All you need to know about life insurance in India
A life insurance plan pays your family a certain sum of money as death benefit (as mentioned in the policy) in event of your death while the policy is in force and/or provides returns as maturity proceeds after a set period (called policy term) when the policy terminates; in exchange of a premium. Insurance life online quote term.
There are different types of life insurance plans broadly the pure protection or term-life plans and investment plans.
In comparison to investment-type life insurance plans, term life plans only get you a death benefit and not any other return. However, the death benefits you get is substantial in comparison, typically 500-1000 times your annual premium. It would take an investment earning 10% interest for more than 65 years – a lifetime - to get a 500X return!
Term insurance is also quite cheap, e.g. for a 30-year-old, a cover of 50 lakhs, costs about Rs. 4,000 per year.
Life insurance plans are classified into two major types: Pure protection policies or term life plans: Life insurance term plan pays your family the death benefit as mentioned in the policy in case of your death while the policy is in force.
In comparison to investment-type life insurance plans, term life plans only get you a death benefit and not any other return.
Investment policies: Investment-type life insurance plan pays your family a certain sum of money as maturity returns after a set time period (called policy term) or the death benefit in event of your death (while the policy is in force); in exchange of a premium.
Typically maturity periods are ten, fifteen or twenty years upto a certain age limit, usually 65 years. Furthermore, these policies are traditional with-profits or unit linked (ULIP) plans. The death benefit you get is lesser in comparison to pure protection (term insurance) plans, typically 7 -10 times your annual premium.
If you have family members who are dependent on your income, you must buy a life cover (a term-life protection plan at the least) to secure their future in your absence.
Life insurance provides financial protection against several risk-hazards in the life of every person:
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That of dying too soon leaving a dependent family without any means of regular income
That of living till old age without visible means of support
Paying off loans and other expenses like illness or accidents in your absence
Moreover, the death benefit is tax free to your family u/s 10(10D), and premiums get tax exemption u/s 80C.
Life insurance provides two types of tax benefits:
The premiums you pay for a life insurance policy are eligible for tax deductions upto Rs1.5 lakhs under Section 80C (to the extent of 10% of sum assured or actual premiums paid whichever is less)
The death benefit (including any accumulated bonuses) received by the nominee is fully tax- free as per section 10 (10 D).
Any maturity proceeds received (other than death benefit) are tax-free provided, the premiums paid in any of the years during the term of the policy do not exceed 10% of the actual Sum Assured
First and foremost, compare quotes across companies. Use our proprietary Value for Money (VFM) score and benefit illustrations to find policies that offer the most bang for your buck.
Choose a company that has a good and fast claim settlement record. You can see this data on Turtlemint.
Choose the right cover amount. Remember the thumb rule of 20 times your annual salary.
Turtlemint helps you with all of the above decisions. In addition, we offer free claims support to all our customers. So, give us a try right now!
Money back plans are anticipated endowment plans. They also have death as well as maturity benefit like Regular Endowment Plans, with the only difference that rather than paying the sum assured in one lump sum on maturity, money back plans pay a portion of the sum assured periodically during the policy tenure. These plans, thus, provide liquidity. The survival, maturity and death benefits are given below:
a.Survival Benefit= % of the Sum Assured as per the policy schedule on the pre-defined year. For example, 10% of the Sum Assured is paid every 5 years, i.e. on survival,
On the 5th year, 10% of the Sum Assured would be paid
On the 10th year, another 10% of the Sum Assured would be paid
On the 15th year, another 10% of the Sum Assured would be paid
And on the 20th year, another 10% of the Sum Assured would be paid
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b.Maturity Benefit= Remaining Sum Assured + Bonus (if applicable) is paid to the policyholder if the life insured survives the entire policy tenure and the policy ends.
Thus, in the previous example, the remaining 60% of the Sum Assured + Bonus (if applicable) would be paid at the end of the policy tenure as Maturity Benefit.
c. Death Benefit= Sum Assured + Bonus (if applicable) is paid to the nominee if the life insured dies within the policy tenure irrespective of the amount already paid as survival benefit and the policy ends.
Bonus declarations, guaranteed additions or loyalty additions might also be paid with the death or maturity benefit, if applicable.