Life Insurance
Life Insurance provides financial security for insured’s dependents in the event of death of the insured your death or terminal illness. This financial safety net can help cover expenses such as debts, living costs, and education for the dependents. Life Insurance is the priceless protection you can gift your loved ones. It helps them lead a comfortable lifestyle, even when you are no more around.
Key benefits of Life Insurance
- Provides financial protection to your family in your absence.
- Replaces lost income, supporting your family financially.
- Helps pay off outstanding debts like home loans.
- Supports short-term and long-term financial goals.
- Offers tax deductions up to ₹1.5 lakhs under Section 80C and tax-exempt payouts under Section 10(10D) of the Income Tax Act.
- Secures claim money for your spouse and children, free from court attachments for debt repayment under the MWP Act.
Life insurance is a contract between you (the policyholder) and the insurance company. You pay premiums to keep the policy active, and in return, the insurer pays a benefit to you or your nominee. For instance, If Ms. Patel buys an endowment plan for ₹5 Crores with a 20-year term and pays ₹10 Lakhs annually, her spouse (the nominee) will receive ₹5 Crores if she passes away during the term. If she survives, she gets ₹5 Crores as maturity benefit. Some plans offer periodic survival benefit too.
Who Shall Buy LIfe Insurance
Earning individuals with dependent family members, individuals with debt, and key persons within small and medium-sized businesses. Buying life insurance is a smart move if any of these apply to you –
- You have financial dependents: life insurance provides stability for your family.
- You have outstanding debts: life insurance covers these liabilities, preventing the burden from falling on loved ones.
- You are planning to start a family or get married: life insurance helps secure your financial future as you enter this new chapter.
- You are a business owner: life insurance ensures your business continues smoothly or transitions seamlessly in the event of your untimely demise.
- You only have employer insurance: personal life insurance ensures continuous coverage even if you change jobs, leave your current one, or retire.
- You plan for retirement: life insurance provides peace of mind and estate planning benefits, ensuring a smooth wealth transfer to your heirs.
Types of LIfe Insurance Plans
- Affordable Premiums: Generally, more cost-effective compared to other life insurance products.
- Income Replacement: Helps your family maintain their lifestyle in your absence.
- Death Benefit: Nominee receives the sum assured if the policyholder doesn’t survive the term.
- Maturity Benefit: Pure term plans don’t have any maturity benefit.
- Flexibility: Add-ons like critical illness or accidental death benefits available.
- Zero Cost Term Plan: A variant of term plan combining benefits of a pure term plan; returns all premiums paid. Policyholders can stop paying premiums at a chosen point, ensuring financial security without long-term commitment.
- Lifelong Coverage: Provides coverage until age 99, ensuring financial security and leaving a legacy for your beneficiaries.
- Death Benefit: Nominee receives the sum assured if the policyholder passes away.
- Fixed Premiums: Premiums remain the same throughout the policy term.
- Survival Benefits: Periodic payouts during the policy term.
- Maturity Benefits: Lump sum payout at the end of the policy term if all premiums are paid.
- Cash Value Growth: Builds savings over time, accessible through loans if needed.
- Flexibility: Options like limited payment plans, single premium plans, and joint life coverage.
- Dual Benefits: Offers both life insurance coverage and investment options.
- Death Benefit: Nominee receives the higher of the sum assured or the fund value if the policyholder passes away during the term, ensuring financial support.
- Maturity Benefit: At the end of the policy term, the policyholder receives the fund value, i.e., total investments and returns earned.
- Flexible Investment Options: Allows investment in equity, debt, or balanced funds with flexibility to switch between them.
- Lock-in Period: Typically has a 5-year lock-in period, recommended to hold for 15 years or more for better returns.
- Partial Withdrawals: Allows partial withdrawals after the lock-in period, providing liquidity.
- Death Benefit: Nominee receives the sum assured if the policyholder passes away.
- Maturity Benefit: At the end of the policy term, the policyholder receives the sum assured along with any accrued bonuses, serving as a savings tool.
- Savings Component: Encourages disciplined savings over the policy term, building a financial corpus for future needs.
- Fixed Premiums: Premium amounts typically remain consistent throughout the policy term.
- Flexibility: Options for limited payment terms, single premium, or regular premium payments.
- Loan Facility: Allows policyholders to take loans against the policy’s cash value in times of financial need.
- Survival Benefits: Regular payments at specified intervals, either a percentage of the sum assured or annual premiums paid, helping meet short-term financial needs.
- Death Benefit: Nominee receives the sum assured if the policyholder passes away during the term, ensuring financial support for the family.
- Maturity Benefit: At the end of the policy term, the policyholder receives the remaining sum assured along with any accrued bonuses.
- Fixed Premiums: Premium amounts typically remain consistent throughout the policy term.
- Cash Value Growth: Builds savings over time, accessible through loans if needed.
- Savings Component: Encourages disciplined savings to build a corpus for your child’s future needs, like education or marriage.
- Death Benefit: Nominee or appointee receives the sum assured if the policyholder passes away during the term
- Maturity Benefit: Lump sum payout at the end of the term for major milestones, ensuring financial support for major milestones.
- Survival Benefits: Periodic payouts at regular intervals during the policy term, helping meet short-term financial needs.
- Waiver of Premium: Future premiums waived if the policyholder passes away and the policy continues, ensuring uninterrupted benefits.
- Flexible Premiums: Options for limited payment terms, single premium, or regular premium payments.
- Guaranteed Annuity: Provides a fixed income stream, ensuring financial stability post-retirement.
- General Annuity Plan: Regular investments convert into stable income, paid periodically during retirement.
- Pension Accumulation Plan: Premiums paid during the policy term accrue into a pension fund, paid as a lump sum upon retirement.
- Death Benefit: Ensures a payout to the nominee or continued annuity payments to the spouse if the policyholder passes away during the annuity period.
- Single Premium and Flexible Plans: Options to invest a lump sum for regular income or make regular investments that convert into stable income during retirement.
Add-ons and Riders with LIfe Insurance
Life insurance providers offer various riders to enhance coverage and tailor it to individual needs. These riders provide additional financial protection by offering higher coverage or immediate funds during critical times. Here are a few:
Critical Illness Rider
Offers a fixed or lump sum amount if the insured is diagnosed with a listed critical illness during the policy period. It provides financial support during challenging times, helping cover medical expenses and other related costs.
Accidental Death Benefit Rider
Pays an additional sum to the insured’s family if the insured passes away due to an accident. It ensures that your loved ones are financially protected in the event of an unforeseen tragedy.
Accidental Total and Permanent Disability Rider
Provides an additional sum if the insured suffers a total and permanent disability due to an accident. This rider offers financial assistance to help adapt to new circumstances and cover any necessary lifestyle changes.
Waiver of Premium Rider
Waives future premium payments if the policyholder becomes permanently disabled or critically ill. It ensures the policy remains in force without causing financial strain during tough times.
Hospital Care Rider
Pays a daily fixed amount for each day of medically necessary hospitalization. It helps cover daily hospital expenses, reducing the financial burden during a hospital stay.
Surgical Care Rider
Provides a fixed sum if hospitalised for surgery for at least 24 hours and the surgery is performed. This rider assists in covering the costs associated with surgical procedures.
Life Stage Benefit
Allows for an increase in coverage at significant life stages, such as marriage or the birth of a child, without requiring additional medical tests. It ensures that your coverage grows as your responsibilities increase.
Increasing Cover Option
Under this rider, the sum assured gradually increases over time to counteract inflation and rising living costs. This rider helps maintain the value of your insurance coverage over the years.
Return of Premiums
Refunds the premiums paid if the policyholder survives the policy term, offering a form of savings. This rider ensures you get back what you’ve invested in your insurance.
Terminology of LIfe Insurance
- Policyholder: Purchases and owns the policy, pays premiums.
- Life Assured: Covered by the policy, whose death triggers the payout.
- Nominee: Receives financial benefits if the life assured passes away.
- Policy Term: Duration the life cover remains active.
- Riders: Add-on benefits that enhance coverage, available for an additional premium
- Premium: Periodical payments to maintain coverage, with amounts based on age, sum assured, lifestyle, policy tenure, medical history, gender, occupation, riders, policy type, and additional features.
- Free Look Period: Time to review and cancel the policy if needed.
- Grace Period: Extra time to pay overdue premiums.
- Policy Lapse: Loss of coverage if premiums aren’t paid on time.
- Exclusions: Risks or expenses not covered by the policy.
- Insurable Interest: A genuine reason for buying life insurance on another person, preventing profit from their death.
- Death Benefit: Sum paid to the nominee if the life assured dies.
- Survival Benefit: Money received if you survive a specified period, providing financial liquidity. Not available in all policies.
- Maturity Benefit: Sum paid to the life assured if they survive the policy term. Not available in all policies.
- Cash Value: In some life insurance policies, money accumulates over time, earning interest while the policy is active. This accumulated amount can be borrowed, withdrawn, or used to cover premiums.
- Surrender Value: Sum paid by the insurer if you discontinue the policy before it matures, usually after 2-3 years of regular premium payments.
Life insurance is essential for everyone to ensure their loved ones’ futures are secured. The right policy brings financial stability, peace of mind, and a safety net against life’s uncertainties. With countless options from various Indian insurers, finding the best policy can be daunting. Rely on our expertise to guide you towards the best solution tailored to your needs.
Secure your family’s future. Trust us to guide you in choosing the best life insurance for you.
