premium of the policy is also affordable. Whereas, an older person is more prone to health-related problems and tends to pose a high risk to the insurer, so the premium of the policy is also expensive. Therefore, it is best to have a life insurance policy at as early a stage of life as possible.
          2. Gender- Apart from age, gender is also an important factor that affects the premium rate of the policy. As per studies, the life expectancy of women is more than men. Moreover, according to statistics, women require more medical attention than men. Therefore, based on these factors women are considered as low-risk individuals and so their insurance policies provide a premium rebate for female insurance buyers. However, they have to pay premiums for a longer
          3. Self and Family Medical History- An individual’s personal medical history and his/her family’s medical history play an important role while determining the premium amount of the life insurance plans. The premium rate of a life insurance policy depends upon the condition of any current or past illness. The life insurance company might charge a low premium if the insured proves that he/she is healthier and has recovered from any pre-existing critical illness. However, the premium of a policy is also determined based on the insurance company and type of plan one opts for.
          4. Marital Status- this plays a significant part while processing the insurance application and determining the premium amount. The premium of a joint life insurance policy is higher as compared to the premium of a regular life insurance. This is because; a joint insurance plan provides coverage for the insured as well as their spouse. However, it is important to consider that joint life insurance policy provides payout on the basis of first death and no benefit is provided in case of death of the second partner.
          5. Dependents- the amount of coverage one requires also depends upon the number of dependents he/she has. If an individual has more dependents, then the coverage of the policy also increases automatically and this results in higher premium rate.
          6. Occupation- The premium of a life insurance plan also depends upon the occupation of an individual. For example, life insurance premium rates are higher for the individuals who are in a risky profession like a soldier, pilots, people working in oil, gas plants and mining industry or any other risky profession.
          7. Income- The income of an individual is checked by the particular life insurance company in order to estimate that whether the policyholder will be able to pay the premium for the policy on time.
          8. Debt- Any due debt including bills related to credit card, mortgages, loans, etc. are key factors that define the amount of coverage the insured is offered.
          9. International Travel– If the insurance buyer is a frequent traveler and travel to places that are affected with high health risk, see frequent acts of terror or have a high crime rate then the person can be charged a high premium amount.
          10. Drinking and Smoking– Person addicted to smoking is charged higher premiums by insurance companies regardless of whether he/she is a heavy smoker or a light smoker. This is because the risk factor for the insurer increases in case the insured is a smoker. Similarly, those people who consume alcohol on regular basis can be subjected to a higher life insurance premium, because of the increased chances of health issues caused due to excessive consumption of alcohol.
          11. Weight and Height- An individual’s body mass index (BMI) is checked by the insurance company while determining the premium rate of the life insurance policy. As an individual suffering from obesity is more likely to suffer from weight-related health problems, they are required to pay a high premium on their life insurance plan.
          12. Insurer Related Factors
              • Mortality Cost- The amount paid by the life insurance company on insurance plans is known as mortality cost. The insurer considers the applicant age, employment, health history (self and family), hobbies, driving record, etc. While deciding the life insurance policy premium rate for an individual.
              • Operating Cost- The premium amount of a policy is also determined by considering the operating cost that the insurance company incurs towards non-marketing and marketing expenses like rent, maintenance, agent’s commission, legal fees, salaries, etc.
              • Interest- In certain life insurance plans like endowment or ULIPs, the insurer invests the premium of the insured in bonds, real estate, stocks, etc. hoping that the policyholder will earn particular returns on these investments. This earning of interest is another crucial factor that contributes towards the premium amount of a life insurance policy.
          13. Factors Related to Policy
            • Term Vs Whole Life Insurance- As compared to the pure term insurance plans, the premium charged for a whole life insurance policy is This is because a whole life insurance plan provides life coverage until the insured’s death, whereas in a pure term insurance plan the coverage is provided for a particular time period.
            • Decreasing Pay-outs- The premium calculation of the life insurance plans also depends upon whether a person wants to have a fixed coverage for the entire term of the policy or wants to have the level of coverage decrease every year.

        So, these are the important factors that should be considered while zeroing in on a insurance plan. Moreover, one can also take help of the life insurance premium calculator in order to avail a comprehensive life insurance policy at an affordable premium rate.

Term Life Insurance vs. Whole Life Insurance

Term Life and Whole Life are the most well-liked variants of life insurance policies. The primary objective of a life insurance policy in itself is to restore the income lost in the event of the death of the policyholder. However, while both these policies are very similar to each other, there are slight differences that need to be understood by the insurance seekers at the time of analyzing their needs and decide on a plan.

Here’s a break up of both these life insurance variants, so that one can make the best option for his/her loved ones based on the needs.

Term Life Insurance

Term life Insurance is the most affordable form of Insurance. It offers pure life protection and is specially designed to protect the family of the insured against any financial losses arising due to the untimely death of the policyholder. However, Term life insurance offers no maturity benefit, only a death benefit. The different available variants include increasing death benefit, life stage options, decreasing death benefit, critical illness cover as rider benefit, terminal illness plan etc.

Whole Life Insurance

With Whole Life Insurance, one can avail life protection and investment under one roof. It offers coverage for the whole life where in case of the death of the insurance, the family receives the policy benefits. They can get accumulated bonus or loyalty or guaranteed additions as well. It can be used as a retirement tool and, to take loans. These plans also come with a high age ceiling, where the usual upper limit is 100 years of age.Let’s gather some information on how they both differ from each other in terms of offerings.

Term Life Insurance Whole Life Insurance
Term Insurance comes with a fixed policy term, and one can choose from the long or short term as per the requirement. One can’t discontinue the policy in-between without having to forgo the policy benefits earned. Whole Life Insurance comes with a flexible policy tenure which offers several policies with different maturity terms. This helps the policyholder to plan his/her financial goals efficiently. The best part is that one can surrender the policy in middle or take a loan on the basis of this policy to manage a financial hardship during a crisis.
The premium offered in Term Life Insurance is comparatively less. The reason is no repayment of the premium on the maturity is offered to the insured. In case of Whole Life Insurance, the insured can earn interest on the whole premium paid towards the policy upon maturity. That’s the reason, the premium of Whole Life Insurance is slightly higher.
Term life insurance offers no cash value, which means the policyholder will be not offered any survival benefits on maturity. The only benefit he/she can earn is the sum assured which is paid to the nominee in case of sudden death of the insured. Whole Life Insurance has cash value. The value is based on the amount made towards investments by the insurance company with the premium amount. After the insured has paid the policy premium for a couple of years, he/she can avail a loan, depending on the cash value offered by the policy. Upon the maturity, the cash value will be given to the insured along with a bonus.
Term Life Insurance plans are not recommended if one wants to save for the future. As it doesn’t offer any survival benefit, it is a one-way deal, where the insured pays a fixed premium to the insurer as a premium for entire tenure. In case there is no mishap, the policy will cease on the maturity without offering any survival benefit. In case of the death of the insured during the policy tenure, the sum assured will be offered to the nominee. On the other hand, one can opt for Whole Life Insurance if the insured wants to save as well as get life coverage. This policy offers survival benefits if there is no need to claim the insurance. Moreover, it also provides a death benefit in case of the insured’s death.
Term or life Insurance Plans may not offer sufficient protection in this scenario. One needs to consider a life insurance that comes with additional coverage or rider. There are various riders available that cover such situation. One should discuss with the insurance advisor before taking a plan. On the other hand, Whole Life Insurance is more secure that offers adequate coverage in this regard. The insured can avail immediate benefits on the occurrence of such situation. In case of critical illness, a lump sum amount is paid towards the treatment or same can be used mitigating the debt or other long-term liabilities.

Which One is the Best Bet?

The answer depends on the choice and needs of the insured. One may choose a term insurance plan to keep his/her premium low and invest in some other investment options. This way a good corpus can be built towards retirement and the goal of providing extreme financial protection to the family is accomplished. In contrast, if someone is looking for a life insurance plan that offers lifelong protection and also helps in building wealth, Whole Life Insurance can be the best option. On the other hand, this plan is also beneficial if the insured wants to withdraw the policy or wants to get maturity payouts or avail surrender benefits. This way investment goals can be met as well. However, irrespective of one’s preference, it is always recommended to compare life insurance plan, before zeroing in on a plan.

What Happens During Permanent Disability or Critical Illness?

No one can predict when an emergency situation can hit and one needs to be prepared for every situation in life. Therefore, it is really important to compare life insurance plan in terms of coverage, benefits, claim settlement or premium offered, in order to avail an adequate life insurance plan. As long as someone is working, it is easy to pay the premium. But what happens in case of a disability due to an accident that forces him/her to leave the job? Or if someone is not able to earn income due to a critical illness? It will be very difficult to survive if the insured is the only bread-winner of the family. Therefore, it is very important to understand the coverage offered by life insurance and whole life insurance and how they differ in terms of their coverage.

Underwriting Process of Life Insurance Plans

Underwriting is a process followed by a life insurance company to assess whether to grant a life insurance policy to an applicant (prospective customer) or not. It also decides the conditions and pricing that will apply to the policy, based on his medical and lifestyle information.

This process helps companies decide whether to apply standard premiums rates or higher rates for the customer, to exclude some conditions, or deny the cover altogether due to unacceptably high risk classification.

The underwriting process helps the insurer to decide whether an individual’s risk level falls within which particular pool and how any additional risk (whether this is occupational, medical, and financial or due to pastimes and pursuits) should be handled.

In short, the purpose of underwriting is to ensure that the cost of the life insurance coverage decided by the insurer is proportionate to the risks involved in the profile of the concerned individual.

The process of underwriting starts once a new life insurance policy’s application is submitted to the insurer. To calculate the risk involved in a particular case, the company relies on the information gathered from a wide range of resources.

The company will need an application form and a proposal form (a personal statement) to start the underwriting process. These documents carry information about the applicant’s financial status, residency, occupation, medical history, any pastimes or pursuits followed by him, etc.

The proposal form is specifically designed to gather details about the applicant’s personal medical history. It includes information about any medical disorders or diseases that can increase the chances of a claim. Apart from that, it also asks relevant questions about the applicant’s family medical history as this will inform the insurer whether the applicant is at an increased risk of a heritable disease.

After going through all this information, the underwriter’s job is to arrive at a conclusion that is fair, both to the applicant and to the pool of funds issued by the life insurance company to cover the risks.

There are three main factors that can affect an individual’s mortality risk or morbidity risk (becoming disabled):

  1. Age– Generally, older people are at a higher risk as compared to the younger people when it comes to death or disability. Hence, the chances of a claim arising from the elderly will be greater than for others.
  2. Gender– On an average, women tend to live longer than men; hence, they are usually offered a lower premium rate by life insurance companies.
  3. Family/Personal Medical History– The applicant’s past and current medical history plays a vital role in determining the course of underwriting as it also affects the probability of more/higher claims by the applicant.

Besides these obvious factors, an individual’s smoking preferences, his family history, occupation and lifestyle are also important aspects that are taken into account before issuing the policy.

People of the same or similar risk level pay similar premiums. For individuals who are at higher risk, the life insurance company may request higher premium rates or can exclude certain risks from their policies. They can also be offered a modified or different form of insurance. In some cases, the insurer can also decline a policy application.

It’s worth mentioning that unlike a house or car insurance, once a life insurance policy is issued, there are set of regulations that restrict an insurer’s rights in cancelling a policy or increasing premium rates in mid of the policy due to deterioration of the policyholder’s health or change in his circumstances. Therefore, the underwriting process becomes more important for the insurers as they won’t be able to do much once the policy has been issued.

Again, each insurance company is different and all of them have underwriting policies. It can drastically impact the results that you are supposed to get. There are dozens of different life insurance companies on the market, which means that you have dozens of options to find the perfect life insurance plan for you.

Life Insurance Policy Cancellation Process

Life insurance plans must be self-audited from time to time. It enables a policyholder to analyze, access, and compare life insurance plans coverage he/she has with the coverage offered by the latest plans. In case a policyholder’s insurance needs aren’t fulfilled by his life insurance plan and he/she doesn’t want to continue the plan, he can always cancel. In order to cancel a life insurance policy, a policyholder needs to follow a process.

Mentioned below is the process to cancel life insurance policy.

  1. The policyholder needs to contact his/her life insurance company and file his/her request for policy cancellation.
  2. The insurance company will offer alternative insurance solutions to the policyholder.
  3. If policyholder still wants to go ahead with the policy cancellation process, he/she needs to visit the official website and download the plan cancellation form.
  4. The policyholder must duly fill up form, attach the required documents (if any) and submit it.
  5. Upon receiving the cancellation form, the insurance company will initiate the plan cancellation process.

Note- If the plan is canceled before the end of the cooling off period, the policyholder isn’t entitled to receive any refunds.

Common Terms used in Life Insurance

The individual who buys the policy is termed as an insured. Also known as policyholder.
The insurance company that sells the insurance policy to the insured is called the insurer.
Sum Assured:
The total amount of money, which is guaranteed to an individual at the maturity of the life insurance policy is called the Sum Assured. This does not include bonuses.
Death Benefit:
The amount payable by the life insurance company to the policy beneficiary,  in form of final payout in case of untimely demise of the insured is called Death Benefit.
Accidental Benefit:
If the policyholder or insured meets with a mishap or accident, the life insurance plan may have a clause to cover all the expenses related to their unfortunate incident like medical expenses, hospitalization charges etc.
Life insurance providers often offer additional features to the policy of the insured at affordable prices. These add-on features that enhance the policy’s value and deliver extra benefits are called riders.
Claim Settlement Ratio:
The ratio of the total number of claims paid by the insurance provider to the nominated beneficiary of the insured in proportion to the total number of claims they receive. Generally, the life insurance providers deny claims for reasons like impersonation, fraud, misrepresentation etc.
Grace Period:
If the policyholder is unable to pay the renewal premiums towards his/her insurance policy on time, they are given some extra number of days after the due date of the premium payment. This grace period can be of 15 days, in case of monthly premium payment, and 30 days if the premium is paid on yearly basis.
Free-Look Period:
If the insured is not satisfied with the provisions and details of the life insurance plan or wants to cancel the insurance policy (for any other reason), s/he may do so during the Free-Look Period without paying any penalties or fees such as surrender charges.
Cash Value:
If the insurance policy of the policyholder is terminated voluntarily before the maturity date, the insurance provider will pay a certain amount of money to the policyholder called Cash Value. The cash value of the insurance policy is the present value and the cost at which one can sell it.
Vesting Age:
The age of the insured at which s/he starts to get the pay-outs from the insurance provider is referred to as Vesting Age.
Policy Term:
The entire duration for which an insured is covered by the life insurance plan is known as Policy term or term of the policy.
Waiver of Premium:
Insured has a responsibility to make payments for the premiums at regular intervals. Waiver of premium is a type of rider, which can be bought if the insured is seriously ill or disabled, and, eventually, is not able to make payments for the premiums. This rider offered by life insurance policies makes sure that the insured continues to get the benefits from his/her insurance provider even when s/he can no longer afford to pay for the premiums.
Premium Paying Term:
The entire duration for which the policyholder makes premium payments to the insurance provider is termed as the Premium Paying Term. These are generally similar to the Policy term.
Single Premium Life Insurance:
The plans that cover the insured for a specific period of time and guarantee pay-outs to the benefits of the nominated beneficiary upon the unforeseen demise of the policyholder, with a single lump sum premium payment are termed as Single Premium Life Insurance plans.
Convertible Term Insurance Plan:
The Convertible Term Life Insurance Policy allows the insured to convert the term life policy to a permanent life policy. However, there is a specified time limit for the insured to make this conversion.
Renewable Term Insurance Policy:
A renewable term life policy is that term life plan having a clause that allows the nominated beneficiary to increase the term of the policy for a certain period of time.

Life Insurance FAQs

What is a life Insurance plan?

A life insurance policy is a protection tool designed to take care of the family members or dependents of the insured, in case of any unfortunate eventuality, such as the death or physical disability of the insured.

Why do I need a life insurance plan?

Insurance plans not only provide financial protection to one’s family in case of unfortunate eventualities, but also help evolve the modern-day insurance policies. You also get the option to build your corpus, plan your retirement, etc.

What are the different types of life insurance plans available in the market?

Life insurance policies have been classified into different categories, namely:Endowment Policy Term Insurance Money Back or Cash Plans Whole Life Insurance Children's Policies Annuity Plans

What is nomination in a life insurance plan?

Nomination is a process to appoint (nominate) a nominee/legal heir who is supposed to receive the benefits, in case something happens to the policyholder.

Can I change my nominee in the insurance policy later on?

Yes. The policyholder has the right to change the name of his/her nominee in the policy documents at any point of time before its maturity date.

Can a minor be the nominee of an insurance policy?

Yes, you can appoint a minor as the nominee of a policy. However, s/he must have a legal guardian in the form of an appointee.

What is a claim in an life insurance plan?

A claim is a formal request sent to an insurance company by its policyholders to reimbursement a payment. The company reviews the claims sent by the customers to check if they are valid. Once approved, the payment is sent to the customers.The claim amount is paid in return for the premium amount paid by the insured. Different companies have different set of rules to follow when it comes to claim settlement. Hence, make sure to go through their terms & conditions in detail before signing the deal if you want to avoid any confusion later on.

Is there any advantage of buying insurance plan at an early age?

Yes, because age is one of the primary factors that decide the premium and tenure of your insurance policy. The younger you are, the lower the premium rate you will pay.

How important is it to disclose my medical history in the insurance application form?

Disclosing your health or medical history to your insurer is very important, as misleading or incomplete information in your form could cost benefits of the policy to you and your nominee.

What are the risks in Insurance Products? How do I know the risk levels of various Insurance products?

The risk associated with an insurance product depends on the type of product you choose, which is mainly of two types. The associated risks are stated largely in the insurance documents, such as: Traditional Plans: The investment risk associated with a traditional life insurance policy is borne by the insurer. The IRDA (Insurance Regulatory & Development Authority) regulates the investment guidelines and its primary objective is to provide stable returns with low risk. ULIPs (Unit Linked Insurance Plans): In ULIPs, the investment risk is borne entirely by the policyholder. With these plans, the policyholder gets various fund options that range from low risk to high risk. One needs to understand his own risk appetite before deciding to invest in these plans and should also focus on the risk involved.

How can I make my premium payments?

There are plenty of options that can help you pay your first and renewal premiums. Few of them are:
  • Online payment
  • Cheque
  • Standing Instruction(SI)/Electronic Clearing Service(ECS) {Bank Account & Credit Card}
  • Demand Draft
  • Interactive Voice Response (IVR) facility offered by the insurance company Credit card at insurance company offices

What if I change my mind after purchasing the Plan?

As a policyholder, you get a 15-days-time period to evaluate your policy and opt out if you are not satisfied with any of its features or conditions mentioned in the policy documents. This 15-days-time is also known as free look period.The insurance company will return the premium paid by you, after taking out different expenses, such as stamp duty cost, medical tests charges (if any) and pro-rated premium rate during this period.

What if I want to surrender my policy?

Usually, there is a waiting time of 3 years to surrender your policy.You will get the surrender value for your policy, which depends upon the rules set by your insurer. You can get the details about the surrender value in your policy documents or can also enquire about it from your sales representative while buying the policy.

What would happen if my smoking habits change after buying insurance?

As the tenure of a life insurance policy is usually 25-30 years long, it’s quite natural for some people to develop some habits such as smoking or drinking liquor. In such scenarios, it’s recommended to disclose this fact to the insurer, as such habits directly affect your risk profile and hence the insurer may need to increase your premium rates to take care of the increased risk.

What if I am not the nominee of a life insurance plan, can I still get a claim?

Yes, you can still get the claim even if you are not the nominee. However, to get the claim, you should be the legal heir of the policyholder.

Do I have to pay for medical tests?

No. Usually, the costs for pre-medical tests are borne by the insurer. In fact, many companies even provide medical reports to the policyholders along with their respective policy documents.

Can a life insurance policy be transferred to another person?

No, a life Insurance policy cannot be transferred to another person in any case. Therefore, make sure to appoint one of your financial dependents as the nominee to receive the death benefits in case something untoward happens to you.

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