What kinds of Life Insurance Plans can I opt from?
There are bundle of life insurance plans available in the market. It purely depends on which one suits your need and requirement basis the benefits accrued or attached to a plan. Buy life insurance policy online.
The term plan is a pure protection plan which is taken to cover the risk of “dying too early”. Term plans provide the nominee with the sum assured as a financial indemnification in the unfortunate event of your demise during the policy term and policy terminates thereafter. Term plan safeguards your loved ones in your absence by shielding them with financial backing as planned by you.
The whole life plan is an insurance plan which covers your life against the risk of “dying too early” and “living too long” both, as the life cover is provided for the whole life keeping maximum maturity age as 100 in most of the plans. This insurance company pays the policy proceeds to your nominee in the event of your death during a policy term, but if you survive till the maximum maturity age the company will provide the maturity benefit as well.
Endowment plan comes with the component of saving and insurance making it a twin benefit plan under the policy. Endowment plans offer lump sum payout in the event or death or maturity, whichever happens first. This plan is basically opted for ensuring a robust corpus and regular savings to meet financial objectives in future.
This policy offers a portion of the sum assured payout on regular intervals during the policy term in terms of money backs or survival benefits, while the insured is alive. Once the insured survives the policy term, the remaining sum assured is paid back as maturity benefit. In case the insured dies during the term of the policy, the lump sum payout is given to the nominee apart from the money backs also known as survival benefits.
Child plans are kind of insurance plans which are taken with a specific objective of giving unperturbed financial support to the child in terms of education, higher education, marriage, etc. Child plans also offer death and maturity benefits (whichever happens earlier). Usually, such plans come with a waiver of premium benefit inbuilt to continue the policy for the objective it is taken for.
ULIPs (Unit Linked Insurance Plans) provide the twin benefit of insurance and investment opportunities under one umbrella. ULIPs are linked to the market, and the insured’s money is invested in various funds (based on equities, debts, government bonds) as per the risk taking capacity of the insured. The lump sum payout is given to the nominee in the event of death and the entire value of the fund is given to the insured if he survives the policy term.
Such plans cover the risk of “Living too Long”. Pension plans enable to survive the same lifestyle and allow financial independence after the retirement age. Regular payment of premiums builds a financial corpus, which can be withdrawn partly and the remaining can be utilized to provide pensions to the insured as stated in the policy.
What are the Benefits of Buying a Life Insurance?
Life Insurance provides financial protection to your family in your absence by providing death claim payout which is a lump sum Sum Assured plus accrued benefits/bonus basis the life insurance plan opted.
Life Insurance provides the insured a lump sum payout as deserved under the policy conditions on the completion of the policy term as Maturity claim payout. This is payable if the insured survives the policy term.
With your Life Insurance plan, you may opt for additional coverage or riders like Accidental Death Benefit, Disability rider, Income benefit rider, Critical Illness rider, etc. to give you added protection along with your base policy.
Life insurance provides you the option to surrender your policy partially or fully in the event of urgent fund requirements at your end. However the surrender value is very less as compared to the premiums paid till that time towards the policy.
Some of the endowment life insurance policies offer loan against the life insurance policy. However, the insured has to pay the relevant interest and repay the loan amount as per policy conditions.
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Premium paid towards the insurance policy taken for yourself, spouse or kids avail tax benefits under section 80 C, and the proceeds of the insurance policy are tax free as per section 10 (10) D of the Income Tax Act,1961 as per the conditions laid.
What are some Smart Buyings Tips?
Start Early: Life insurance premium most importantly depends on the age at which you are buying the policy. Starting early can save a lot on the premium amount throughout the policy term. It’s prudent to get a Life Insurance at the earliest to protect the financial interest of your loved ones.
Assess your Life Cover Accurately: It is imperative to assess the life cover or Sum Assured, based on the number of dependants you have, how much money you require to meet your financial goals like building a house, child’s education, child’s marriage and how much debts/liabilities you need to pay.
Check for Claim Settlement Ratio: Many insurers offer a variety of innovative life insurance plans. The entire purpose of taking the policy gets defeated if the insurer does not settle the claim in the event of your unfortunate demise. So check on the claim settlement ratio of the insurer, you are seeking insurance from.
Keep Inflation in Mind: Its imperative to take a cover keeping inflation in mind. A cover of Rs 30 – 40 Lakhs may not be of the same value down the years say 20 years later. So it’s prudent to keep in mind that how inflation will affect your financial needs later in the future.
Compare & Buy Online: The internet has made buying so easy. Online buying of insurance policies is much cheaper as there is no intermediary in between. It is hassle free to buy with a few clicks which allow quick policy issuance. Compare policies online and choose the best fit as per your need and requirement.
Read the Fine Print: You may get excited to buy the cheapest plan offering a bundle of benefits, but don’t forget to read between the lines. Study the terms and conditions of the policy contract carefully before buying to avoid any issues later. Your insurer also provides you with a free look period of 10 to 15 days where in case you are not satisfied with the plan you have opted, you may get it cancelled and get your premium amount back.
Opt for Requisite Riders: Riders offer additional coverage to your policy. It’s prudent to opt for only requisite riders only as opting for too many riders will elevate the premium amount and may be are not required.
Is there any Add on Cover/Rider with Life Insurance Policy?
Riders are additional benefits attached to your base policy which will offer you boosted benefits apart from your base policy. Various insurer’s offer multiple riders which can be taken with the main policy as per the policy conditions. Additional benefits come with the additional costs.
Accidental Death Benefit Rider
Accidental death benefit rider gives extra financial benefits to your nominees in case you die an accidental death. There is an accidental death sum assured, which is paid to your nominee apart from the base Sum Assured of the policy.
An additional death benefit is paid to your nominee apart from the base policy payout. The nominated beneficiary/ nominee can receive term rider sum assured if you have taken this rider to your base policy.
Critical Illness Rider
There are severe illnesses which disable an individual temporarily or permanently resulting in loss of earnings. The treatment cost of such illnesses is massive due to medical cost inflation. To take care of the medical cost involved in such illnesses like Heart attack, Cancer, Paralysis, Coronary artery bypass surgery, Major organ transplant and many more, a critical illness rider can be opted.
Waiver of Premium Rider
As the name suggests, the future premiums are waived off in the events like death or disability of the insured or policyholder as per the policy contract. The policy continues to survive till the end with the waiver of future premiums.
Income Benefit Rider
Life Insurance benefits are usually given to the nominees as a one-time lump sum, income benefit rider allows you the choice of distributing policy benefits in installments as a family income to the nominees. This rider allows you to regulate the dispersal plan of policy proceeds that suits best for your family in your absence.
Disability rider replaces your income for the specified tenure in the event of permanent or temporary total or partial disability due to an accident. The payout varies with the kind of disability occurred and also basis the insurers rider conditions. Usually the total disability, the payout is full sum assured where as in the case of partial disability, the payout is the partial sum assured.
(Note: The rider benefit, conditions, and eligibility criteria may vary from insurer to insurer)
What is NOT included in the Life Insurance Plan?
Your life insurance plan excludes the following:
This clause states that the policy benefits are paid out only in the event where the life insured is killed in a commercial plane crash while travelling. But if the life insured dies as a passenger in a private plane insurance company will not entertain the claim.
Dangerous Adventure Sports
This exclusion says that in the event the death of the life insured happens due to the involvement in certain dangerous adventure activities like auto racing, rock climbing, hang-gliding, etc., the payment of the policy proceeds will not be paid. Some insurer’s cover death arising out of such activities at a very high premium rates.
Act of war exclusion
This exclusion provides that the insurer will not pay, if the cause of death is a result of the war.
Life Insurance Glossary
Bonus: An extra amount provided by the life insurance company over and above the base sum assured either on maturity of the policy or death of the policyholder.
Claim: The insured event where the insurance company will pay the policy proceeds under the contract.
Insurer: The Insurance Company is known as the insurer.
Insured: The individual whose life is being insured under the life insurance contract.
Term life assurance quote
Insurability: It means all conditions that are related to the health and life expectancy of an insured.
Insurable Interest: This means that there should be some financial loss to the policyholder who is taking an insurance policy on the insured. Without insurable interest an insurance contract holds invalid.
Misrepresentation: Statements of any kind that does not hold true or are manipulated, which affects the insurance policy contract.
Moral Hazard: Wrong intentions or representation by a person to seek the life insurance benefits.
Nominee: The beneficiary or a family person entitled to be the recipient to get the policy proceeds declared by the insured.
Premium: The policyholder agrees to pay a cost for seeking life cover from the insurance company as consideration for buying the insurance policy.
Policy Term: The specified number of years for which the policyholder is insured with the insurance company.
Sum Assured: The life cover which the person has taken under his life policy which is payable in the insured event.
Riders: The additional benefits linked with the base policy taken by paying extra premium by the policyholder.