Life Insurance
Tailored insurance plans for you
What Is Life Insurance
Life insurance is a financial agreement between an individual and an insurance company, designed to provide financial security to the policyholder’s family and dependents. In this agreement, the policyholder pays regular premiums to the insurance company, and in return, the insurer promises to pay a predetermined sum of money (known as the sum assured) to the nominated beneficiary in the event of the insured person’s death during the policy term.
The primary purpose of life insurance is to offer long-term financial protection and peace of mind. It ensures that the insured person’s loved ones are financially supported even in their absence. The payout can help the family manage everyday living expenses, repay outstanding loans or liabilities, fund children’s education, and maintain their standard of living.
Types of Life Insurance Policies
A Term Life Insurance plan provides coverage for a specific period of time. If the insured person passes away during the policy term, a death benefit is paid to the nominee.
Endowment Life Insurance plans combine insurance protection with savings. Premiums are paid for a fixed period, such as 15 or 20 years.
Child Life Insurance plans are designed to secure your child’s future by combining insurance and investment.
A Unit Linked Insurance Plan (ULIP) is a market-linked life insurance plan that offers both insurance coverage and investment opportunities.
Pension plans are designed to provide financial stability after retirement. By investing during your earning years, these plans offer regular income post-retirement.
Group Term Life Insurance provides life cover to a group of individuals under a single policy, typically offered by employers or organizations.
Best Life Insurance Policy Benefits and Features
Financial Security
Life insurance provides financial security to your family by paying a lump sum amount in the event of your untimely demise, helping them manage expenses and maintain their lifestyle.
Death Benefits
The primary benefit of life insurance is the death benefit. It ensures that your family or beneficiaries receive a specified sum of money upon the policyholder’s death.
Maturity Benefits
Certain life insurance policies offer maturity benefits, where the policyholder receives a lump sum amount upon surviving the policy term.
Guaranteed Returns
Some life insurance policies provide guaranteed returns on the premiums paid, ensuring stable and predictable growth of your savings.
Wealth Creation
Life insurance also acts as a long-term wealth creation and financial planning tool, helping you achieve goals such as buying a home or funding your child’s education.
Tax Benefits
Premiums paid towards life insurance policies qualify for tax deductions under the Income Tax Act, helping you save on taxes while securing your future.
Riders
Life insurance riders are additional benefits that can be added to the base policy to enhance coverage, such as critical illness rider or accidental death benefit rider.
Flexible Premium Payment Options
Life insurance policies offer flexible premium payment options, including monthly, quarterly, and annual payment modes, allowing you to choose as per your convenience.
Retirement Planning
Certain life insurance plans, such as pension and annuity plans, help you build a retirement corpus and ensure a steady income after retirement.
Loan Facility
Some life insurance policies allow you to take a loan against the policy’s cash value, providing financial support during emergencies without discontinuing coverage.
Who Needs a Life Insurance Policy?
Individuals with dependents
Primary breadwinners of the family
Parents looking to secure their family’s future
Homeowners with outstanding loans
Business owners
Single parents
Individuals with debts or liabilities
People involved in estate planning
Individuals planning for retirement
High-income earners
Anyone concerned about long-term financial security
You!
Types of Term Insurance Plans
Level / Standard Term Plan
In this plan, the sum assured remains constant throughout the policy term. Premiums are generally lower when purchased at a younger age.
Increasing Term Insurance
Under this plan, the sum assured increases every year by a fixed percentage or amount. In the event of death, the increased sum assured applicable for that year is paid to the nominee.
Decreasing Term Insurance
The sum assured decreases annually over the policy term. This plan is commonly used for loan protection, where the payout aligns with the reducing loan balance.
Return of Premium Term Insurance (TROP)
This plan offers both death and maturity benefits. If the insured survives the policy term, all premiums paid are returned. If the insured dies during the term, the sum assured is paid to the nominee.
Factors That Affect Life Insurance Premiums
The premium amount increases as the chosen sum assured or coverage amount becomes higher.
Premiums are generally lower when the policy is purchased at a younger age, as the risk to the insurer is lower.
Life insurance premiums may vary by gender, with women often paying lower premiums due to higher average life expectancy.
Any existing or past medical conditions can impact premium rates and may result in higher premiums.
Habits such as smoking, alcohol consumption, or other high-risk activities can significantly increase life insurance premiums.
Individuals working in hazardous or high-risk professions are usually charged higher premiums due to increased risk exposure.
How to Receive Life Insurance Term Benefits
On Survival
If you survive the policy term, you may receive maturity benefits depending on the type of life insurance policy. These benefits can be paid as a lump sum or through periodic payouts.
On Death
If the life assured passes away during the policy term, the insurance company pays the death benefit to the nominated beneficiary, ensuring financial support for the family.
Important Terms About Life Insurance Benefits
Policyholder
The individual who owns the life insurance policy and pays premiums to keep the policy active.
Life Assured
The person whose life is insured under the policy. This may or may not be the same as the policyholder.
Nominee
The person selected by the policyholder to receive the death benefit in case of the life assured’s demise.
Policy Term
The duration for which the life insurance policy provides coverage, chosen at the time of purchase.
Premiums
Regular payments made by the policyholder to maintain the insurance coverage.
Riders
Optional add-on benefits that enhance the base policy coverage, such as critical illness or accidental death riders.
Maturity Benefits
The amount payable to the policyholder if they survive the policy term, either as a lump sum or periodic income.
Death Benefits
The sum assured paid to the nominee upon the death of the life assured during the policy term.
Term Insurance Riders Add-on Benefits
Critical Illness Rider
Provides a lump sum payout if the insured is diagnosed with any specified critical illness.
Accidental Death Rider
Offers an additional payout to the nominee if the insured dies due to an accident.
Premium Waiver Rider
Waives future premiums if the insured becomes disabled or loses income, while keeping the policy active.
Terminal Illness Rider
Pays the sum assured on diagnosis of a terminal illness to support medical and personal expenses.
Return of Premium Rider
Refunds all or part of the premiums paid if the policyholder survives the policy term.
Understanding Factors Affecting Term Insurance Premiums
Age
Premiums increase with age due to higher mortality risk.
Gender
Women generally pay lower premiums due to longer life expectancy.
Occupation
High-risk professions attract higher premiums compared to low-risk desk jobs.
Policy Term
Longer policy durations usually result in higher premium amounts.
Lifestyle and Health
Healthy lifestyles lower premiums, while smoking and unhealthy habits increase costs.
Family Medical History
A history of hereditary illnesses may lead to higher premiums.
Residential Area
Living in high-risk zones may impact premium pricing.
Add-on Benefits
Adding riders increases the overall premium amount.
Why Life Insurance Is Important at Every Stage of Life
Life Insurance for Young Adults (20s–30s)
Protection against student loans and early career debts
Financial security for spouse and future family
Early wealth building and asset protection
Life Insurance for Middle-Aged Adults (40s–50s)
Coverage for home loans and children’s education
Income replacement for dependents
Preparation for medical and critical illness expenses
Life Insurance for Pre-Retirement (50s–60s)
Clearing remaining loans and liabilities
Building retirement savings
Ensuring healthcare and financial independence
Life Insurance for Retirement (60s and Above)
Providing inheritance for heirs
Protecting accumulated assets
Covering funeral and end-of-life expenses
Who Should Consider Buying Life Insurance?
Working individuals
Married couples
Parents with children
Housewives
NRIs
Retirees
Business owners
Determining Your Family’s Life Insurance Needs
Family’s Needs
Evaluating current and future financial responsibilities.
HLV Calculation
Estimating Human Life Value based on income, expenses, and liabilities.
Income Replacement
Ensuring consistent income for dependents in your absence.
Existing Loans and Debts
Covering outstanding liabilities to avoid financial burden.
Medical Emergencies
Preparing for unexpected healthcare costs.
Life Stage Changes
Adjusting coverage as responsibilities change over time.
Reasons for Needing Life Insurance
Protecting loved ones from financial hardship
Covering medical expenses during serious illnesses
Ensuring affordable long-term financial protection
Building reserves for emergencies
Encouraging disciplined savings
Planning funds for major life milestones
Securing a stress-free retirement
Availing tax benefits on premiums paid
How Does Life Insurance Policy Work?
Purchase a life insurance policy from a reputable insurance company. This policy is designed to provide financial protection to your loved ones in case of your untimely demise.
Make regular premium payments as specified in your policy. These payments keep your policy active and ensure that coverage continues without interruption.
Once your policy is active, you have peace of mind knowing that your family will be financially protected against unforeseen events, including death, critical illness
What Are the Payout Options Available in Life Insurance Income Plan?
Lump Sum Payout
A one-time payment of the full sum assured.
Monthly Income Payout
Regular monthly payments to the beneficiary.
Lump Sum + Monthly Income
A combination of a lump sum and monthly payments.
Increasing Monthly Income
Monthly payments that increase gradually over time.
How to Claim Life Insurance Plans in India
Inform the Insurer
Notify the insurance company about the death of the policyholder as soon as possible and provide necessary details.
Submit Documents
Provide documents like the death certificate, policy papers, and claim form.
Claim Verification
The insurance company verifies the claim and processes it.
Payout to Nominee
Once approved, the payout is made to the nominee or beneficiary.
Types of Deaths Not Covered in Life Insurance
Suicide
Death due to self-inflicted suicide, especially within the first year, may not be covered.
Death due to Self-Inflicted Injuries
Serious injury causing death through self-harm is excluded.
Death due to Hazardous Activities
Deaths during undisclosed dangerous activities like skydiving are not covered.
Death due to Criminal Activities
Death occurring while participating in illegal acts is excluded.
Death under the Influence
Deaths caused by alcohol, drugs, or other intoxicants are not covered.
War and Civil Commotion
Deaths resulting from war, riots, or civil disturbances are excluded.
List of Required Documents for Life Insurance Claim Settlement
Original Policy Bond
The original copy of the insurance policy.
Death Certificate
Self-attested copy of the death certificate.
Identity & Address Proof
Photo ID and residential proof of the nominee.
Bank Details
Copy of nominee’s bank passbook and canceled cheque.
FIR and Legal Reports
If applicable, copy of FIR or reports from authorities.
Post-Mortem Report
Required in case of non-accidental deaths.
Medical Documentation
Reports and certificates from the attending physician and hospital, including bills and discharge summary.
Why People Lose Money in Life Insurance
Canceling Early
Stopping a policy prematurely can result in loss of premiums due to penalties.
High Costs
Choosing an expensive plan beyond your budget may cause missed payments.
Not Understanding the Policy
Lack of awareness about terms and conditions can lead to denied claims.
Inadequate Coverage
Too little coverage can leave your family financially unprotected.
Ignoring Health Updates
Failing to update policy details to reflect health changes can affect benefits.
Stop Before You Cancel Your Life Insurance
Review Your Policy
Understand the terms, benefits, and penalties for early cancellation.
Compare Alternatives
Check other policies and insurers for better options.
Reassess Your Needs
Evaluate your current financial situation and future coverage needs.
Get Professional Advice
Consult a financial advisor for guidance before making decisions.
Know the Rules
Be aware of specific conditions, penalties, or loss of benefits associated with cancellation.
Avoiding Mistakes Before Buying or Comparing Life Insurance
Calculate Coverage Needs
Determine how much protection your family requires based on financial obligations.
Understand Policy Types
Know the difference between life insurance (lifetime coverage) and term insurance (fixed-term coverage).
Compare Beyond Price
Consider coverage, riders, and additional benefits, not just premiums.
Read Terms Carefully
Check fine print for exclusions and coverage details.
Check Insurer Reputation
Pick a company with good claim settlement and customer service history.
Provide Accurate Information
Honest disclosure about health and lifestyle avoids future claim issues.
Consider Riders
Add extra protections like accident or critical illness riders if needed.
Periodically Review
Update your policy to match life changes like marriage, children, or major financial shifts.
Why People Lose Money When Canceling Life Insurance Early
Surrender Charges
Most policies have fees for early cancellation, reducing the returned amount.
Loss of Premiums Paid
Early termination may forfeit premiums already paid.
Reduced Cash Value
Permanent policies accumulate cash value slowly; early surrender may result in minimal returns.
Administrative Fees
Cancellation or processing fees can further reduce the payout.
Missed Future Dividends
Policies with dividends lose future potential earnings if canceled early.
Loss of Death Benefit
Canceling removes coverage, leaving beneficiaries unprotected.
Tax Implications
Surrender payouts may be taxable if the amount exceeds total premiums paid.
Impact on Financial Planning
Canceling can disrupt long-term financial strategies like retirement or estate planning.
Difficulty Requalifying
Reapplying later may be difficult or expensive if health has worsened.
Loss of Rider Benefits
Optional add-ons like critical illness or disability riders are lost upon cancellation.
Psychological Impact
The security and peace of mind provided by insurance are forfeited when canceled.