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
Due to the economy struggling against COVID-19, there have been many companies who have been adversely affected in terms of revenue and operations. With the novel pandemic affecting lives every day, there have been many companies who are struggling to stay afloat, including various life insurance companies. Life insurance companies have been trying to save by reducing the number of branches they have.
According to various sources, by the financial year 2022, around 6-8% of the total number of branches could be shut down in order to save money which would be around 11,600 branches across the country. The branches which are nearer to large cities with internet connectivity will be the first ones to be shut down.
Insurance plans have been sold online through video calls or through various websites since the lockdown was imposed and according to reports, life insurance companies saw an overall year-on-year decline of 32.2% in the new premium collection in March 2020. In April, the first-year premium collection declined yet again by 32.6% to Rs.6,727.74 crore in the month.
With the lockdown in place, banks and various insurance agents are the two major and largest distribution channels for the insurance companies in the country. Online sales have constituted less than 10% of the total premium collected.
22 May 2020
On Monday, IDBI Federal Life Insurance had reported a net profit of Rs.148 crore for the FY 2019-20 against its profit of Rs.133 crore in 2018-2019.
The company's overall premium reduced by 4.65% to Rs.1,843 crore in 2019-20 from Rs.1,933 crore during the FY 2018-19. The CEO Vighnesh Shahane had said that while FY20 was challenging for the company, they have now taken a lot of steps to get back on their feet. They are now focussing on developing the distribution footprint through their proprietary channels. They are going to continue strengthening parameters like costs, persistency, claims, surrenders, solvency margin and PAT.
The renewal premium had grown by 14% to Rs.1,282 crore as against Rs.1,126 crore in the FY 2018-19. The solvency ratio had been 298% as compared to 334% during the FY 2018-19.
19 May 2020
On Sunday, the insurance regulatory body, the IRDAI had said it want to extend the grace period for the renewal of life insurance policies which have premium that were due in March till 31 May. This was done amidst the wake of the lockdown in order to combat the coronavirus.
The IRDAI had said that by reviewing the current situation of this lockdown, they have taken a decision that for all life insurance policies for which the premium was due in March 2020, the grace period will be extended till 31 May 2020.
14 May 2020
Stocks of SBI Life Insurance gained 5% reaching a high of Rs.750 which was a 9% surge on the BSE over the last 2 days. The shares of ICICI Prudential Life Insurance went up to Rs.403, which was a surge of 7.5%. HDFC Life Insurance Company rose by 4% to a price point of Rs.498 on the BSE. The Value of New Business (VNB) for SBI Life Insurance improved to 18.7% (which is +102 bps yoy) with a gradual rise in protection plans. This is likely to improve further, as per analysts, because of the post-Covid situation where there is a rising trend towards protection plans both from the corporate side and the individual angle.
12 May 2020
The chief minister of Assam, Sarbananda Sonowal had tweeted that the frontline journalists who are covering news stories of COVID-19 and risking their lives by doing so will be given a life insurance cover of Rs.50 lakh by the government.
Mr Sonowal mentioned that the journalists have been on the frontline, risking their lives to provide adequate coverage of the pandemic in the country and the state. With this, the government had announced the insurance cover to support them and their work.
On 25 April, there were many journalists in the state of Assam who took the COVID test in the Guwahati Medical College and hospitals. With this announcement, various associations of journalists have welcomed this decision taken by the state government on insurance coverage.
06 May 2020
People who wish to buy different insurance policies will be able to do so much easier with insurers starting to offer e-KYC option by providing the Aadhaar card number as identity proof. According to the press release by IRDAI, with the e-KYC option in place, customers can purchase insurance policies easily making the KYC process simpler during the lockdown period.
To enable this, the government has allowed insurers to avail the Aadhaar-based authentication service of the Unique Identification Authority of India (UIDAI) to complete the KYC norms of people who hold policies. In the press release, IRDAI mentioned that to facilitate the public to complete the KYC process, IRDAI has recommended for allowing insurance companies to avail the Aadhaar Authentication Services.
According to Kayzad Hiramanek, EVP – Customer Service and Operations at Bajaj Allianz Life Insurance, this move by the government will help this industry to restart the process of paperless KYC for their online customers who wish to purchase insurances in this period.
28 April 2020
The Pune Municipal Corporation (PMC) will provide Rs.1 crore life insurance cover and a job to one family member in the case of the death of a civic staff due to Covid-19 in the cases of the staff being involved in the containment activities of the coronavirus in the city of Pune. These activities would include conducting surveys to ascertain the spread of the disease, managing those in quarantine wards, and being involved in the treatment of the infected people. The civic staff would include medical staff, non-medical staff, and conservancy staff. They will also be provided with Personal Protective Equipment (PPE). Life insurance cover has also been provided to staff by the Pune police department and the Pune Zila Parishad.
14 April 2020
The Life Insurance Council of India announced that none of the life insurers which are its members will deny policyholders a death claim if there is loss of life due to the Covid-19 infection. For death claims related to Covid-19, the general clause called ‘'force majeure’' will not be applicable. This clause usually refers to unforeseeable circumstances that may prevent a contract from being fulfilled. The apex body also stated that all private and public insurers must process death claims related to Covid-19 as expeditiously as possible. This will have to be communicated to customers individually by the insurers. Also, digital support will be provided for quick servicing of policies and for honoring death claims. This is in the context of the lockdown that is currently in place in the country.
13 April 2020
Public interest litigation was moved in the Delhi High Court on 30 March 2020, in order to seek directions to provide medical and life insurance to reporters, journalists and other media personnel on the ground of at least Rs.50 lakh each. The litigation was moved to the High Court to seek directions from the Central Government about this.
However, the court mentioned that there is no urgency to this issue and stated that it will later hear the petition once the lockdown was done. The petition was filed by social activist and lawyer, Arpit Bhargava who sought direction for providing security and safety of media personnel on the ground along with providing a life insurance or medical insurance cover who are working on the ground reporting about COVID-19.
The plea also sought directions to the Central Government and the Press Council of India to ensure the safety of journalists and media personnel to allow them to ‘Work from Home’ and to ensure basic sanitation and other facilities at their workplace along with not cutting salaries during the period of the lockdown is over.
The plea mentioned that the responsibility falls on the government to provide social security to the people in the media and welfare during the times of emergency must be given.
3 April 2020
The state government of Dehradun announced on Monday that around 68,457 employees who are directly involved in the fight against COVID-19 will receive an insurance cover of Rs.4 lakh each. The insurance cover will be given to the frontline employees and the period of this insurance will be for a year. The total amount of Rs.17.02 crore will be taken from the CM Relief Fund according to a notice from the Chief Minister’s office.
Among the 68,457 employees, 22,523 are police personnel, 7,899 are health employees, 15,595 are anganwadi employees, 14,376 are anganwadi assistants, 4,924 are mini-anganwadi assistants, 464 supervisors, 78 child development project officers and 3,000 employees of the Garhwal Mandal Vikas Nigam and Kumaon Mandal Vikas Nigam. Provisions for an insurance cover will also be made for the media persons who are reporting the pandemic from the ground.
Chief Minister Rawat had held a meeting with the members of the Indian Medical Association where he stressed on the importance of the role of private hospitals handling the current situation. He mentioned that the hospitals keep their OPDs open so that patients who are suffering from other ailments do not face any inconvenience. He also mentioned that the state government will provide the required support to private hospitals.
1 April 2020
Many companies across India are now facing the risk of having their insurance policies lapse as business across the country are now shutting down after the lockdown imposed by the government. This move was made in order to combat the coronavirus.
The Insurance Brokers Association of India (IBAI) had spoken to the nation’s insurance regulator and had requested the extension of all existing policies for 60 days. This could be done by paying pro-rated premiums at current rates and terms.
In this request, the association had also added that the IRDAI temporarily relax a particular rule that states that insurers should receive the premium before they provide the cover. For avoiding the gap in coverage, companies will have to pay premiums right before the existing policy expires.
A new report has said that a lot of insurance policies provide annual contracts and while they can be purchased at any time during the year, a few businesses buy them when they start the Indian fiscal year -1 April. The IBAI president, Sanjay Kedia had said that a lot of international insurance authorities and markets, (Lloyd’s of London) have taken the step to implement extensions to all policies because of the disruptions caused by the coronavirus.
27 March 2020
Unit-linked life insurance policies allow for the partial withdrawal of money, but this results in a reduction in the sum insured for at least two years from the date of the withdrawal. The sum assured is restored to its original amount after the two-year period is up but only if there have not been any further withdrawals within those two years. The facility for partial withdrawal is only available in the case of unit-linked endowment plans and unit-linked insurance plans. Traditional insurance policies that are not unit-linked do not allow for this facility of partial withdrawal. Some new rule of the Insurance Regulatory and Development Authority of India (IRDAI) came into effect from 1 February 2020. As per the new rule, policy holders can partially withdraw from the value of the fund a total of three times during the term of the policy. The minimum amount that can be withdrawn varies from one insurer to the other, with some minimum amounts starting at Rs.1,000 or Rs.2,000. The maximum limit is 25% of the fund value of what it will be at the time of its withdrawal. These withdrawals can be made only for specific major life events which can be buying a property, constructing a residential property, treatment for a critical illness, a child’s higher education, or a child’s marriage. Also, partial withdrawals only if the policy is in force, all premiums have been paid on time, and 5 years have passed since the policy was taken, along with being 18 years of age for the policy holder.
26 March 2020
Premiums for life insurance policies comes with tax benefits under Section 80C of the Income Tax Act. To continue to avail the tax benefits, premiums have to be paid until the end of the policy. However, if an individual chooses the new tax regime, then these tax benefits will no longer be applicable, both for new policies taken as well as for existing policies. If individuals wish to surrender the policies, they have to look at the surrender charges, which will be dependent on the premium that has been paid a specific number of years. There are other costs too, so an early surrender may incur heavy personal cost. One option would be to pay all the premiums upfront and take a reduced life cover. However, then the maturity value will be received only at the end of the term. However, the advantage is that future premiums don’t have to be paid as it has already been paid up. Since the new rule is that salaried individuals can switch between the old and new tax regimes, choosing the new one and then going back to the old one may not be that beneficial if the life insurance policy itself has been discontinued. As per the current tax laws, the maturity benefits of traditional life insurance policies such as moneyback and endowment as well as those of unit-linked insurance plans remain tax-free.
17 March 2020
The Insurance Regulatory and Development Authority of India, in its latest report, revealed that in the year 2017-2018, women accounted for 32% of all the life insurance policies that were sold. Women comprise 48% of the population of India. With more women entering the workforce, insurance companies are creating more life insurance products that provide more financial protection for women. Even with the gap in wages between men and women, with women earning less overall, but spending more time on childcare, the value of a woman’s income and life is priceless. So the death of a homemaker also has as much impact as the death of a breadwinner. Because of this, a term life insurance policy is helpful for women as it provides both financial security and financial independence. Term plans are also the most affordable and simplest life insurance products in the market. It has one of the lowest premiums of all life insurance products too. For a term plan of Rs.1 crore taken at the age of 25, a woman would have to pay a monthly premium of Rs.500, or an annual premium of Rs.6,000. The sum assured can be used to finance education of children, fund a wedding, or even pay off a home loan. Term life insurance products also come with add-ons such as critical illness cover or money-back insurance policies.
13 March 2020
The Insurance Regulatory and Development Authority of India had previously banned life insurers from the sale of indemnity-based health plans, but has now assigned a panel of 9 members to check whether or not it would be feasible for life insurance companies to offer these plans again. Representatives of life insurance companies had enquired about the possibility of selling these products. The panel is set to be led by National Insurance Academy’s director, G Srinivasan. The recommendations of the panel are expected to be submitted within 2 months.
Indemnity-based health policies are quite popular when it comes to health cover as they offer protection to policyholders against unforeseen medical expenses. The expenses incurred on medical treatments and hospitalization will be reimbursed by the insurance company up to the sum assured. Bajaj Allianz Life Insurance’s CEO and MD, Tarun Chugh, said that letting life insurance companies to engage in the sale of indemnity products could help customers gain access to a wide variety of benefits. He added that considering how low the penetration of health insurance is in India, selling value-packed products via the distribution network of life insurance companies can enable customers to ensure that expenses related to hospitalization or critical illnesses are easily taken care of.
12 March 2020
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