About Life Insurance

Among various insurance products, LIFE INSURANCE has been the most popular. It is an important part of financial planning. Life insurance provides financial protection to the family in case of the death of the breadwinner of the family. It enables the family to lead the same standard of life even after the demise of the head of the family.

Type of Life Insurance Policies

Term Insurance

Term insurance is the simplest and purest form of life insurance, offering financial coverage to the policyholder against fixed premiums for a specified duration – hence the name ‘term’ insurance policy.

Money Back Policy

In this policy the policyholder receives a certain percentage of sum assured at regular intervals say 5,10,15,20 years. In case of survival remaining amount along with bonus is paid on maturity. In case of death sum assured is paid.

Pension Plan

In this plan annuity is paid to the policyholder against the accumulated fund at the end of the term of the plan. Policyholders can also obtain the accumulated amount in a lump sum in place of the annuity.

Whole Life Policy

This policy provides coverage throughout the life of the policyholder. The premium is paid for certain number of years only say for 20 years.

Unit Linked Insurance Plan

In this plan the amount of premium is invested in the Equities and debt instruments. Here, return is not guaranteed and is market-driven but offers to build a good sum at the end of the plan.

Endowment Policy

In this policy the sum assured is paid in both the situations i.e. death or survival. The amount is paid either on maturity or death of the policyholder.

Life Insurance Benefits

This is the first and foremost benefit of life insurance. It provides financial protection to the family in case of death of the policyholder.

It offers an opportunity for investment through the Unit linked plans. There is a possibility of accumulating a huge sum at the end of the term of the policy

The premium paid for the insurance policies are eligible for the income tax deductions under Section 10,80C and 80 CCC of the Act.

Buying Decision Basics

Important Points to be checked before buying a life insurance policy

Before buying a policy track record of the company is to be checked about its promoters, claim settlement ratio, customer service, etc.

Some companies offer a free look period from 15- 30 days. The policyholder has an option to return the policy if not satisfied within the free look period.

Terms and Conditions of the policy are to be read carefully – whether any exclusions are there or not.

Claim settlement ratio is an indicator of companies’ promptness of settlement of claims. The higher the ratio, the better is the company. This can be checked on the web site of the companies.

Company offers to pay a premium in Monthly, Quarterly, Half yearly, and yearly instalments. The company also offers a discount on Yearly payment of premium. Payment option to be chosen based on income.

Frequently Asked Questions

Term insurance is a legal agreement between the insured (you) and the insurer (insurance companies) where death benefit is provided to the nominee if the life insured dies during policy tenure. Normally a term insurance provides a sustancial life insurance cover at an affordable premium.

The thumb rule for deciding the cover of your term plan is that it should be at least 20 times your annual income. For example, a person earning ₹5 lakh annually must have a term policy of about ₹1 Crore for adequate support to his family after his death.

Yes, you can always buy term insurance from two separate companies. Both the insurers from which you’ve purchased term insurance plans are liable to pay claim to the nominee in case of the policyholder’s demise during the policy period.

The premium terms generally vary from a smoker to a non-smoker and these terms are generally higher for a smoker as she/he comes in a high-risk category.

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