A life insurance policy is something that provides a dedicated sum of money on the demise of the policyholder or after a certain period of time.
Life insurance is a contract wherein an individual is offered financial coverage by an insurance company in exchange for a payment over a period. The payment made to the insurer is referred to as the premium. In case the policyholder passes away during the policy tenure, the insurance company will offer a lump sum amount to his/her nominee. This lump sum amount is called the sum assured on death or the death benefit. Upon completion of the policy term, the policyholder receives a sum assured on maturity or the maturity benefit from the insurer along with some bonuses.
A pure protection plan, such as a term insurance policy, offers only the death benefit. However, there are several types of life insurance policies that offer savings in addition to protection. The savings can be in the form of a maturity benefit or bonus. Premiums paid and benefits received under life insurance are liable to tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961.
|Types of Life Insurance||Life Insurance Companies in India||Life insurance provider statics||Life Insurance Benefits||Claim Life Insurance|
Online tracking of applications
Life Insurance policies offer several different benefits to individuals. Following are the most important:
New Plans from Life Insurance Corporation of India
Life Insurance Corporation of India or LIC (as is popularly known) is the first-ever state-owned general insurance company in India to have commenced operations. Till date, LIC remains to be one of the most reputed insurance companies providing comprehensive health and life insurance policies to its customers. LIC came into origin in the year 1956 and since then it has managed to carve its own niche in the sector of insurance. LIC offers a wide range of insurance products to its customers from endowment plans, and Unit-Linked Insurance Plans, to moneyback plans and term insurance plans. Whatever insurance needs and requirements you have in life, Life Insurance Corporation of India will fulfill it easily and in a hassle-free manner.
Life insurance has evolved from a luxury to a necessity, with it becoming an integral component for the smooth functioning of our lives. While life insurance penetration in the country is yet to do justice to our numbers, each day sees hundreds of new entrants into different life insurance schemes. One of the biggest challenges pertaining to Life Insurance is related to choosing the right type of insurance, and with companies offering multiple options it wouldn’t be hard for people who are not familiar with them to get confused.
The table below will highlights and compares key aspects related to the different types of life insurance policies in India.
|Parameter||Endowment Policies||Unit Linked Insurance Policies||Money Back Policies||Whole Life Policies||Pension/Annuity Policies||Term Insurance Policies|
|Overview||These are protection plus investment policies||These are investment plus insurance policies which are unit-linked and participatory in nature||These are protection plus saving policies which are participatory in nature||These are protection plus saving policies which are participatory in nature||These are traditional policies which are non-participatory in nature||These are the simplest life insurance policies|
|Term*||Term typically ranges between 10 -35 years||Term ranges between 10 – 20 years||Typically ranges between 5 to 25 years||Covers the whole life of a policyholder. Term can be if 40 years||Typically there are no fixed terms, with annuity kicking in post-retirement||Typically ranges from 5 years to 30 years|
|Death benefits||Payable to nominee on death of policyholder. Typically includes bonuses accumulated also||Payable to nominee if policyholder dies while policy is in place||Payable to nominee if policyholder dies while policy is in place. Death benefit is exclusive of other pay-outs||Payable to nominee if policyholder dies while policy is in place||Some plans offer a provision to return the invested amount in the case of death of policyholder||Sum assured is payable to the nominee if policyholder dies while the policy is in place|
|Maturity benefits||Maturity benefit will be paid to policyholder on survival at end of term||Maturity benefit will be paid to policyholder on survival at end of term||Survival benefit will be paid on maturity of policy||Maturity benefits are typically paid when the policyholder reaches a certain age (could range between 80 years to 100 years)||No maturity benefits per se. Policyholders are entitled to regular pension for the term specified.||No maturity benefit will be paid on survival|
|Premium costs||High premium costs||Premiums are on the higher side, owing to investment costs||Affordable premiums||Generally have higher premiums associated with them||Premiums are moderately priced, with most policies requiring one-time payment||Affordable premiums, lowest among all policy classes|
|Additional benefits||Investments accumulate profits, which are paid as bonus||Investments accumulate profits, paid as bonus. Tax exemptions can also be claimed||Regular monetary benefits are given to policyholder while the policy is in force, with these amounts not impacting the death benefit||Benefits paid on maturity or death include a bonus component along with the sum assured||Regular income source post retirement||These plans provide maximum cover at low premiums. One can opt for variants of pure term plans which provide maturity benefits|
|Ideal for||People with income to pay high premium and those who are looking to protect themselves and multiply their investment||People who are looking at a medium term investment goal to diversify their portfolios. Also suited to those with high income and keen investment sense||Individuals who are looking to secure their life but wish to earn some money at regular intervals. It is ideal for people looking at an investment plus protection plans||People who want to protect the interest of their family and those looking to secure the financial future of their loved ones irrespective of what happens||People who are worried about their retirement life, and those who wish to have a regular income source post retirement. Not suited for those looking at higher returns on their investment||People who are looking to secure the financial interest of their family members without having to pay exorbitant premiums. Individuals looking for short term protection can opt for these plans|
*Note – The term varies from plan to plan, with the numbers mentioned above reflecting an overall average.
|Insurance Provider||Claims Paid(2017-18)||Claim Settlement Ratio (in %)||Percentage of Grievances Solved|
|Birla Sun Life||5292||96.38%||99.75%|
|Star Union Daichi||1145||92.26%||100%|
Life Insurance Providers statistics for 2017-18 By IRDA
“Based on IRDA Annual Report 2017-18 on Total Business Premium”
When it comes to life insurance, the standard idea of the product is that if you pass away, an insurance company will pay your family a large sum of money. But that is not the only benefit that a life insurance product has to offer. A life insurance policy can also be used to plan for upcoming and unforeseen expenses through schemes like ULIPs (Unit Linked Insurance Plans) that provide returns through investment in the markets.
Following are the top 10 life insurance companies in India and the products they offer:
Following are the documents you will require to purchase a life insurance policy:
Life insurance claims are made under two circumstances:
Here, nominees or close relatives of the deceased makes the claim (or assignees if the policy has been assigned) in the following way:
While these outline the standard set of documents required to process a claim, other evidence may be required such as an employer’s certificate or any other forms or reports that will help resolve any issues thrown up during an insurer’s claim verification or investigative processes.
When a policyholder’s beneficiary or nominee is claiming life insurance, he or she will be required to follow certain simple rules. The nominee will have to file a death claim in order to procure the death benefit. If you have a physical insurance policy, you can take a claim intimation or a notification form from your life insurance provider. If you have an online policy, you can apply for a form online.
Being insured in today’s date is of utmost importance. Even if your partner has a life insurance policy and a group policy from his/her company, it is important that you purchase a comprehensive life cover for yourself. Covering your life will not reduce the emotional distress that you may be going through, but a life insurance policy will ensure that you have adequate financial backup during times of your need. The insurance market is currently flooded with insurers selling a horde of insurance products and services. While selecting a particular life insurance policy, it is imperative to understand the tax implications of the same.
Women are becoming more and more empowered in all aspects in India. These days they are not only contributing to household chores but are also working shoulder to shoulder alongside men. Gone are the days where the man of the house was the sole breadwinner.
This is probably the reason why women need life insurance just as much as men in India. Women typically have the tendency of taking their financial protection for granted, hence miss out on purchasing life insurance or health insurance policies for themselves. Mentioned below are a few reasons why women should invest in life insurance policies in India:
The following types of life insurance policies are most suitable for the women in India:
Life insurance policies are known for insuring the life of an insured and also for providing a lump sum amount to the insured’s family after the former (the insured) passes away. The insurance market is flooded with with numerous insurance policies offered by various insurance providers in today’s date. Hence, choosing a life insurance policy that best suits one’s needs has become a convenient process.
However, before investing in a life insurance policy, it is important to analyse the cost and one’s needs, and invest accordingly. Mentioned below are a few life insurance plans in India offering the best benefits.
|Life Insurance Policy||Minimum and Maximum Entry Age||Minimum and Maximum Term of the Policy||Minimum and Maximum Sum Assured Amount|
|Aegon Life iTerm Plan||18 years as on the last birthday and 65 years as on the last birthday||Individuals can opt to invest in any policy that has a term ranging from 5 years to 62 years. A coverage for 100 years can also be opted for||Minimum sum assured is Rs.25 lakh and there is no maximum limit|
|Bajaj Allianz iSecure Plan||18 years as on the last birthday and 60 years as on the last birthday||The policy terms range from 10, 15, 20, 25, to 30 years||Minimum sum assured is Rs.2.5 lakh (general category) and there is no maximum limit|
|HDFC Life Sanchay||30 days as on the last birthday and 50 years if the term of the policy is 10 years and 45 years if the term of the policy is 15 to 25 years||The minimum policy term is 15 years and maximum ranges between 15 years and 25 years||Minimum sum assured is Rs.1.18 lakh and there is no maximum limit|
|SBI e-Shield Plan||18 years as on the last birthday and 60 years is the maximum entry age||If the policy is a level cover then the minimum term is 5 years and for increasing cover the term is 10 years. Maximum policy term is 30 years||Minimum sum assured is Rs.35 lakh and there is no maximum limit|
Factors Affecting Life Insurance Policy Premiums:
In India, the general tendency is to not purchase an insurance policy unless one really needs it. This is a highly risky behavior as medical emergencies and unfortunate events are unpredictable. The need to purchase a life insurance policy becomes even more integral once an individual reaches his/her retirement age.
Typically, an average young Indian avoids purchasing a life insurance policy for two reasons – firstly they feel like they might not require an insurance coverage due to their current good health, secondly, working professionals often find the insurance coverage provided by their employers to be sufficient. This ultimately results in a situation where they have zero savings during the golden years of their lives. Owing to this, a multitude of insurance companies offer health coverages or plans that are custom-made for the senior citizens of India. The enrollment age for such policies are usually up to 65 years. However, there are multiple insurers in the market that do not have the entry age restriction, thereby making it super easy for senior citizens to access standard healthcare during any point in time.
With almost every insurance company providing quality healthcare to senior citizens, it can be a daunting task to narrow down on one and purchase it. Therefore, the below-mentioned factors must be taken into consideration while purchasing a life insurance policy for senior citizens in India:
Senior citizens are relatively more prone to illnesses and diseases due to their age. This is the time during which they should be worrying about taking care of their health instead of finances.
With the insurance sector maturing vastly over the last few years, people are becoming more and more aware about the importance and absolute vitality of insurance policies (both health and life). Indian citizens have rendered themselves proactive and with the constant help of financial advisors, planning in advance has become ever more easy.
Surge of NRIs in India: With an increase in the number of Non-Resident Indians wanting to invest in Insurance policies in India, the platform has become extremely expansive. A Person of Indian Origin or PIO and a Non-Resident Indian has the full liberty to buy a life insurance policy in India to assure their lives. Multiple insurance firms and companies have now begun to re-strategise their policies to suit the needs of PIOs and NRIs.
As most of you must be aware, a term insurance plan is essentially a pure protection policy, and hence makes the most sense to be purchased for the security of an entire family. Multiple insurance companies in India have various term plans that are completely suitable to the needs of an NRI or a PIO. With the help of a questionnaire, this kind of an insurance policy can be bought in a jiffy. They are not entirely different in their structure, however individuals may customise their policies as per their needs.
However, in India, currently a handful of insurance companies have a streamlined system in place to help the NRIs with their policies. Whatever requirements are there, whether it be a medical test or simple documentation, the employees of these companies will always be at your service. Given below are few of the firms who have a systemised structure in place:
NRIs may also choose from certain insurance policies that depend wholly on the country where the person is residing currently, their age, and other valid information.
Location: If you are an NRI seeking life insurance policies in India, then you should bear in mind the fact that your geographical location will not be taken into account for doing so. However, for the medical test, you might need to visit the place of origin.
No Extra Premiums Whatsoever: If the risks involved are more or less the same, then there will be no difference in the premium rate of resident and non-resident Indians. The premium cost will be impacted if the involved risk is increased for some reason.
Digital Payment: An NRI can opt to pay digitally through a foreign nation’s remittance, or a bank account with an Non-resident ordinary (NRO) nature, and through a Non-resident (NRE)/Foreign Currency Non-Repatriable (FCNR) account.
Benefits such as death and maturity can also be deposited through the above-mentioned methods. If you are paying the premiums in a foreign currency, your proceeds will be rendered wholly repatriable. However, this will not bear any effect on the policy or the proceeds status whatsoever.
The concept of life insurance was established in India in the year 1818 by the British colonial rule. Since then, it has become a financial instrument that is crucial for every Indian citizen. The British Raj instituted Oriental Life Insurance Company to initially protect their community from medical mishaps. Much later on, the benefits of purchasing a life insurance policy were extended to Indians as well. The first-ever life insurance company of Indian origin encompassing reasonable premiums was established in the year 1970 and it was known as Bombay Mutual Life Assurance Society. The following milestones highlight the many achievements of the Life Insurance sector in India along with how far they have come in terms of covering innumerable lives.
Life insurance involves the payment of an amount of funds when the insured individual dies or once a certain period is completed. It also helps in minimising the risk by migrating it from the policyholder to the insurance provider. Life insurance mainly focuses on risk management and risk pooling. It helps people in attaining financial security instead of being stuck when certain unforeseen and unfortunate incidents occur. Some of the most important and common principles of life insurance include both parties (insurer and policyholder) having good faith, policyholder having insurable interest in the insurance offered by the company, the insurance company’s readiness to offer compensation when a damage or loss occurs, the principle of subrogation where the policyholder has the right to claim the amount from the insurer, etc. Life insurance products function according to 3 aspects and they include interest earnings, mortality, and expenditures of developing and maintaining the insurance plans, etc.
With life insurance, you can provide enhanced financial security to your near and dear ones. Life insurance is an integral part of our financial planning, providing financial cover to your family members even when you are no more. Life insurance policies help you prepare for life's uncertainties; they provide complete peace of mind ensuring that the future of your loved ones is secure. Also, you can pay off various expenses incurred in different phases of your life with the help of life insurance policies. The amount received as life insurance policies can be used for paying off loan and other expenses, taking loans and fulfilling various personal needs.
Life, as we know it, is essentially divided into four stages. In a similar fashion, a life insurance policy will also have its phases and each phase will have its own prerequisites and features.
Mentioned below are the essential stages of life insurance policies that in turn coincide with the stage of life an individual is in.
Few tools are as effective for long-term financial planning as life insurance. However, in order to ensure the incorporation of a life insurance policy into your portfolio, it is crucial to understand the manner in which life insurance works and when payouts can be claimed.
Life insurance works in a fairly simple manner. Customers will have to make premium payments to the insurance company at regular intervals of time, and in exchange, the company will guarantee the policyholder with a lump sum pay out to his / her beneficiaries in case of his / her untimely death. The premium payments made to the company will accumulate over a period of time and provide bonuses as well.
Benefits under a life insurance policy are usually paid out to the nominee or beneficiary upon the death of the policyholder. To receive the sum assured, the nominee will have to file a death claim with the insurance company for which he / she will have to furnish a copy of the policyholder’s death certificate in addition to any other documents as required by the insurance company. Most insurance providers take around 30 days to review the claim before deciding to make a payment or denying the claim. It takes between 30 and 60 days for an insurance company to settle the claim with a nominee or beneficiary of a policyholder. While there is no specified time frame, most insurance companies try to settle claims as early as possible because it helps them in avoiding high interest fees for delay in payment of claims.
While most claims are paid out without much concerns, there may be situations that cause the insurance company to delay the payment of your claims. For instance, in case the policyholder dies within the first two years following the purchase of a life insurance policy, the nominee or beneficiary may have to wait for a period of between six and 12 months before receiving the payment because the policy may contain a contestability clause due to which the insurance company will have to investigate the original application and confirm there was no fraud committed. A number of life insurance policies also come with a suicide clause that enables the insurance provider to reject claims in case the policyholder commits suicide within two years of taking out a life insurance policy.
Since all life insurance policies pay out a lump sum amount to the beneficiaries or nominees upon the death of the policyholder, it is essential for the nominee or beneficiary to contact the life insurance policy immediately after the death of the policyholder and commence the claims process as soon as possible. A certified copy of the policyholder’s death certificate must be obtained and submitted to the insurance company along with the original policy document and any other document requested by the insurer.
Over the past 20 years or so, an increasing number of life insurance companies have designed and made available policies that enable their policyholders to withdraw money against the policy’s face value. In case you are critically or terminally ill and need funds to meet emergency expenses, you may avail a loan or withdraw money against your insurance policy by simply submitting the necessary documents to the insurance company along with a letter that states the reason for your withdrawal.
The most important thing to do before taking out a life insurance policy is to evaluate and understand your insurance requirements. Following are the points you will have to consider before purchasing a life insurance policy:
Even before the era of online premiums calculators existed, people did feel the need to analyse their life insurance requirements and wanted to know how much is just enough for them and their family members. This was done through the assistance of financial advisors and experts who used to sit down with the policyholders and used to help them calculate their life insurance requirements and needs. This activity basically includes two things:
The remainder that you have at the end of the calculation is essentially the amount of coverage that you need for your family. This is the amount that should ideally be your death benefit. The period of time that your family will need the coverage for is known as policy term. Policyholders are free to choose from a wide array of policy terms made available by insurance providers.
The general thumb rule of life insurance is always selecting a coverage that is ten times more than your current annual salary. However, circumstances and financial requirements vary from one individual to another. What one person needs as a coverage might not suffice for you. Therefore, it is important to carefully calculate your financial expenses in the future before purchasing a comprehensive life insurance policy.
Since life can be uncertain, it is essential to have a proper savings plan in place in order to deal with unforeseen circumstances and emergency expenses. One of the best ways through which you can plan your savings while also ensuring that you and your loved ones are financially secure.
There is no particular time that can be considered as the ‘right time’ to purchase life insurance as it depends on individual requirements and circumstances. The market has a number of options with varying terms and implications, and the key to picking the right policy lies in research and comparison. If you find the right policy at the right age, the benefits you reap when you most require it can be truly helpful. It is also important to consider such factors as future plans, dependents, income, etc. in order to make an informed decision about the policy term, the premium and the cover.
Purchasing life insurance need not necessarily make sense for all individuals. In case you do not have any dependents, and possess adequate assets to cover all costs related to your death, such as lawyer fees, funeral expenses, etc., then you need not take out an insurance policy. Life insurance is also not necessary in case you have dependents but also have adequate assets to cover them in case of your unfortunate and untimely death.
However, in case you are the main provider of your family and also have debts that are significantly larger than your assets, insurance will work out beneficial for you. Taking out life insurance will ensure that your dependents are covered in case of your death. While many individuals consider life insurance as a form of investment, it does not offer too many attractive benefits when compared with other conventional investment instruments. Some kinds of life insurance policies are considered as instruments for investing funds for retirement or savings, and are known as cash-value policies, and they are basically policies that help in building up a pool of money that accrues interest, and a percentage of the money will paid out to you upon the maturity of your policy.
Cash-value policies are the preferred selling instruments for insurance companies and they hire agents who aggressively promote these policies in exchange for commission. In case you wish to surrender a cash-value policy, insurance providers recommend that you avail a loan from your savings to continue making premium payments. While this solution seems easy, you will incur costs due to the loan as interest payments will have to be made to the insurance provider for the money you have borrowed.
Term insurance, on the other hand, allows you to purchase a policy that will pay out a predetermined amount of money in case of your unfortunate demise during the policy term. However, no amount will be paid in case you are alive when the policy term coms to an end. The reason this product was designed in such a manner is to ensure that your assets make you self-insured over a period of time. However, convertible and renewable term insurance policies are the best options regardless of your debts, income, lifestyle, etc. The coverage offered by them is similar to that offered by cash-value policies and they are also comparatively cheaper.
If your term life insurance policy has a renewable clause, it means that you will be allowed to renew your policy at a predetermined rate without the need to undergo a medical examination. In essence, in case you have been diagnosed with a serious illness when the policy has expired, the policy can be renewed at a competitive rate. Convertible insurance policies offer the opportunity to convert the policy’s face value into a cash-value plan provided by your insurance company when you attain 65 years of age and do not have the financial security to do without insurance. A comprehensive research and comparison of policies will help you better understand which plans best suits your personal requirements and how much coverage you will require.
Purchasing a life insurance policy is considered essential nowadays because it ensures that your dependents will have the financial resources to cope with their daily expenses in case of your unfortunate and untimely death. While life insurance is not necessary for every individual, it definitely plays a crucial role in ensuring the financial security of the family of an income-earning individual, and it becomes all the more important for individuals who are the sole earners in their families.
Insurance can also come in handy for individuals who wish to repay personal loans or home loans, or those who have children that require funds for marriage or higher education. In essence, life insurance policies serve as contingency plans that ensure that your nominees or family members will remain financially stable in case of your demise as the insurance company will pay them a lump sum amount. Based on the kind of policy you purchase, you can also avail a healthy savings-cum-investment instrument that will qualify you for tax benefits as well.
Thanks to advancements in technology, you can now compare life insurance policies from the comfort of your home. All you need is a computer and an internet connection in addition to a payment account such as a debit or credit card. But before you choose a policy and pay for it, it is essential that you do your homework and ensure that the policy is select has all the features and benefits that will come to good use in the future. Following is a brief description of the various policies at your disposal and the important points that must be considered before selecting a life insurance plan:
Life insurance policies are often considered incomplete without riders. While term life insurance policies are the most popular kind of insurance purchased by Indian individuals, they have been designed in a manner such that they offer maximum protection to the family of the policyholder in case of his / her untimely death. However, additional financial cover can be obtained through a life insurance policy by incorporating riders into them. Riders are basically additional features that enhance the value of a life insurance policy while providing extra benefits that are not covered by the original policy document. Availing a rider along with an insurance policy may slightly increase the premium amount depending upon the kind of raider you have purchased. If you are looking to choose an optional rider to increase your insurance cover, it is essential to understand each rider and what kind of benefits it offers. Following are the most popular riders that can be availed in addition to your life insurance policy:
Since life is uncertain and we are prone to contracting medical conditions from time to time, a Critical Illness rider is an excellent option to reduce unnecessary expenses. Life insurance policies do not usually cover medical and hospitalisation expenses, which means that if you fall sick despite holding a life insurance policy, you will have to bear all the costs related to your treatment by yourself. A Critical Illness rider can prove very beneficial as it not only ensures that you have financial support when it comes to paying your medical bills, but also provides access to quality medical attention, thereby ensuring that treatments are not ignored or delayed owing to lack of finances.
A Critical Illness rider usually covers medical expenses related to illnesses such as stroke, heart attack, kidney failure, paralysis and cancer among other illnesses. In case you purchase this rider, you can breathe relatively easy in times of ill health, knowing fully well that your insurance policy will cover your medical expenses and that your family will not have to worry about the finances in addition to dealing with the emotional trauma. Individuals who purchase the Critical Illness rider will receive a predetermined lump sum amount the moment they are diagnosed by any of the aforementioned conditions or the conditions mentioned in the terms and conditions section of the policy document.
Given the uncertainty of life, an incident or accident has the potential to render an individual disabled. In case of disability, the individual is impaired to the extent that he / she cannot work and earn the income they require to support their family, thereby affecting the lifestyles of both, the individual as well as his dependents. In such cases, the individual will require an alternate source of income to ensure the healthy functioning of his / her family. A Partial and Permanent Disability rider is the best bet in such cases as it provides staggered payments to the individual in case he / she has met with an accident due to which they are disabled and unable to work. These payments are generally a certain percentage of the total sum assured (10% or more in most cases), and ensure that you can meet your financial requirements even if you are partially or permanently disabled.
The Accidental Death rider is an ideal option for those who intend on ensuring that their families have adequate financial resources in case of their untimely and accidental death. In addition to considerably high medical costs, the number of unfulfilled financial liabilities are also usually high in case of an individual’s accidental death, making it very difficult for his / her family to cope with the financial requirements.
An Accidental Death rider comes in very handy in such situations as it will ensure that the individual’s family will receive an additional payment in case the policyholder dies from an accident. Although the basic sum assured will be paid out to the nominees upon the death of a policyholder, the Accidental Death rider provides the family with extra funds to ensure that they can manage all their expenses, thereby making it less stressful to deal with the loss of a loved one.
In case you fail to make a premium payment on time, you will receive a notification from the company to ensure that all due premiums have been paid within a predetermined grace period. Failure to make premium payments within the stipulated time period often results in a situation wherein the policy is considered lapsed. As a result, the policy will no longer be active and you will not be eligible for the benefits upon maturity of contract. There could be a number of reasons as to why an individual may not be able to make premium payments, but regardless, the policy will be rendered useless. In such a case, the rider called Waiver of Premium can come in handy.
Even if you cannot make premium payments for a certain period of time, be it because of disability or unemployment, purchasing a Waiver of Premium rider will ensure that your policy does not lapse so that you can enjoy all the benefits upon maturity as initially agreed. The rider will allow your premium payments to be waived off but the policy will continue as per the initial agreement.
The demise of a sole-earning member of any family can be a devastating loss and make it hard for the dependents to carry on with their lives in the same manner as before. If you have a family whose financial requirements are met solely by your income, it is essential to ensure that they have a regular source of income in case you are no longer able to provide for them. The Income Benefit rider is perfect for individuals who wish to ensure that their family’s lifestyle remains unaffected in case of their untimely death. As the name suggests, the Income Benefit rider provides regular income to the family of a deceased policyholder, and the amount payable to the nominees through such a rider is usually a percentage of the total sum assured. Purchasing this rider will ensure that your family will be financially secure and have lesser concerns to deal with in case of your untimely death.
The importance of comparing life insurance policies before purchasing one cannot be stressed on enough. Following are a few simple reasons as to why it is absolutely necessary for you to compare life insurance plans online:
When life insurance companies calculate the premium for each individual, there are certain factors that are taken into consideration. Since life insurance is a form of investment, even low premiums have the potential to yield relatively high returns over a period of time. However, availing a life insurance policy with a low premium may not always be possible as you will have to meet some requirements as laid down by the insurer. With that said, some individuals tend to avail similar life insurance policies as others at significantly low costs. The reason for this is that these individuals have made the right life choices that have enabled to avail lower premiums.
Following are the factors that are taken into consideration by life insurance companies for the calculation of premiums:
Once the insurance company has taken the aforementioned factors into consideration, it will determine the amount of premium applicable to an individual, making it essential for you to ensure that you lead a healthy lifestyle and make the right choices in order to avail the best possible rates.
The premium charged on your life insurance policy is the amount of money levied by insurance providers for coverage. The premium charged by each company may vary, making it important for you to compare different policies to find the one that best suits your requirements. However, there may be times when the quote for a premium may differ from the premium that is actually charged as it will depend on the manner in which the premium is computed.
Mathematical calculations and statistics done by the insurance provider’s underwriting department will determine the premium charged to an individual. In most cases, the statistical data regarding the health, age and life history of an individual are taken into consideration when computing the premium. For instance, a youngster driving a fancy sports car will likely have to pay a higher insurance premium in consideration with a middle-aged individual who drives a sedan. The underwriting process is applicable to all individuals who wish to avail life insurance, and it entails investigation of filial illnesses, analysis of reports such as motor vehicle reports and medical information bureau.
Once the underwriting department of your insurance provider has gather all your information and analysed it, an actuary will scrutinise it further to determine your risk to the insurance company. The actuary will also forecast how likely you are to make a claim on your policy, and the higher your chances of making a claim, the higher your premium payment will be. The actuary will also peruse mathematical information after which he / she will compile “mortality and sickness” tables based on which potential losses you will incur due to illnesses and death will be noted. There tables are used by actuaries to create models that ascertain how likely an individual is to contract illnesses or die. The premium charged to you will be determined by these results.
Nowadays, when you want to make your premium payments for your life insurance plan, you can do it online conveniently. The different online premium payment options include net banking, debit card, credit card, mobile banking, etc. You can also go for automatic payment options where your premium amounts will be deducted from your account directly on a quarterly, half-yearly, monthly, or annual basis depending on the premium payment mode that you choose. The payment options include eCMS, NEFT, Electronic Clearing Service (ECS), Standing Instructions (SI) mandate, Auto debit facility offered by RBI, etc. These online payment options will depend on the life insurance provider that you choose. You can make these payments by logging into the official website of the company or by visiting your bank’s internet banking portal.
There could be several reasons as to why you may want to cancel your life insurance policy. It could be because you no longer possess the money to make premium payments. It could be because you have a dire need to cash out the policy. It could be for any reason, but regardless of the reason, it is relatively easy to cancel your life insurance policy. Following are a few tips on how to cancel your insurance policy:
The following are the steps that can help you cancel your life insurance policy:
Many employees in India can get life insurance with the help of their employer. This is known as the employer-employee structure. The employer will purchase insurance from the insurance company and then the employee will be insured. This brilliant facility is being offered by many employers in order to retain and motivate employees efficiently. When life insurance policies are offered by the company, employees get attracted and stimulated to work at an organisation. The attrition rate will also minimise with the provision of life insurance.
You can check with your employer if you will receive life insurance. Under the employer-employee structure, the employee will receive the benefits of the policy and also tax benefits. You will not have to pay any tax for such an insurance policy. You can buy any type of life insurance under this particular structure.
Your company will most likely offer a life insurance policy to employees if it is a sole proprietorship firm or a legal or corporate firm with at least 5 employees who can purchase the life insurance policy. Your employer will need to draw a single cheque to offer coverage to its employees.
When an employer offers life insurance policies to its employees, certain eligibility criteria need to be met:
Now, even SMEs can provide life insurance policies to its employees. They only need to fill a proposal firm which mentions that they would like to go for the employer-employee scheme and that it will be paying premiums for its employees. The form will need a signature from a certain authorised party working at the company. The form will need details such as names of employees who want coverage, type of insurance plan, policy period, riders, and sum assured. There should also be a stamp or seal of the organisation.
The organisation will need to fill and sign both the nomination form as well as assignment form and furnish these forms to the insurance company at the proposal stage.
The employer will need to fix the insurance quantum according to the CTC of the different employees, work experience, qualification, and previous work records of the employees.
Life insurance is not exempted from GST (Goods and Services Tax). The introduction of GST will have an impact on the life insurance industry. The insurance premiums will most likely increase from 15% to 18% in the insurance sector. If you are paying premiums for health, car, and life insurance, you will be affected heavily.
Under the GST regime, there is a Services Accounting Code (SAC). This code is applicable only for services that come under GST. The SAC for GST classification for life insurance services (not including reinsurance services) is GST Code for Life Insurance. Similarly, the SAC GST code for pension services is 997131.
The on-going debate surrounding the linking of Aadhaar to insurance policies, and a string of other important services had previously created some confusion among policyholders and citizens availing these services. As per an earlier Supreme Court ruling, it was mandatory to link your Aadhaar details to not only insurance policies, but also your mobile number and several other facilities. The deadline given for the same was 31 March 2018. However, in a second ruling which was passed on 13 March 2018, the Supreme Court said that the deadline for linking Aadhaar has been extended indefinitely, till a judgement is announced for the same.
The implications of this decision for insurance policyholders are varied, depending on whether you are an existing policyholder, or are looking to purchase a new insurance policy. Existing policyholders will not be required to link their Aadhaar to their policy, until a decision on the matter is announced by the Court.
However those who are looking to buy a new life insurance policy will be required to provide their Aadhaar and PAN/Form 60 details at the time of registering for the policy. This means that new insurance policies will need to be linked to the policyholder’s Aadhaar number, for which IRDAI has granted policyholders 6 months, starting from the date of registration. If the policyholder does not have an Aadhaar Card, they will be required to provide any other “officially valid document”, from the list of documents mentioned in the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. These documents include your driving licence, passport, PAN card, job card issued as per Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), and the voter identity card issued by the Election Commission of India.
The cost of a life insurance policy depends on the type of policy you own. Term plans are generally cheaper in nature as it only offers death benefit with no profits or returns. Traditional plans and unit-linked plans tend to cost more as they offer a wide range of benefits. The cost also depends on the sum assured i.e. a higher sum assured will cost you more and vice versa.
The effectiveness of a policy depends on the coverage it provides, the benefits associated with it, and the claim settlement ratio of the insurance provider. Based on these factors, Aegon Life Insurance, Edelweiss Tokio Life, and Future Generali Life Insurance offer life insurance policies that provide a wide coverage to the customers.
Term life plans are offer a high sum assured at low premium rates. Such plans do not offer any returns and are valid for a limited period of time. Whole life plans, on the other hand, offer death benefits as well as savings benefits. Unlike term plans, these plans are valid for the entirety of the policyholder’s life.
Both types of policies have their own perks. You must assess your needs first to decide which is better. If you seek high coverage at low premium rates, then term plans are a better option. However, if you want life cover as well as savings benefit with a longer tenure, a whole life plan will be a perfect pick.
A basic life insurance or life insurance refers to an agreement between the insurer and the policyholder under which the insurance provider must offer a death benefit to the nominee of the policy upon the death of the policyholder.
Life insurance prices are heavily influenced by your age. As you grow older, the premium rates will increase as old age makes us more vulnerable to risks. Ideally, you should invest in a life insurance plan in your late 20s or early 30s. The ideal age varies based on the number of dependents you have. If you have a history of any critical illness in your family, it is advisable to invest in a plan as soon as possible.
Yes, you can buy life insurance at 62 years. Most life insurance policies have a maximum entry age ranging between 55 years and 60 years. However, there are numerous policies that are designed specifically for senior citizens. Such plans are useful for individuals who haven’t invested in a plan earlier in life. Certain plans for senior citizens also offer retirement benefits and pay outs.
Life insurance policies are designed in a way to provide your family/nominee with financial support after your demise. The death benefit can be availed only if the policyholder dies within the policy period. But, in case you survive the policy period, the death benefit won’t be paid out.
For traditional plans and policies with benefits, if you survive the policy term, you will receive the maturity benefit. But in the case of term plans, the policy ceases to exist after you survive the term.
The premium rates of life insurance policies are largely based on your age, income, sum assured, etc. Due to this varying nature of the prices, it is difficult to determine the plan with the best rates. However, most insurers provide a premium calculator service on their websites. You can use this service to find out the accurate premium and compare different plans to find the one with the lowest rate.
The exclusions under life insurance plans may differ from one policy to another. However, there are certain exclusions that almost all policies agree with. Mentioned below are some important ones:
Life insurance is an important investment if you have a family or dependents. Usually, people who are single do not require a life cover but that is not the only factor which you must consider. Whether single or married, if you have loved ones depending on your income, you must buy a life insurance policy as after your demise, the burden of expenses will fall on your loved ones.
The premium of a whole life plan may differ among insurance providers based on your sum assured. Similar to other insurance policies, the cost of the plan also depends on your age and other similar factors. Therefore, it is advisable to use a premium calculator to find out the price
Death under the following conditions are covered under life insurance plans:
The premium payment term for whole life insurance plans can be any of the following:
Endowment plans include a life cover along with savings benefits. By investing in such plans, you will receive a lump sum amount after the policy matures. Endowment plans offer death benefits to the nominee if the policyholder passes away within the policy period.
Choosing a life insurance policy depends on your financial protection needs. Ideally, life insurance should be opted for to provide financial protection to your dependents in the unfortunate event of death. Term insurance policies are considered the best form of pure protection as they offer the highest coverage for the lowest premiums. These plans offer only death benefits. To receive maturity or survival benefits as well as death benefits, you will have to opt for TROP policies, endowment policies, pension or annuity policies, money back policies or ULIP policies.
Premiums paid by a term insurance policyholder are fully utilised towards creating a life cover. Under other types of life insurance plans, only a part of the premium paid is allocated towards creating a life cover. The balance is utilised to provide for maturity benefits or as in the case of ULIPs a part of the premium is used to meet administration and sales expenses. This makes term insurance plans more affordable than other plans. This is why they are also called pure protection plans because they only offer a pay-out in the event of death of the life assured. Other plans offer returns as well as life coverage.
In general, it is recommended that a person avails a cover that is at least 20 times his/her current income. However, this depends on your personal financial situation and personal profile. If you have to provide for many dependents, you would need a larger cover. If you are young, you should opt for a longer term life cover to take advantage of lower premiums. As you grow older, premiums rise for the same sum assured. Again, if you don’t have other savings avenues, a large sum assured will serve the purpose better. Always, remember to account for inflation as well. Consider loan obligations or debt that will have to be serviced in your absence. Many people ensure the chosen sum assured will cover debts in their absence. Another pertinent factor is affordable. Higher the sum assured, higher the premiums.
Life insurance policies are meant to provide financial sustenance in the event of death, primarily. However, most policies offer additional coverage for disability, accident and various illnesses. These are called riders and usually come at an additional cost although some policies do offer them as part of the primary plan.
Yes, premiums paid are deductible U/S 80C, U/S 80CCC, U/S 80D, U/S 80DD and death benefits are tax exempt U/S 10(10D). This is subject to prevalent provisions of the Income Tax Act, 1961.
Yes, these days almost all insurance providers offer online purchase of life insurance. Additionally, a number of financial services providers offer this option through their websites, where you can compare and choose from a number of providers. The fact that people are increasingly turning to online purchases of life insurance policies signifies how secure the process is. Online purchases offer policyholders of comfort and convenience and in many cases the policies are cheaper since there are no sales agents involved.
Depending on the type of policy chosen, premiums can be paid either in a lump sum or in regular instalments.
Bonuses are offered under participating life policies i.e. policyholders can participate in the profits of the policyholder’s fund. A reversionary bonus is declared as a percentage which applies to the chosen sum assured. Reversionary bonuses can be simple or compounded bonuses. One-off reversionary bonuses are those that are paid out of one-time profits that may not occur again. A terminal bonus is the residual bonus declared on maturity or the policy i.e. if after declaration of all reversionary bonuses, there are still profits accrued to the fund, it may be paid out to the policyholder in the form of a terminal bonus.
Premiums are the amounts paid by the policyholder to the insurance company in order to keep the policy in force.
Under certain plans, insurance companies give policyholders a share in profits. This amount is called a bonus and accrues to the policyholder at no extra cost. It is awarded at certain times during the policy period. Bonus amounts are decided by the company and are paid out in addition to the chosen sum assured. Certain plans guarantee bonus payments.
Riders are specific to certain situations or events whereby the insurer pays the policyholder a certain amount of money when such event occurs. E.g. critical illness or disability rider. They are an additional benefit to a standard policy for higher premiums.
As per IRDA regulations, if a policyholder does not wish to continue his/her policy they can discontinue the same within the first 15 days of buying it and get a refund.
If a policyholder wishes to cancel his/her policy, once in effect, they can surrender it to the insurer and receive the surrender value as a refund. The surrender value is calculated based on premiums paid and how long the policy was in effect. Surrender is usually allowed after a certain period of time.
If, for example, a policy is used to raise a loan, the policy is ‘assigned’ or transferred to the lender. The policy then bears the lender or the ‘assignee’s’ name. Once the loan is repaid the policy can be reassigned or transferred back.
When purchasing a life insurance policy, the most important thing to check is whether or not guaranteed returns will be provided by the plan. You must also keep an eye on the lock-in period, information regarding premium payments, the implications of defaulting on premium payments, the revival conditions, the fees that would be charged for cancelling or surrendering the policy, the availability of a loan facility, etc. Go through the terms and conditions of the policy you wish to purchase and make sure that it meets all your requirements for an affordable cost.
Proposals are key components on insurance and policies are underwritten based on the disclosures made in them. It is essential that you provide only correct disclosures and statements to the insurance company or you will be at risk of rejection of claims.
Insurance companies may request medical reports from applicants depending upon the age at which they purchase the insurance policy, their age when the policy matures, personal and family history, sum assured, and other factors they consider crucial. For instance, if the applicant is obese, special reports such as Glucose Tolerance test or Electro Cardiograms could be requested. Similarly, depending upon your medical condition, the insurance company may ask you for one or more reports.
The surrender value of a policy is usually a percentage of the policy’s paid-up value. Insurance companies calculate the surrender value of an insurance policy based on the surrender value factor, which is the ratio between the premiums paid and the period for which premium payments have not been made.
Some insurance companies provide loans against insurance policies to their customers. The amount of money you can avail through such a loan is usually a percentage of the insurance policy’s surrender value.
Almost all insurance companies send an intimation along with the discharge voucher to you at least two to three months before the date of maturity. The intimation will inform you as to how much money you will be receiving from the insurance provider. The discharge voucher as well as the policy bond must be duly signed by the policyholder and returned to the insurance provider as soon as possible as the sooner you do so, the sooner will they be able to release your payment. In case you have assigned the policy to another individual, only the assignee will be authorised to receive the claim amount at the time of maturity.
At the time of purchasing a life insurance policy, the insurance provider may design and define the manner in which you will receive the payout. Settlement options are offered by most insurance companies and they ensure that you receive your money in a manner that was specified when you were purchasing the insurance policy.
In case of your unfortunate and untimely demise during the policy term, your nominees will have to furnish such basic documents as the policy bond, the claim form, and the death certificate of the late policyholder. There may be instances wherein the insurance company may also request you to furnish other documents like a post mortem report, a police inquest report, an employer’s certificate, a hospital certificate, a medical attendant’s certificate, etc. The policy bond usually contains all the information associated with the claims process.
Insurance agents are usually representatives of specific life insurance companies and have the authority to offer advice on any product that is sold by that particular insurance company. All agents who deal with the sale of life insurance policies are registered with the IRDA. All agents also have a basic requirement to pass an examination before undertaking to sell insurance policies. In case you are purchasing an insurance policy through your agent, make sure that you request for his / her authorisation card attained from IRDA.
A non-participating insurance policy is one that does not allow the insured individual to share in the profits made by the company, while a participating policy ensures that an insured individual has the right to share in the profits of the company. However, the dividends or bonuses declared by the insurance company may increase or decline based on the life funds’ investments returns.
The mortality or risk class of an applicant will be calculated based on an underwriting procedure through which the insurance provider can determine whether or not the applicant is a risk worth taking. The risk of death is calculated based on many different factors like the age of the applicant, the sex, medical and personal history, occupation, habits, etc. The decision of the life insurance company to insure the life of an applicant will depend on the details you have mentioned in the application form. Make sure that all the information you enter therein is accurate as inaccurate information has the potential to cause problems at the time of making claims.
Insurance companies provide something called a grace period to customers who are unable to make premium payments on the due date. The period usually spans for 15 to 30 days, and customers who default on their premium payments are expected to pay during this period. Failure to do so will mean that your life insurance policy has lapsed. As a result, you can either reinstate or revive the policy within a predetermined period of time.
Cancellation of policies during the free-look period can be done free of cost. However, in case you wish to cancel your life insurance policy after the free-look period, you will be charged a small fee for the same.
When a life insurance plan has been active for a specified number of years (usually at least five), the policy acquires a cash value. Every life insurance policy has a savings portion called the cash value. The cash value of a life insurance policy adds up when the worth of premium payments made by the policyholder exceeds the cost of insurance. This excess amount is transferred to a cash value account where it accrues interest. In case you choose to surrender the policy, the company will offer you the cash value or surrender value of the policy. However, please note that surrendering an insurance policy prior to the end of the maturity period will make you incur a significant loss.
The cost of a life insurance policy will be determined by the premium payments you have undertaken to make to the insurance company. The number of premiums and the cost of each premium, in turn, will be determined by your age at the time of purchasing the policy, the kind of life insurance policy you purchase, the sum assured, and the policy term. Premium payments are payable on an annual / semi-annual / monthly basis.
A life insurance policy essentially ensures that your family is financially secure in case of your unfortunate and untimely death. That apart, life insurance policies also offer tax benefits. The premium payments you make towards your life insurance policy can be deducted under Section 80C of the Income Tax Act. However, the total amount of money deducted under Section 80C cannot be more than Rs.1.5 lacs. Moreover, life insurance policies can also be used as a financial planning tool as most insurance policies in the market today come with built-in savings element that enable you to ensure that both savings as well as life cover can be possible. Life insurance companies also cover hospitalisation costs, making them beneficial instruments that ensure that you have access to quality healthcare. In addition, the riders that can be purchased along with a life insurance policy will significantly reduce expenses. For instance, if you purchase a Critical Illness rider, you will receive a lump sum in case you are diagnosed with conditions such as cancer, heart attack, coronary bypass, kidney failure, stroke, paralysis, Alzheimer’s disease, vital organ transplants, etc.
Money Back policies are the best bet in case you want a policy that will pay out during the course of the policy term.
Premium payments can be paid based on the discretion of the policyholder, but the options available to you will be monthly, quarterly, semi-annual and annual.
Yes, purchasing a life insurance policy at a relatively young age, such as in your twenties, can help you avail the plan for significantly low premium.
While life insurance companies are the most reliable sources when it comes to purchasing life insurance policies, insurance agents are not totally untrustworthy either. However, before you purchase a life insurance policy from an insurance agent, it is advised that you request for their authorisation card from the IRDA to ensure that they are certified sellers.
Your life insurance cover will start on the date of commencement after the insurer has received and approved of your insurance application. It is also known as Risk Commencement date.
The premiums of life insurance policies usually do not change and remain fixed for the term of the policy which is decided by the policyholder. Some policies have single pay or limited pay options also where the premiums can be paid in one lump sum or over a period of a few years.
Yes, older citizens who are above the age of 60 can also purchase life insurance policies. There are various types of insurance policies like term life policies, whole life policies and guaranteed life insurance policies which are designed to provide cover to older individuals. LIC and Reliance offer life insurance plans specially designed for senior citizens.
Yes, you can get your parents insured under a life insurance policy. Depending on their age and health, you can choose from a range of life insurance policies which are specifically designed for older individuals or senior citizens, as the case may be.
As per the provision of Section 10 (10D) of the Income Tax Act, 1961, any sum assured amount received under the policy, along with any bonus that is paid by the policy at the time of its maturity or on the survival of the life assured, is tax free. However, there are certain conditions following which the policy proceeds may be taxed.
When it comes to life insurance, one person’s requirements will differ from another’s. The amount of life insurance cover that one requires depends on various factors such as their income, their liabilities, and their expenses. After calculating all of these, you can determine how much life insurance cover would be adequate for you.
In case of single cover policies, both individuals are covered under separate and independent policies which have no effect on each other. However, under a joint policy, both individuals are covered under one policy. In case of a mishap where both individuals lose their life, their beneficiary will receive only a single pay out, while in the case of two single policies, there will be two pay outs, one from each policy.
Premiums for various kinds of life insurance policies like whole life policies remain fixed for life, as they do for term insurance policies. However, for term insurance policies, if you wish to renew the policy after the end of the policy term, the premiums may significantly increase in order to cover the risk of a higher age.
he person who files a claim on a life insurance policy is known as the claimant. In case of the life insured suffering injuries not amounting to death, the life insured will become the claimant.
YA policy which features a modified death benefit usually has a waiting period before it pays out the full death benefit to the beneficiary.
Graded life insurance is one of the lesser known types of insurance. This whole life policy features initial premium which are lower than other similar policies. However, the premium increases every year for a fixed number of years, after which it stays fixed till the policyholder owns the policy. This type of life insurance is suitable for those individuals wish to get covered but may not be able to afford the premiums of a life insurance policy. With a graded policy, they can take advantage of the lower initial premiums which eventually stabilize after a few years. Graded premium policies are also known as graduated premium life insurance policies.
our life insurance cover will start on the date of commencement after the insurer has received and approved of your insurance application. It is also known as Risk Commencement date.
The premiums of life insurance policies usually do not change and remain fixed for the term of the policy which is decided by the policyholder. Some policies have single pay or limited pay options also where the premiums can be paid in one lump sum or over a period of a few years.
Life insurance is essentially a way in which an individual can secure his/her family’s future in his/her absence. A life insurance policy’s worth is efficiently comprehended once the breadwinner of the family passes away or his/her income ceases to come in altogether. The payout amount released by the insurance provider is thereafter utilised by the family to clear any debts, or pay off loans, or pay the mortgage amount, and so on.
If you have a dependent or dependents who rely on you financially, then purchasing a comprehensive life insurance policy is a must. The sum assured amount of the life insurance policy will financially assist your dependents at a time when they need it the most.
As the name suggests, a whole life insurance policy essentially provides coverage for an individual’s lifespan. In case the insured passes away before end of the policy term, the corpus built is handed out to the nominee/beneficiary as mutually agreed upon by the insured and the insurer.
Whole life insurance policies may be purchased for the following reasons:
Money back plans essentially combine the elements of insurance and investment to provide policyholders with a policy that is comprehensive in nature. Over the policy term, these plans offer a certain amount of money (periodic returns) at regular intervals as survival benefit. The regular payouts are paid as per the interval decided by the insured, and upon successful survival of the policy term, the insured gets the remainder of the maturity benefit.
Top 10 Factors Affecting Life Insurance Premium Costs
Life insurance is a smart way to not only provide protection to your loved ones but also as a means of investment. For a low premium, you can get a modest amount of coverage and also a chance to invest and get returns in the future. However, when it comes to life insurance premiums, it is important to know, that premiums for life insurance policies vary for different individuals depending on a number of factors.
If applicant A is being charged an X amount of premium, it is not necessary that applicant Y will also be charged the same premium. While some of these factors are in your hands to control, some are not. If you are looking to take a life insurance policy, it would be greatly helpful to know what can and what cannot affect your premium. Read on to find out some of the most crucial factors affecting your life insurance premiums.
How To Claim Your Life Insurance Policy
The most important aspect of any insurance policy is claim settlement. After all, the objective of taking an insurance policy is to ensure that your dependents remain financially secure in case you are not around to provide for them. When it comes to insurance, an insurer’s claim settlement ratio is one of the most important indicator of the insurer’s intention regarding claims. Customers will undoubtedly prefer an insurer who has a proven record of processing claim settlements in the shortest amount of time. However, many policyholders remain in the dark about the claim settlement process of an insurer until the time when they actually have to file for a claim. This can often cause hassles and stress as without much knowledge about the process, it can take longer than needed to register a claim and get it approved as well. Did you know that there are multiple steps involved in filing a claim, or there are different documents that are required for death related claims and maturity related claims? Read on to know all about the claim filing process under life insurance.
Key Things To Know About Life Insurance
The concept of life insurance is not a new one. People have been making use of life insurance for over 4 centuries to protect not only themselves but also their loved ones from the possibility for an unfortunate event. Though life insurance seems to have been around for a fairly long time now, there are many people who are not quite aware of all the aspects involved in a life insurance policy. When it comes to purchasing life insurance, there are many people who take the assistance of life insurance agents for purchasing a policy, while several others who prefer doing their own research and purchasing a policy directly themselves.
For someone who isn’t quite familiar with the workings of it, life insurance can be confusing to understand. Who are the parties involved in a life insurance policy? What is the eligibility age acceptable to apply for an insurance policy? How many types of life insurance policies are there? What factors affect the premiums of a life insurance policy? When is it best to purchase a life insurance policy? Is it wise to get life insurance as a tax saving instrument? These are just some of the many questions which will find answers to in this article.
Best SBI Life Insurance Plans in India
SBI Life Insurance is one of the pioneers in India’s life insurance segment. The insurer offers a variety of life insurance plans, some of which cater to individual (ULIPs, protection plans, retirement plans, child plans) and some to corporate group needs (group micro insurance plans, group loan protection plans). Offering the ease of online purchase, SBI Life insurance plans offer a range of other benefits like online payment of premiums, hassle-free claim process, high claim settlement ratio, and minimal paperwork required for application. Some of the popular life insurance plans offered by SBI Life insurance include SBI Life eShield, SBI Life – Smart Money Planner, SBI Life – Smart Humsafar, SBI Life – Smart Power, SBI Life – CSC Saral Sanchay, and more. If you are looking to purchase an SBI life insurance policy, read on to find out about the best policies which SBI has to offer, right here.
GST of 18% is applicable on life insurance effective from the 1st of July, 2017
In the third quarter of the financial year 2020, an Annualised Premium Equivalent (APE) growth of 4% to 18% was delivered by the top four life insurance companies. Even though October was weak, most of the companies saw an increase in November and December.
The year-on-year growth of HDFC Life was on par most likely due to the launch of its new product. In the case of Max Life, non-par policies that have a regular income, the return of premium protection policies, and limited pay were the key factors. Therefore, even though there was a fall in interest rates and high ULIPs, most of the large players used different strategies to deliver healthy growth. The trend shows the ability of life insurance companies to manage growth via a combination of channels and products. This also helps insurance companies to sail through any challenges in the near future. A moderate pace of growth has been reported by most life insurers due to competition, a muted growth, or slowdown at NBFCs. According to various sources, reinsurance rates on term policies may be increased by reinsurers. The higher APE growth was mostly driven by the strong value of a new business.
12 February 2020
Budget 2020 saw the government offer lower tax rates to taxpayers if they do not avail exemptions or deductions. One of the avenues that offers such an exemption is life insurance. Experts say that people who fall in the tax bracket ranging from Rs.5 lakh to Rs.7.5 lakh may migrate to the new tax regime. As a result, life insurance providers in the private sector may have to work harder to ensure the sales of insurance products. And in their defense, they have been promoting life protection in their ads rather than the tax benefits on offer. However, many insurance agents across the country are still brining in the tax element when trying to sell insurance products to people in India.
Another decision that affected insurance companies was the doing away with Dividend Distribution Tax. Dividends will now be taxable in the investor’s hands, and the government will get a sizeable part of their earnings. According to estimates by Nomura Financial Advisory and Securities (India) Pvt. Ltd., removing Dividend Distribution Tax will reduce 5% to 10% of new businesses in case pricing is not changed by insurance companies.
11 February 2020
Future Generali India Life Insurance Company Limited launched ‘Project Roar’ under which 28 new branches were inaugurated to enhance it countrywide footprint. The new branches are spread across the country, in cities and towns such as Kolkata, Mumbai, Bangalore, Gurugram, Ambala, Noida, Dimapur, Keonjar, Trichy, Udhampur, Kozhikode, Mohali, Patiala, etc. The operational presence of Future Generali India Life Insurance Company would widen in India with the new expansion plan. Demographic parameters were assessed before selecting the aforementioned areas. The World Bank released the Economic Potential Indicator data which also contributed towards the selection of the aforementioned cities. The aim of the company is to recruit around 350 employees in addition to more than 2,000 distributors in 2020. They also have hopes of raising the number in the next two years. Future Generali India Life Insurance Company Limited has been concentrating on expanding their agency channels by recruiting more new agents as well as opening more new branches in the country. Over the past three years, Future Generali India Life Insurance Company Limited has experienced tremendous profitability as well as progress, thereby contributing to its overall development.
7 February 2020
Following the Union Budget announcement by the Finance Minister, offering reduced tax rates for those who don’t claim any tax exemptions, there was a sharp dip in the shares of life insurance companies by 5% to 10%. SBI Life Insurance Company and ICICI Life Insurance Company each suffered a slump of 10%. HDFC Life Insurance Company had a 5% dip. The Nifty was down at 11836.25 points which was 1.7% down. This is because many people use Unit-Linked Insurance Plans (ULIPs) and life insurance policies to fill up their tax deduction quota. If they choose the new tax system, these deductions would no longer apply. However, even under the old system, which still remains, around 70 deductions have been eliminated. There are other factors that led to a decline, such as the initial public offering made by the Life Insurance Corporation of India and an overall decline in the stock market due to economic conditions. General insurance companies also saw a decline in shares with the decline in the benchmark index. However, deductions were not applicable for many of the general insurance policies under the old tax structure.
5 February 2020
According to a statement by the MD and CEO of IndiaFirst Life Insurance, RM Vishakha, mentioned the importance of the upcoming budget to be focusing on the consumer. There are expectations on the increase of the tax limit under Section 80C from the current Rs.1.5 lakh.
The government is also expected to emphasise on the consumption of goods in the domestic sphere in order to get back on the growth track. Moreover, the individual tax exemption for income tax is expected to be raised to Rs. 3 lakhs. By doing so, it will provide the required push for the people falling under the lower and middle-income population.
To add, another aspect which could contribute to growth would be for the pension and retirement scheme. Expectations are to move the annuity pay-outs from the current EET (Exempt Exempt Tax) structure into an EEE regime (Exempt Exempt Exempt).
3 February 2020
Budget 2020 is coming up soon and the media has been talking to different experts from the sector to find out what their expectations are from Nirmala Sitharaman, the Finance Minister, when the Budget is rolled out on the 1st of February. One of the moves that will be closely followed by both the general insurance as well as the life insurance sector is the potential increase in the FDI limit from the present rate of 49% to 74%. Besides, life insurers across the country have been wanting an increase in the income tax deduction limit under Section 80C of the Income Tax Act. A decline in GST rates applicable to life insurance products has also been requested by life insurance companies. The general insurance sector, meanwhile, has been asking for incentives when purchasing home insurance plans, either via rebates or via home insurance plans sponsored by the state, such as Pradhan Mantri Suraksha Bima Yojana or Pradhan Mantri Jeevan Jyoti Bima Yojana. The sector is also monitoring the situation regarding the recapitalization of 3 PSU general insurers and any documents pertaining to their merger.
30 January 2020
Over the last nine months that ended in December, the performance of listed life insurers has largely justified their valuations. However, there have been concerns that their stocks might have outrun their performance.
The stock trade of HDFC Life Insurance Co. Ltd is 5 times its embedded value for the financial year 2020. There has been a 58% increase in the insurer’s shares and investors have received a 109% return. The value of business margins of HDFC Life has been the main reason for its valuations. The margin of the insurer has been better than that of ICICI Prudential Life Insurance Co. Ltd. and SBI Life Insurance Co. Ltd. Due to the upswing on return-guaranteed products and market-linked products, margin moderation is expected as well. However, according to Jefferies India, insurers could be hurt in the long run as this is an opportunistic play. According to various analysts, the growth of new businesses will continue to remain high and the margin will be supported due to an increase in business protection. Term plans have been hawked aggressively by life insurance companies and this is working well for them now. SBI Life has done a better job in terms of business growth when compared to its competitors. The premium growth of SBI has increased by 35%.
29 January 2020
Life insurance guaranteed income plans, as the name implies, provides the option of getting a monthly income on a regular basis. These guaranteed payouts on a regular basis also come with maturity benefits. The regular income depends on a percentage of the sum insured that is predefined by the policyholder. The policyholder also decides the interval at which the income is received. This is done at the time of buying the policy. The frequency of income can be monthly, quarterly, half-yearly, or annually. The duration of the policy is also decided by the policyholder. At the time of the policy getting matured, the additions that were accrued over the period are paid out to the policyholder. In case the policyholder passes away before the policy matures, the payment of premium is waived off for the survivors. The policy and benefits will continue, however. The death benefit is passed onto the nominee. The death benefit is the combination of the basic sum assured and the bonuses. The guaranteed payouts will be paid out to the nominee at intervals that were decided by the policyholder. This kind of policy offers long-term returns that are conservative and ideal for investors who are risk averse. The return benefits are paid out in the final 3 to 5 years of the policy. However, this also depends on the term of the policy as decided by the policyholder. At the time of maturity, there is also a reversionary bonus and a terminal bonus. Apart from tax deduction, there is also tax exemption for the maturity amount.
27 January 2020
Non-life insurance companies in India recorded an increase of 11.5% so far as premium collections were concerned. The total amount collected in December 2019 was Rs.15,980.81 crore, according to data released by the Insurance Regulatory and Development Authority of India. 34 non-life insurers in the country reported an overall premium of Rs.14,334.98 crore in December 2018, marking an increase of 11.5% in the space of a year. Of all the insurance companies, it was reported that 25 general insurance companies saw a 4% increase in their combined premium in the last month of the year. 7 stand-alone health insurance companies from the private sector collected Rs.1,258.14 crore in premiums during the month, registering an increase of 16.3% in comparison with a year ago. ECGC Limited and Agricultural Insurance Company of India Limited – 2 specialized private sector insurance companies, recorded collection of premium income to the tune of Rs.685.16 crore in December last year.
20 January 2020
Two new prepaid plans have been launched by Bharti Airtel with life insurance coverage included. The prepaid plan of Rs.279 comes with a life insurance cover of Rs.4 lakh. This is a term life insurance policy from HDFC Life.
6 January 2020
One of the indications that women are increasingly becoming more financially independent. The number of Indian females buying life insurance has increased manifold. The Insurance Regulatory and Development Authority of India (IRDAI), in its annual report 2018-19, said that women had bought 36% of the 28.6 million policies sold in FY19.
In FY18, women purchased 32% of the policies. Data showed that, out of the 10.3 million policies bought by women, one-third of the policies have come from three states including Maharashtra, Uttar Pradesh, and West Bengal. One of the insurance companies which has been the most trusted by women is Life Insurance Corporation of India (LIC) as compared to other private insurers. The percentage of policies sold by LIC is 39% while it is 27% in the case of private insurers.
In 17 states and union territories, the share in number of policies bought by women is higher than the all-India average of 36%. One can also note that life insurers are also working on niche insurance products for women. These products aim to take care of specific life-stage needs of women including marriage, childbirth and menopause.
Life insurers are also of the opinion that the more the number of women selling policies, the better will the sales to females be.
At the end of FY19, there was a total of 6,03,208 women working as life insurance agents of which 52% worked for private life insurers while 48% worked for LIC.
Among private life insurers, Max Life had the highest percentage of women agents at 45%, followed by IDBI Federal Life at 41.2% and Star Union Dai-ichi Life at 35.9%.
19 December 2019
There are different kinds of life insurance policies for different requirements. While life insurance policies also offer tax benefits and even investment returns, their core benefit is that even after the death of the policyholder-cum-breadwinner, the family continues to receive an income that would assure their standard of living, education, healthcare, and future plans without any interruption. When choosing a life insurance company, it is important to ensure that it is registered with the Insurance Regulatory and Development Authority of India (IRDAI). There are currently 24 such life insurance companies in India, including the government-owned Life Insurance Corporation (LIC) of India. The other life insurance companies are promoted by Indian as well as foreign investors and business firms. These are some of the different types of life insurance policies available in India: An endowment policy provides both life cover and investment returns, usually pre-fixed. Term policies offer coverage on the death of the policyholder during a specific term with no maturity value if the person survives at the end of this term. Since the premium is only charged for risk of death, it also has the lowest premiums, making it one of the most affordable and cost-effective policies. A whole life policy offers coverage for the entire lifetime and has premiums to be paid for a specific term. Unit-linked policies offer both life coverage and investment returns.
18 December 2019
When taking a life insurance policy, it is mandatory to fill up personal details including habits such as drinking and smoking. However, smokers may end up paying more premium than a non-smoker. Concealing such details in order to avoid paying a higher premium may result in dire consequences later, from making benefits non-applicable at the time of the claim to even the policy getting cancelled. This is because of the many diseases that can be caused by smoking, ranging from strokes and heart disease to lung cancer, esophageal cancer, oropharyngeal cancer, type 2 diabetes, and chronic obstructive pulmonary disease. A higher premium is charged for smokers because of the higher risk exposure. If details of smoking have been concealed at the time of taking the premium, and it comes to light later, for example at the time of death, then even death claims can be rejected by the insurer. This would mean that the beneficiaries may not even receive the death benefits that are entitled to them. Therefore, it is important not to conceal such details, even at the cost of paying higher premiums. More importantly, changes in habits can be gradually made over time in order to benefit both the policyholder and the beneficiaries.
17 December 2019
When investing to ensure that your child receives adequate financial resources for higher education or marriage, there may be questions about the different financial products in the market that are geared towards children. Some of the options that you have are the Public Provident Fund (PPF) and Sukanya Samriddhi Account (SMA). You can invest in PPF both in your name and in your child’s name. However, the overall limit for both accounts together will remain Rs.1.5 lakh per annum. While the PPF returns are tax-free, tax deduction is only available for up to Rs.1.5 lakh. The Sukanya Samriddhi Account is only open to girl children. This is a social welfare scheme under the Indian government. Up to one account can be opened for each child with a maximum of two accounts for two girl children. The interest is compounded annually and is tax-free. There is also tax deduction available for the contributions to the account under Section 80C of the Income Tax Act. Returns from the SSA are higher than from PPF or National Savings Certificate (NSC). Under Section 10 (32), A tax exemption of up to Rs.1,500 per year can be claimed for investments made in each child’s name. This is for a maximum of two children.
21 November 2019
Airtel customers who recharge an amount of Rs.599 will be eligible to receive a life insurance cover from Bharti AXA after the telecom company and the insurance company entered a partnership together. Bharti Airtel announced that customers who subscribe to the Rs.599 plan will get 2 GB data per day along with unlimited calls to any network, 100 free SMS per day, and a life cover of Rs.4 lakh. The customer will also receive a physical copy of the life insurance cover document upon request.
18 November 2019
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