Life insurance is a contract between an insurance company and the insured whereby the company guarantees payment of an agreed amount (called death benefit) to the named nominee if something untoward happens during the policy period or at the end of the policy, termed as maturity. The insured needs to pay regular premiums to the insurance company for the policy to be valid.
At different stages of life, you have different financial needs. In order to meet these needs, you need to protect yourself against financial risks. In addition to protection, you must find avenues to invest your savings and give them an opportunity to grow. Life insurance can help you fulfil both these financial objectives.
Life insurance can help you in a number of important ways:
- Protect your family that is financially dependent on you:
- Help your family deal with loans or liabilities:
- Aids in saving-cum-investment:
- Safeguard your business interests
The short answer to this question is – as early as you can.
- If you have just started working but are not married yet, you should consider buying a policy now, as it costs less now than when you are older. The policy will also protect your parents/siblings who may be financially dependent on you.
- If you are married and have children or plan to have children, it is very important for you to insure yourself (assuming that you are the breadwinner) to protect and save for your family's future.
- It is never too late to buy an insurance policy. Even if you are 45, and are not insured, you could choose insurance products that provide benefits to your family and provide income during your retirement period.
Your life insurance premium, which is the cost of buying life insurance, will depend upon:
- Your age, health and the nature of your work
- Type of policy selected
- Sum assured
- Policy term
- Premium paying term
- Premium payment frequency
- Riders (if any) attached to the policy
The cost of the policy (premium amount) can be lower if you:
- Buy insurance at an early age, while the risk is lower.
- Insure yourself for a long period.
- Offer to pay premium annually, thereby receiving discounts, if any.
- Buy riders at nominal price for a comprehensive coverage
Term insurance covers “risk to life”, which means death, for a specific term. Upon your death (during the term of the policy), spre-pecified benefits are paid to your beneficiary./nominee(to check). No maturity benefit under Term policies except for Term with Return of Premium policies (Term ROP), where a specified percentage of premiums paid are payable on survival till the end of the policy term. Term plans are lower in cost (premium) compared to all other types of life insurance policies since they offer pure protection without any component of savings or investment.
The insurer does, and the amount depends on several factors that can impact the insured’s life expectancy, such as age, gender, smoking habit, personal medical history, and family medical history (such as heart disease or cancer among immediate family members).
All our term insurance plans cover COVID death claims. Apart from that, we also have a life insurance plan which covers COVID Hospitalization expenses. Know more about this COVID Insurance Policy
In general, beneficiaries and insured persons can make a term life insurance claim in either of the two following cases: (a) if something untoward happens to the person for whom the insurance policy has been taken, and (b) the policy matures. You need to inform the insurer, fill in the relevant forms, and submit the documents requested.
If premium remains unpaid one month after the due date (that is the ‘grace period’), the policy will lapse. In that case you, as the insured, will have wasted all the premiums you have paid in previous years. Additionally, your beneficiary will also not receive a pay out as the policy will be deemed ‘lapsed’.
If the insured dies during the plan term, before he or she can pay the premium, the due premium will be deducted from the death benefit.
In case of a term life insurance policy, there are no paybacks. So, if you as the insured buy a standard term insurance, and you outlive the plan, you get nothing. But do not forget that your primary objective is to create a protective financial umbrella for your loved ones. For other plans, except term plan, you get the money after the policy matures.
For Non-Linked products, you can surrender your policy only if it has acquired a paid-up value. For your policy to acquire a surrender value, typically your policy should have run for a specified period and you should have paid a minimum number of premiums. Further, for Linked products, there is a lock in period during which the surrender value is not available for withdrawal. The surrender value payable is defined in your policy document.
If premiums are not paid within the grace period, which is 15 days for monthly frequency policies and 30 days for other premium payment frequencies, your policy lapses. When your policy lapses, the benefits under the policy either get reduced or cease fully. A lapsed policy can be revived within a specified period of time called the “Revival period”. Refer your policy document for the revival period allowed for your policy.
In case of life insurance policies, the “Basic premiums” payable are normally "Level Premiums" and they remain constant (or level) throughout the term of the policy. The instalment premium, which is the basic premiums plus the applicable taxes as levied by the government from time to time, will however change due to change in the premium payment frequency or change in the applicable taxes. Further, when your premium or the cost of insurance may change when a revival of your lapsed policy is accepted with revised terms.
Current health status and personal medical history are key factors in insurance evaluation process. While low Sum Assured is granted basis the health disclosures in the proposal form, in high Sum Assured cases medical examination of the client is conducted through the empanelled Diagnostic Centers. Similarly, if client is having any medical history then also medical examination is needed to evaluate current health status of the client. Based on medical examination findings an insurance proposal can be accepted at standard rates or the risk is postponed or declined or accepted with extra premium on health grounds.
Premiums under your policy are payable on or before the due date. However, we understand that sometimes you may not be able to meet the premium payment deadline. To help you with this, we offer an extended period of 15-30 days from the due date as grace for you to make the payment of premium. This period is referred to as days of grace or grace period. The exact grace period depends upon the type of policy.
- Nomination is an act by which you authorize another person to receive the policy money in the event of your death. The person so authorized is called a Nominee.
- Assignment is a method by which you (policy holder) can transfer your right, title and interest in the policy to another person either wholly or in part. An assignment can be made by an endorsement on the policy document or as a separate deed. Assignment can be Absolute or conditional contingent upon the happening of a specified event.
Besides insuring your family, this type of life insurance offers various tax deductions and exemptions. Under Section 80C of the Income Tax Act, you can claim a deduction of up to Rs 1.5 lakh on your policy premium. Even the proceeds that your loved ones get in your absence or the amount you get at the maturity of the term is tax-free. Learn all about tax benefits here.
A rider is an attachment or amendment that supplements the term plan coverage, helping the insured meet specific needs. There are various types of riders:
- Accidental death and dismemberment
- Critical Illness
- Waiver of premium
- Partial and permanent disability
We examine and settle claims on the basis of all records related to the claim. Once you report a claim, we request you to submit the required documents. The sooner the documents are submitted, the faster your claim will be processed.
The claim benefit can be received by:
- The nominee or the guardian (in case of minor nominee), if you are the Life Assured
- The proposer, in case you are not the Life Assured
- Assignee, in case the policy is assigned
- Life Assured, in case of living benefit claims such as, claims under disability, critical illness and major surgery rider.
In such circumstances, we would require the proof of title/succession certificate issued by a competent court. The claim would then be paid to the person specified in the said proof. Such a condition is called 'Open Title' situation.
If we have accepted the claim but are waiting for the issued certificate of proof, we hold the money till the proof is submitted and pay interest as directed by the Insurance Regulatory and Development Authority of India.
Following KYC documents are required:
- PAN/Form 60 (mandatory)
- One recent photograph
- List of Officially Valid Documents:
- Driving License
- Voter's Identity Card issued by Election Commission of India
- Job Card issued by NREGA duly signed by an officer of the State Government
- Letter issued by the National Population Register containing details of name, address or any other document as notified by the Central Government in consultation with the Regulator
- Proof of possession of Aadhaar (to be taken in masked/redacted form/black out version to be taken from clients
Your insurer can reject a life insurance claim on grounds of:
- Misrepresentation of actual information
- Non-disclosure of complete information
- Policy does not cover specific situation : Assuming you are 25 years old and take a whole life plan; you will receive a lumpsum payment at the age of 45. However, if you make a claim at 40 because of an emergency, your claim will not be entertained.
- Disability and critical illness : Life insurance policies do not generally cover disability and critical illnesses, unless you buy disability and critical illness riders as well.
- Minor beneficiary : The money will be paid only to a trustee designated by you (the insured) and not to the spouse or child (the beneficiary) if he or she is under 18 years.
- Insured lives beyond term expiry : Some policies are only valid until the insured turns a certain age or for a certain number of years. The policy becomes invalid if you outlive this tenure.
- Suicide : Although suicide cases qualify for insurance pay outs, there is a catch. The insurance sector regulator, IRDAI, has made certain changes in the suicide clause with effect from January 1, 2014. Policies issued prior to this date will not be entertained under the old clause. As for those policies that have been taken out later, we’ll come to that a little later.
- Unpaid premium : This is the most common ground for pay out refusal. If the premium is not paid within 30 days after the due date, the policy is considered lapsed.
You can buy as many term insurance plans as you want to fulfill your insurance needs. You can even nominate different beneficiaries for both the insurance plans.
It is usually suggested that a life insurance cover should be at least 10 times of your annual income and 15 to 20 times is an even better option. If you have loans such as home loans, car loans, etc. then you should factor that in too.
For instance, if your annual income is ₹ 10 Lakhs, it is ideal to buy term life insurance cover of at least ₹1.0 crore, if you do not have other liabilities. In case you have a home loan of ₹50 lakhs, include this amount in your life cover. It is best to use the term calculator provided by insurance companies before deciding on your life cover.
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