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Life Insurance

what is life insurance
Life insurance offers financial protection to the family in situations such as sudden death or permanent disability of a leading family member. Therefore, it is a guarantee that the insurance company will take care of the financial well-being of the family members even if the breadwinner is not present. 

This is done by paying a guaranteed amount to the nominee or beneficiary. Insurance can also cover other issues such as serious illness and permanent or temporary disability. The policyholder is called the insurer, while the insurance company is called the insurer.

A life insurance policy helps to meet three goals in life. Let's take a look at them:

1.Protection: The life insurance policy provides financial protection for the family in the event of the death of the uninsured.

2.Investment: In addition to protection, health insurance also assists in investing so that money can be used to meet various financial purposes.

3.Savings: As well as protection, through health insurance, you also get savings that can be used for retirement or other financial needs.

What is a Life Insurance Premium?

A premium is an amount paid to an insurance company by obtaining a life insurance policy. Premium or insurance costs are an important factor to consider before finalizing a policy. It depends on a variety of factors, such as age and gender. 

In order to reap the benefits of insurance, it is important to pay the premium on time. In the event of non-payment or payment delay, the policy may be considered outdated. However, before the policy expires, you usually get a grace period of 30 days. 

Payment mode can be either single or regular. Regular payments can be monthly, annual and so on. Let’s understand some of the factors on which premium depends.

Age: This is an important factor in deciding when to buy insurance. When you are older, raise the premium value. Similarly, young people should pay a minimum premium on life insurance policy.

Gender: Women's premium rates are lower than men's.

Smoker / Non-smoker: In the event you smoke, the premium will be higher because you are prone to serious health risks. Therefore, non-smokers should pay less.

Guaranteed amount: Raise a guaranteed amount or death benefit, increase the premium amount to be paid.

Policy Term: If the policy is long-term, the premium amount will be higher.

Types of Life Insurance Policy

There are 7 types of life insurance. And each has its own unique features and features. You can choose them according to your need and need. These are Time Insurance, Lifetime Insurance, Share Policy, Refund Policy, Child Plan, Retirement or Pension Plan, and United Linked Insurance Plan (ULIP).

Term insurance

Long-term insurance is a pure insurance policy in which the beneficiary receives a guaranteed amount, also called a death benefit, if the policyholder dies during the scheme. However, if the insured survives the term plan, the coverage also ends, when the beneficiary does not receive the money. Even the premium paid is not refundable to insurers.

However, there are certain plans for the period in which the premium paid is refunded, if the policyholder occurs in the survival of the plan. This payment is called the survival benefit. The cost of such programs is quite high. Apart from that, the pure time plan is one of the least expensive plans compared to other types, as the premium price is very small. One can choose regular payment or single payment mode.

3 Types of Term Insurance

•Term Rate: The guaranteed amount remains the same throughout the policy period. Therefore, even the premium price and the premium renewal remain constant.

•Decreased Term: In this case, the guaranteed amount decreases over time; however, the premium amount does not change.

•Increased Term: Both the amount is guaranteed and the premium amount increases over time. This is preferred by people who think the beneficiaries will need more money.

Lifetime Insurance / Life Cover Insurance

Under this policy, insurance is covered for the rest of his life, that is, until his death. Maturity is usually 100 years. Therefore, you need to continue paying premiums until your 100th birthday. Here, the beneficiary receives a guaranteed amount and benefits of maturity in the sudden death of the policyholder. On the other hand, the policyholder gets to enjoy the benefits of survival, in the event he survives the policy period. The entire life insurance plan offers benefits in both cases - when the policyholder survives the policy or dies suddenly over time.

2 Types of Whole Life Insurance

•ULIPs: In the case of ULIPs, part of the premium paid is used for coverage and half is invested in the market

•Indigenous Health for All: Here, you get a guaranteed return on program maturity. These plans may be categorized as involvement, where the insurer receives a bonus or share from the company, and does not participate, where the insurer does not receive a bonus or share from the company. You can enjoy the benefits in the end or get them as temporary payments.

Endowment Policy

This provides both coverage and cost-saving options. As with any other life insurance policy, here, the beneficiary receives a guaranteed amount in the event of the death of the insurer. However, if the insured survives the system, you get a maturity benefit. 

The policy may participate in both, where the insurer receives the bonus and benefits from the company, and not the participants, where the insurer does not receive the bonus and benefits from the insurance company. 

The endowment policy can also be ULIP, where part of the premium is invested in the market other than the part used in consolidation.

Refund Policy/ Money Back policy

In this policy, the insurer receives a certain percentage of the guaranteed amount at regular intervals during the policy period. If the policy exceeds the policy, you receive a guaranteed amount regardless of the percentage guaranteed. So, in the end, the insurer receives a guaranteed amount and an additional bonus.

And in the event of the death of the insurers during the policy, the beneficiary receives the full guaranteed amount regardless of the amount of premiums paid. It is one of the most expensive policies, as it provides benefits to insurers over time and the long-term benefits of standard life insurance schemes. The refund policy provides benefits to insurers during the insurance period they can use to meet various financial objectives.

Child Program

People can take out this insurance scheme if they want to save money for the future of their child and get coverage. It is a combination of savings and insurance, in which the insurer can spend money on the child's future needs as higher education. 

The investment in this program is age-appropriate - one can start investing immediately after the birth of a child and one can withdraw money after the child has reached a certain age. Some pediatric vaccines offer moderate withdrawal options. This could be a ULIP or a stock system.

Retirement or Pension Scheme

Taking out family insurance policies is not enough. One must also keep one's aging in mind. When you are young you have a normal source of income, but in old age the situation can change. Therefore, one needs to plan for retirement as well. 

Along with coverage, retirement or pension plans offer the opportunity to save and invest money that can be spent in old age. Life insurance companies in India offer retirement plans that help create a company where regular income, called a pension or pension, is paid to the insurers after reaching a certain age.

Retirement plans can be obtained “with cover” or “without cover”. The first scheme provides a guaranteed amount to the beneficiary and then “without cover” provides the amount to the beneficiary only after the death of the insurer.

Types of Retirement Plans

• Immediate Pension Fund: An insured person receives a pension within one year of the premium

• Postponed pension: The insured decides the time frame after which they will receive a pension from the company. This time period is known as the fixed time

Unit Linked Insurance Plan (ULIP)

The Unit Linked Insurance Plan (ULIP) offers two benefits - coverage and investment methods. Under this scheme, the amount of money/amount paid for the policy depends on the current value of the asset. 

The total amount paid by insurers is divided into two parts: one invested in the market or in debt and the other is used for insurance. The type of investment is chosen by the insurer based on the type of risk he intends to take.

Types of ULIPs

On an investment basis:

• Violent ULIP: Here invest 80-100% of the investment in equity

• ULIP Rated: In this case, 40-60% of the investment is equally invested and the rest is invested in the credit market

• Conservative ULIP: Here 20% of the investment is invested and the rest is invested in the credit market

On the basis of death benefit:

• In the first case, the beneficiary receives a guaranteed amount or the amount of the fund, whichever is higher

• In the second case, the beneficiary receives both a guaranteed amount and a fund value.

Other Types of Life Insurance

Group Life Insurance

Group life insurance is a type of life insurance that includes a group of people. It is mostly offered by companies to their employees. Since insurance is done in a group, group life insurance is considered less expensive. 

The group may have lawyers, members of cooperative banks, communities, doctors, etc. This life insurance may have a contribution, in which employees contribute with the employer to the payment of premiums, or non-contribution, in which the employer pays the full premium amount.

Adult Health Insurance

You can tolerate a variety of health conditions in childhood; however, in old age you need more protection and security. Managing those living conditions in old age, life insurance for older people can be a great option. Insurance also provides financial coverage in times of need. 

For example, in the event that you do not have the support of your spouse, the life insurance of the elderly can provide financial protection for your spouse in the event of your sudden death. The death benefit can be used to manage loans, debts, and other financial needs.

Coverage of Life Insurance Policy

Along with the standard installation that varies with the planning system, you can further protect yourself with passenger assistance, such as passengers with accidental death benefits, a full or permanent paramedic and much more. Additional benefits can be obtained by paying an additional fee. The following are common passengers:

• Passenger death benefit accident: The nominee receives this financial benefit and a guaranteed amount, if the insurer dies in an accident

• Complete and permanent accidental passenger: Insurance receives financial assistance if it is unable to pay due to the disability mentioned in the policy

• Sick passenger: This covers major serious illnesses such as cancer, heart disease

• Hospital passenger: A fixed fee is payable to cover non-medical expenses in the event of hospitalization

• Premium Passenger Discount: Once you have this passenger and your life insurance policy, the company ceases to pay the balance due to sudden death or permanent disability for insurers,

Eligibility criteria

Particulars

Details

Entry Age

18-75 years

Policy Term

5-75 years

Premium Payment Option

Regular, limited, and single premium

Sum Assured

Rs 3 Lakh-100 Crore

How Does Life Insurance Work?

• Before buying a health insurance policy, you should understand your need and analyze your financial situation and decide who will benefit from it.

• Choose an insurance company and policy after a thorough comparison

• Once you have finalized the company and policy, and set a policy time. The premium is determined on the basis of various factors such as age, lifestyle, gender, policy duration, etc.

• The policyholder must pay a fixed premium to the insurance company for a fixed period. The premium is collected to provide a guaranteed amount for the sudden death of the insurers

• In the event of sudden death insurance, the applicant must notify the company immediately and provide the required documents and claim form

• If the application is approved, the beneficiary receives a confirmed amount. A claim can also be rejected for reasons such as non-payment of premium, unclaimed death in the policy, etc.

Documents Required for Claim Process

The following is the standard set of documents required to process a claim:

• A completed and signed claim form

• Initial policy certificate

• Death certificate issued by the municipality AND

• Exhumation reports

• Summary of discharge from hospital

• Beneficiary KYC documents such as a copy of the photo ID and address proof

• A copy of the canceled check and bank statement

• If the claim is made by a person other than the nominee or authorized person, the person making the claim must provide legal proof of his or her identity

Procedure to File a Claim of Life Insurance

 
 

In the event of a sudden disappearance of the insurer, the nominee or beneficiary may file a claim to confirm the amount.

• Inform the insurance company as soon as possible with details such as the time of death, place of death and cause of death and the required documents provided above

• Once these documents have been submitted, the insurance company will verify the details and charge a claim

• The guaranteed amount will be transferred to the beneficiary's bank account

• If a company encounters a problem while verifying, it may reject the claim

Not covered under Life Insurance

Life insurance protects the insurer and his family in a variety of situations, but certain claims are not covered by the insurance company. Below is a typical release. However, this can vary with different policies.

• Self-injury or intentional self-injury

• Involvement in extreme sports such as paragliding, water sports, rock climbing

• Man-made disasters or damage caused by negligence on the part of a person

• Loss of life due to HIV and STDs

• If the complaint arises as a result of being involved in any illegal activity

Time Taken to Resolve Claims

After notifying the insurance company of the death of the insurer, the applicant is required to submit the required documents, as well as an application form. The insurance company takes something like a week to a month to check and approve or reject the claim.

Payment of a claim usually takes one or two months and in the event that it takes longer than the prescribed amount, the insurance company may pay interest on the late payment of the guaranteed amount. However, insurance companies are also taking the last step proposed by submitting a claim status.

Companies Offering Life Insurance Policy in India


INSURANCE COMPANIES


Max Life Insurance

DHFL Pramerica Life Insurance

Future Generali India Life Insurance

LIC of India

Aditya Birla Sun Life Insurance

Star Union Dai-Ichi Life Insurance

TATA AIA Life Insurance

AEGON Life Insurance

Bajaj Allianz Life Insurance

ICICI Prudential Life Insurance

Edelweiss Tokio Life Insurance

IDBI Federal Life Insurance

HDFC Life Insurance

Canara HSBC OBC Life Insurance

PNB MetLife India Insurance

Bharti AXA Life Insurance

Reliance Nippon Life Insurance

India First Life Insurance

Exide Life Insurance

Aviva Life Insurance

Sahara India Life Insurance

SBI Life Insurance Co. Ltd.

Kotak Mahindra Life Insurance

Shriram Life Insurance

Significance Factors

With so many companies selling insurance policies, choosing a particular company and policy is a daunting task. To simplify the process, you need to keep certain points in mind.

• Ask your insurance provider to explain the waiver under the policy you have chosen. This helps to get a clearer picture of what is covered by the policy

• As your needs change, it is important that you review your insurance requirements every year

• Do not postpone payment or payment after the renewal date as this will be considered a 'serious risk' and your plan may end

• Choose wisely according to your needs while choosing the type of insurance

• Consider the insurance company's payment rate as this shows how reliable the company is when it comes to resolving an insurance claim

• Use a premium health insurance calculator to weigh the pros and cons of various life insurance plans and choose the best life insurance depending on your needs and abilities

Benefits of Purchasing a Life Insurance Policy

• Controlling guesses: Everyone wants their family to live a good life even after their death. No one can replace the death of a person, but financially, a person can protect the future of his or her family so that members do not need to rely on someone else. That’s where a guaranteed amount of life insurance comes in handy

• Financial pillow: Life insurance policy helps to get a family out of financial problems such as loans and debts after the sudden death of a breadwinner

• Retirement: A person needs to protect his or her old age, when various sources of income can start to dry up. A pension plan can help in such a situation. Money invested or saved by ULIPs or endowment plans can also be used for aging

• Tax benefits: Tax benefits may be enjoyed by the payment of fees and refunds provided by the company under sections 80C and 10 (10D) in accordance with the IT Act, 1961. You may receive tax benefits even from passengers.

• Peace of mind: Once all your finances are in order, a person is free from all conflicts and, as a result, can focus on other aspects of life

• Savings tool: Along with the time plan, one has the option to choose a plan that will be a combination of protection and savings. This will help create a corpus for future financial needs

• Protect the future of children: Things like the cost of education and the cost of marriage can be very stressful while raising a child. Children's programs can help get you out of these situations

• Anti-policy loans: With certain insurance policies, a person can also take out a loan charged a fixed amount or amount paid, depending on the type of insurance plan taken out. These loans are usually taken at a lower interest rate

• Occupational protection: Passengers or additional services provided by these policies may provide financial assistance in cases such as accidents and disabilities.

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