Term life Insurance FAQ’s

Everyone wants to insure the following risks:

• Dying too soon
• Living too long

Life Insurance is perhaps one of the most critical investments that any individual can make to financially protect themselves and their families from any uncertain and unpredictable even in the future. It is needed:

• To ensure that one’s immediate family has financial support in the event of the insured’s unfortunate and untimely demise
• To finance future expenses that include children’s education, marriage expenses, investments in fixed assets
• To ensure a recurring and consistent source of income post retirement
• To provide for unplanned financial contingencies and to ensure life style upkeep

IRDAI stands for Insurance Regulatory and Development Authority of India and they are the apex body that regulates the Insurance industry in India, both for Life and Non Life Insurance and are based in Hyderabad. They are similar to the Reserve Bank of India (RBI) who is the Banking regulator. Apart from protecting the interests of the policyholders, it regulates the overall industry and takes concrete steps towards development of the insurance sector in India.

According to IRDAI guidelines, the insurance company must mandatorily process a claim within 30 days after receiving all claim related information/documentation. If the claim needs further investigation based on the circumstances and supporting documents provides, the process should be completed within 6 months.

Anyone who is an income generator for a family, whether they are the primary earner or no, needs to ensure they have Life Insurance cover. Due to the value of their contribution to the family, it becomes essential to protect the family incase any unforeseen event happens to the income generator and this is what Life Insurance does. Sometimes even homemakers and children can also be covered for life insurance given their future income potential being at risk.

Currently in India, Life insurance is one of the most preferred tax planning financial instruments. Premiums paid for all life insurance policies are exempt from tax up to a maximum of ₹ 1.5 lacs under Section 80C of the Income Tax Act, 1961. Further under Section 10D, on settlement of a claim, the claim amount paid to the nominee is exempted from any tax.

The straightforward answer is the younger the individual, the lesser the premium. Hence it is advisable for young adults to invest in Life protection through Term Life covers at an early stage to ensure the most competitive premiums for their policy. This is on account of the individual being in better health at a younger age and free from pre existing health conditions.

The amount of Life Insurance coverage can also be terms as the Sum Insured of the Life insurance policy, which is basically what the nominee will get incase of the unfortunate demise of the insured . While there is no scientific approach to arrive at this Sum Assured, some of the factors that need to be considered while fixing this include:

• Age + Number of dependants of the Life Assured
• Financial Commitments in terms of Loans, Future Expenses etc based on the lifestyle of the individual and family
• Specific Financial Goals like Children’s Education / Marriage etc
• Current Income & Future Potential Income levels of the life assured

Yes, all life insurance plans cover death due to natural disaster, like flood, earthquake, storm, etc.

Yes, all life insurance policies offer coverage for Death by all means, except suicide. This includes unfortunate demise of the life assured due to terrorist attack/war/natural calamities/epidemics/pandemics etc (unless specifically excluded by insurance company).

Yes, Non-Resident Indians (NRIs), People of Indian Origin (PIOs) can buy a life insurance plan in India. Foreign Exchange Management Act (FEMA) allows NRIs to buy any plan that meets their requirements of protecting themselves and their family whether he is currently residing in India or not.

Generally most documents required are KYC documents that include:

• Income proof (Salary slip, Form 16, ITR)
• Age proof (Aadhar Card, Voter’s ID card, Passport)
• Address proof (Aadhar Card, Utility bills, Driving License)
• Photo identity proof (Passport, Voter’s ID card, PAN card)
• Recent passport size photographs

If required, the insurance companies might call for additional supporting documents to the one specified above.

No; being present in India is not at all compulsory while option to purchase a life insurance plan. The best way to go about buying a life insurance for an NRI is by going the online through websites like https://www.eindiainsurance.com/life-insurance/. This way one can compare all available options to find the best plan and buy it instantly from the comfort of your home or office from your current country of residence. Though not required but being present in India while buying a life insurance plan is highly beneficial. If you are present in India at the time of buying the policy, the insurer can conduct the required medical check-ups.

Firstly, the level of risk cover (sum assured) is directly dependant on the annual income of the individual. Ideally, it is recommended that the sum assured should be between 12 - 15 times of the individual’s annual income. The objective of opting for a sum assured of this value is to ensure that the individual’s family can continue with the same lifestyle even after the unfortunate passing away of the assured. This also factors in future expenses that may arise or have been planned like children’s education, marriage or investment in an asset. Secondly, this sum assured also depends on the age of the individual. A younger person can buy a higher sum assured policy, atleastupto 20 times of the annual income. Given that the premiums will be lower also for a younger person will help them invest in a higher SI plan.

The traditional insurance plans consist of Term Insurance, Term with Return of premium (TROP), Endowment, Money Back and Whole Life Policies. Some traditional life insurance policies are participating, that means they offer bonus and dividend to their customers.

The different types of insurance plans currently available for an individual to choose from include:

• Term Insurance - Protection for a defined period of time at a fixed premium cost. with Term Insurance. In Term Insurance, there is no survival benefit, which is premium paid back to the assured if they survive. Premiums are relatively lower when compared to other plans.
• Whole Life Insurance - Guaranteed lifelong protection. Whole life insurance pays out a death benefit on the assured’s demise at whatever age. Ideal plan for creating wealth/inheritance for the family.
• Endowment Policy - An Endowment Policy is a savings linked insurance policy with a specific maturity date. Should an unfortunate event by way of death or disability occur to you during the period, the Sum Assured will be paid to your beneficiaries. On your surviving the term, the maturity proceeds on the policy become payable.
• Money back Plans - Under this plan, certain percent of the sum assured is returned to the insured person periodically as survival benefit. On the expiry of the term, the balance amount is paid as maturity value. The life risk may be covered for the full sum assured during the term of the policy irrespective of the survival benefits paid.
• Children Policies - These types of policies are taken on the life of the parent/children for the benefit of the child. In this plan, parents plan to get funds when the child attains various stages in life, life for their higher education, marriage etc.
• PensionPlans – Also known as Annuity plans, this plan provides for a regular income during our retired/old age period to take care of expenses that may occur during this period.
• Unit Linked Insurance Policy - ULIPs offer a combination of investment and protection to the insured and allow the insured the flexibility to choose/opt as to how and where their premiums are invested. In ULIP plans, the investment risk portfolio is borne by the insured as the investor.

One must check and see whether there is guarantee of return or not, the lock in period, details of premium to be paid, implications of premium default, revival conditions, charges that would be deducted for all services, loan availability etc.

The insurance claims process is a straightforward process and the steps include:

1. Step 1 - Intimate a claim over phone, email, sms to the insurance company. Policy details to be available while registering a claim
2. Step 2 - The claim form needs to be filled completely with policy details and information regarding the cause/reasons of death/disability/critical illness
3. Step 3 - All claim related documents as defined by the insurer to be provided with the claims form
4. Step 4 - In case of Accidental Death, additional documents like FIR, Post Mortem report, Hospital reports also to be submitted
5. Step 5 - Insurance company reviews documents and approves/rejects claim. Rejection by insurer to be accompanied with reasons and supporting documents
6. Step 6 - Claimant's KYC documents to be provided along with confirming payout terms. Claim is settled

An important point relating to the nominee :

• If the nominee passes away before the assured, then the policyholder should appoint another individual as his/her beneficiary before the expiration of the policy
• If the nominee passes away with the insured, then the claims payment under the policy is given to the next legal heir

There are many channels available today for an individual to buy a Term Insurance plan or any other insurance plan for that matter. Apart from a simple and informed process of purchase, an online insurance option has the following benefits:

• Competitive Premium - Purchasing an online insurance plan is more economical when compared to purchasing the plan offline through channels like Agency, Broking and Bancassurance. This is because there are no intermediaries involved in between. Further in most cases, there is a reduced paperwork.
• Higher Sum Assured - Most insurance companies offer relatively higher sum insured options for online purchases given that the cost structure is lower for policies sourced online. There is also a slight relaxation on the medical test requirements for online customers.
• Comparison Table - The biggest advantage for the online customer is the availability of multiple options of insurance companies/plans for the customers to evaluate before making a final decision. The comparison tables allow a customer to not only compare the premiums of similar plans but also compare the benefits for the customer to make a more informed decision.
• Transparency - Another important advantage of the online buying process is the access to product related information. All online distributors have product related information including terms and conditions, product brochures, product reviews and product related FAQ’s that give the customer an indepth review of the plan before they decide to buy it.
• 24X7 Availability - Unlike the offline channel, online insurance plans can be accessed anytime and anywhere from any electronic device. The customer can opt to buy the policy from the comfort of their home at their convenience. Additionally during their policy issuance or claims process, the customer can track the status online without any dependencies.

Checkout the Life insurance comparison table based on your requirement on https://www.eindiainsurance.com/life-insurance/

Before purchasing any insurance plan, it is critical for the proposed insured to review the terms and conditions of the policy and go through the exclusions under the proposed plan. They will also get to recheck the same during the free look period (normally 14 days) after the policy document kit reaches them. Some of the key exclusion are:

• Involvement in violation of law and/or unlawful activities
• Sexually transmitted diseases such as AIDS/HIV
• Man-made disasters such as wars or war like situations. Further invasion, war, act of foreign enemy, civil war, revolution, rebellion, strike, mutiny, etc.
• Adventure Sports like but not limited to scuba diving, paragliding, skydiving, bungee jumping, water sports activity, high risk terrain trekking, rock climbing etc.
• Suicide - In case, the life assured (sane or insane) commits suicide within 12 months (1 years) from the date of policy inception, the policy terminates immediately and the claim is not payable upto the sum assured but the premium amount paid is returned net of applicable taxes/charges
• Claims during Waiting Period as defined in the Insurance policy
• Alcoholism or Addiction to drugs / narcotics substances etc
• Intentional self-inflicted injuries, self-abuse, attempted suicide, psychological disorder
• External congenital anomalies

After premiums are paid for a defined period and/or beyond and if subsequent premiums are not paid, the sum assured is reduced to a proportionate sum, which bears the same ratio to the full sum assured as the number of premiums actually paid bears to the total number originally stipulated in the policy.

Yes, the proposal form is a mandatory document, given that the disclosures made in the proposal form are the basis for underwriting a life insurance policy. One must ensure to declare correct information since such disclosures can lead to denial of a claim.

Yes, all life insurance plan offer coverage for the life assured even when they are traveling out of India on business or leisure. The coverage is effective worldwide.

Depending upon the age of entry, age at maturity, sum assured, family history and personal history, special medical reports may be necessary for evaluation of a life risk. Some routine tests like Electro Cardiogram, TMT, Glucose Tolerance test, X-ray of the chest and lungs with reports etcmay be required.

Yes, there are certain Conventional Life Insurance policies under which the insured can avail a loan. The loan is sanctioned as a percentage of the Surrender Value.

Usually the Insurance Company sends the insured an intimation with a discharge voucher 2 to 3 months prior to the date of maturity of the policy informing the insured of the amount payable. If the policy is assigned in favour of any other person the claim amount will be paid only to the assignee who will give the discharge.

The minimum documents required are the death certificate, claim form and policy document. Other documents such as medical attendant's certificate, hospital certificate, employer's certificate, police inquest report, post mortem report etc could be requested depending on the nature and cause of death.

A Fund is a component in a Unit Linked Policy. The invested portions of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policyholders are pooled together to form a Unit fund.

Most ULIP plans a wide range of funds to suit the insured’s investment plans, risk profile and time horizons. Different funds have different risk profiles and varying returns on the investment. Some of the funds include Equity Funds, Fixed Interest and Bonds, Cash Funds and Balanced Funds.

Investment returns in ULIP plans may not be guaranteed always. In unit linked products/policies, the investment risk in investment portfolio is borne by the policy holder. One should also be aware that the past returns of a fund don’t necessarily indicate the future performance of the fund.

Some of the charges applicable in a ULIP plan include:

• Premium Allocation Charge - This is a percentage of the premium appropriated towards charges before allocating the units under the policy. This charge normally includes initial and renewal expenses apart from commission expenses.
• Mortality Charges - These are charges to provide for the cost of insurance coverage under the plan. Mortality charges depend on number of factors such as age, amount of coverage, state of health etc.
• Fund Management Fees - These are fees levied for management of the fund(s) and are deducted before arriving at the Net Asset Value (NAV).
• Policy/ Administration Charges - These are the fees for administration of the plan and levied by cancellation of units. This could be flat throughout the policy term or vary at a pre-determined rate.
• Surrender Charges - A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.
• Fund Switching Charge - Generally a limited number of fund switches may be allowed each year without charge, with subsequent switches, subject to a charge.

It is preferable that the insured verifies the following on the sales brochure :

• features and benefits
• limitations and exclusions
• all the charges deductible under the policy
• payment on premature surrender
• other disclosures
• Illustration projecting benefits payable in two scenarios of 6% and 10% returns as prescribed by the Life Insurance Council.

Yes, there is a designated Free Look Period (normally 0f 15 days) within which the policyholder can cancel their policy and seek refund of premiums if the terms and conditions of the policy are not agreeable to them or different from what they signed up for. The policyholder shall be refunded the premium paid post deduction of expenses towards medical examination, stamp duty and proportionate risk premium for the period of cover.

NAV is the value of each unit of the particular fund on a given day. The NAV of each fund is displayed on the website of the respective insurers.

Yes, it is advisable for all salaried persons to buy an individual life insurance policy even if they are covered under their employer’s Group Term Life policy because 1) Under Group policies, sum insured are relatively lower than when compared to what an individual actually needs and 2) It is important to note that most individuals may not be employed at the same organisation forever, and hence if they leave that employer, they could potentially risk being without an insurance coverage at all.

The value of the fund units with bonuses, if any is payable on maturity of the policy.

Yes. “SWITCH” option provides for shifting the investments in a policy from one fund to another provided the feature is available in the product. While a specified number of switches are generally effected free of cost, a fee is charged for switches made beyond the specified number.

The Do’s include:

• Finalise as to why you are buying insurance the expectations from the opted plan
• Be open-minded but cautious about the advice and information you gather - ask lots of questions to ensure the plan is really what you need
• Fill the proposal form very carefully and personally
• Fill the proposal form completely and truthfully - remember you are responsible for its contents. Keep a copy of the completed proposal form you sign and any declarations and terms agreed upon mutually for your records
• If you are buying Unit Linked Insurance Policies (ULIPs) ask specific questions aboutVarious charges, Fund options

The Don'ts include:

• Do not leave any column blank in the proposal form
• Do not let anyone else fill it up
• Do not conceal or misstate any facts as this could lead to disputes at the time of a claim
• Do not miss or delay your premium payment

The key factors to keep in mind include:

• How many dependants one has
• What your investment needs are currently and in the future?
• What kind of lifestyle is needed for the family
• How much investment is needed for children’s education, marriage etc

Life Insurance is a financial cover for a contingency linked with human life which include death, disability, accident, retirement etc against all possible risks and this results in loss of income to the household, if the insured was an income earning member of the family.Though human life cannot be valued, a monetary sum could be determined based on the loss of income in future years. Hencethe Sum Assured payable as a benefit in case of any eventuality. Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.

Everyone wants to insure the following risks:

• Dying too soon
• Living too long

Life Insurance is perhaps one of the most critical investments that any individual can make to financially protect themselves and their families from any uncertain and unpredictable even in the future. It is needed:

• To ensure that one’s immediate family has financial support in the event of the insured’s unfortunate and untimely demise
• To finance future expenses that include children’s education, marriage expenses, investments in fixed assets
• To ensure a recurring and consistent source of income post retirement
• To provide for unplanned financial contingencies and to ensure life style upkeep

IRDAI stands for Insurance Regulatory and Development Authority of India and they are the apex body that regulates the Insurance industry in India, both for Life and Non Life Insurance and are based in Hyderabad. They are similar to the Reserve Bank of India (RBI) who is the Banking regulator. Apart from protecting the interests of the policyholders, it regulates the overall industry and takes concrete steps towards development of the insurance sector in India.

According to IRDAI guidelines, the insurance company must mandatorily process a claim within 30 days after receiving all claim related information/documentation. If the claim needs further investigation based on the circumstances and supporting documents provides, the process should be completed within 6 months.

Anyone who is an income generator for a family, whether they are the primary earner or no, needs to ensure they have Life Insurance cover. Due to the value of their contribution to the family, it becomes essential to protect the family incase any unforeseen event happens to the income generator and this is what Life Insurance does. Sometimes even homemakers and children can also be covered for life insurance given their future income potential being at risk.

Currently in India, Life insurance is one of the most preferred tax planning financial instruments. Premiums paid for all life insurance policies are exempt from tax up to a maximum of ₹ 1.5 lacs under Section 80C of the Income Tax Act, 1961. Further under Section 10D, on settlement of a claim, the claim amount paid to the nominee is exempted from any tax.

The straightforward answer is the younger the individual, the lesser the premium. Hence it is advisable for young adults to invest in Life protection through Term Life covers at an early stage to ensure the most competitive premiums for their policy. This is on account of the individual being in better health at a younger age and free from pre existing health conditions.

The amount of Life Insurance coverage can also be terms as the Sum Insured of the Life insurance policy, which is basically what the nominee will get incase of the unfortunate demise of the insured . While there is no scientific approach to arrive at this Sum Assured, some of the factors that need to be considered while fixing this include:

• Age + Number of dependants of the Life Assured
• Financial Commitments in terms of Loans, Future Expenses etc based on the lifestyle of the individual and family
• Specific Financial Goals like Children’s Education / Marriage etc
• Current Income & Future Potential Income levels of the life assured

Yes, all life insurance plans cover death due to natural disaster, like flood, earthquake, storm, etc.

Yes, all life insurance policies offer coverage for Death by all means, except suicide. This includes unfortunate demise of the life assured due to terrorist attack/war/natural calamities/epidemics/pandemics etc (unless specifically excluded by insurance company).

Yes, Non-Resident Indians (NRIs), People of Indian Origin (PIOs) can buy a life insurance plan in India. Foreign Exchange Management Act (FEMA) allows NRIs to buy any plan that meets their requirements of protecting themselves and their family whether he is currently residing in India or not.

Generally most documents required are KYC documents that include:

• Income proof (Salary slip, Form 16, ITR)
• Age proof (Aadhar Card, Voter’s ID card, Passport)
• Address proof (Aadhar Card, Utility bills, Driving License)
• Photo identity proof (Passport, Voter’s ID card, PAN card)
• Recent passport size photographs

If required, the insurance companies might call for additional supporting documents to the one specified above.

Firstly, the level of risk cover (sum assured) is directly dependant on the annual income of the individual. Ideally, it is recommended that the sum assured should be between 12 - 15 times of the individual’s annual income. The objective of opting for a sum assured of this value is to ensure that the individual’s family can continue with the same lifestyle even after the unfortunate passing away of the assured. This also factors in future expenses that may arise or have been planned like children’s education, marriage or investment in an asset. Secondly, this sum assured also depends on the age of the individual. A younger person can buy a higher sum assured policy, atleastupto 20 times of the annual income. Given that the premiums will be lower also for a younger person will help them invest in a higher SI plan.

The traditional insurance plans consist of Term Insurance, Term with Return of premium (TROP), Endowment, Money Back and Whole Life Policies. Some traditional life insurance policies are participating, that means they offer bonus and dividend to their customers.

The different types of insurance plans currently available for an individual to choose from include:

• Term Insurance - Protection for a defined period of time at a fixed premium cost. with Term Insurance. In Term Insurance, there is no survival benefit, which is premium paid back to the assured if they survive. Premiums are relatively lower when compared to other plans.
• Whole Life Insurance - Guaranteed lifelong protection. Whole life insurance pays out a death benefit on the assured’s demise at whatever age. Ideal plan for creating wealth/inheritance for the family.
• Endowment Policy - An Endowment Policy is a savings linked insurance policy with a specific maturity date. Should an unfortunate event by way of death or disability occur to you during the period, the Sum Assured will be paid to your beneficiaries. On your surviving the term, the maturity proceeds on the policy become payable.
• Money back Plans - Under this plan, certain percent of the sum assured is returned to the insured person periodically as survival benefit. On the expiry of the term, the balance amount is paid as maturity value. The life risk may be covered for the full sum assured during the term of the policy irrespective of the survival benefits paid.
• Children Policies - These types of policies are taken on the life of the parent/children for the benefit of the child. In this plan, parents plan to get funds when the child attains various stages in life, life for their higher education, marriage etc.
• PensionPlans – Also known as Annuity plans, this plan provides for a regular income during our retired/old age period to take care of expenses that may occur during this period.
• Unit Linked Insurance Policy - ULIPs offer a combination of investment and protection to the insured and allow the insured the flexibility to choose/opt as to how and where their premiums are invested. In ULIP plans, the investment risk portfolio is borne by the insured as the investor.

One must check and see whether there is guarantee of return or not, the lock in period, details of premium to be paid, implications of premium default, revival conditions, charges that would be deducted for all services, loan availability etc.

The insurance claims process is a straightforward process and the steps include:

1. Step 1 - Intimate a claim over phone, email, sms to the insurance company. Policy details to be available while registering a claim
2. Step 2 - The claim form needs to be filled completely with policy details and information regarding the cause/reasons of death/disability/critical illness
3. Step 3 - All claim related documents as defined by the insurer to be provided with the claims form
4. Step 4 - In case of Accidental Death, additional documents like FIR, Post Mortem report, Hospital reports also to be submitted
5. Step 5 - Insurance company reviews documents and approves/rejects claim. Rejection by insurer to be accompanied with reasons and supporting documents
6. Step 6 - Claimant's KYC documents to be provided along with confirming payout terms. Claim is settled

An important point relating to the nominee :

• If the nominee passes away before the assured, then the policyholder should appoint another individual as his/her beneficiary before the expiration of the policy
• If the nominee passes away with the insured, then the claims payment under the policy is given to the next legal heir

There are many channels available today for an individual to buy a Term Insurance plan or any other insurance plan for that matter. Apart from a simple and informed process of purchase, an online insurance option has the following benefits:

• Competitive Premium - Purchasing an online insurance plan is more economical when compared to purchasing the plan offline through channels like Agency, Broking and Bancassurance. This is because there are no intermediaries involved in between. Further in most cases, there is a reduced paperwork.
• Higher Sum Assured - Most insurance companies offer relatively higher sum insured options for online purchases given that the cost structure is lower for policies sourced online. There is also a slight relaxation on the medical test requirements for online customers.
• Comparison Table - The biggest advantage for the online customer is the availability of multiple options of insurance companies/plans for the customers to evaluate before making a final decision. The comparison tables allow a customer to not only compare the premiums of similar plans but also compare the benefits for the customer to make a more informed decision.
• Transparency - Another important advantage of the online buying process is the access to product related information. All online distributors have product related information including terms and conditions, product brochures, product reviews and product related FAQ’s that give the customer an indepth review of the plan before they decide to buy it.
• 24X7 Availability - Unlike the offline channel, online insurance plans can be accessed anytime and anywhere from any electronic device. The customer can opt to buy the policy from the comfort of their home at their convenience. Additionally during their policy issuance or claims process, the customer can track the status online without any dependencies.

Checkout the Life insurance comparison table based on your requirement on https://www.eindiainsurance.com/life-insurance/

It is a duration for which the policyholder pays premium to the insurance company. The individual can opt for a Regular Pay or Limited Pay depending on their financial position. Regular pay is where they pay premium every year for the full tenure of the policy or Limited pay, where they pay for a limited number of years…say 10 years payment for a 20 year policy period. The advantage of Limited Pay is a reduction in overall premium paid when compared to the Regular Pay.

Term Insurance is a pure risk insurance cover and every individual who is an income generator for the family and has dependents who are financially relying on them, must mandatorily have a term insurance cover. It is generally recommended that the term insurance sum insured be between 15-20 times the individual’s annual income. In term insurance, if the life assured passes away, the nominee gets the sum assured. In case the life assured survives the policy term, nothing is paid back to the individual. This is currently the cheapest form of life insurance cover.

Endowment Plans are insurance plans which provide a combination of both insurance and investment. The life assured gets a life insurance cover as well as an investment return also during the tenure of the policy. The insuredpays premiumfor the course of the policy term and on survival at the end of the term getsthe maturity amount paid. Due to the unfortunate demise during the policy term, the nominees will get the sum assured along with the bonus accrued on the investment. The difference between Endowment & Term plans are as follows:

Term Plans	Endowment Plans
Only Life Insurance	Life Insurance + Investment
Offers only Death Benefit	Offers Death Benefit on Death of Assured + Maturity Benefit if Assured survives policy term

Notwithstanding the fact that this is the cheapest life insurance plan, the other reasons to buy a term plan include:

• Family Dependency: Due to the unfortunate demise of the life assured, the family can use the money to meet the monthly financial expenses as well as future specific expenses like education and marriage of children
• Lifestyle Protection: Contemporary Lifestyle leads to many ailments including critical illnesses or accidental disability…term plans can help protecting oneself against these diseases
• Asset Protection: A term plan allows an individual to avail loans for a car or a home to ensure repayment due to the unfortunate demise of the life assured
• Income Tax Benefits: Premium paid for Life insurance plans are eligible for IT deduction as per the prevailing IT laws.

Term Insurance Plans are required to secure one’s family's financial needs in case of untimely and unfortunate death, critical illness or accidental disability to the primary assured. Some of the key features include:

• Death Benefits - On the unfortunate demise of the life assured during the tenure of the policy, the nominee receives the death benefit (sum assured) under the policy. There are various options of payment which include a one timelump sum payment, lump-sum payment plus an annuity that may be monthly, quarterly or yearly, or simply annuities that are spread over a number of years
• Premium Payment Term (PPT) - The individual can opt for a Regular Pay or Limited Pay depending on their financial position. Regular pay is where they pay premium every year for the full tenure of the policy or Limited pay, where they pay for a limited number of years…say 10 years payment for a 20 year policy period. The advantage of Limited Pay is a reduction in overall premium paid when compared to the Regular Pay.
• Policy Term – The policy term for a Term Life plan can vary depending on the assured’s premium paying capacity and financial position. The minimum policy term is 5 years, with the maximum varying from 25 years to whole life span for monthly premium payments. For single premium policies, the policy term can vary from a minimum of 5 years to a maximum of 40 years.
• Entry Age – For Term plans, the minimum age of entry is 18 years, with a maximum age of 65 years with optional add on benefits. The premium of the term plan increases with age and hence it is advisable to go for a term plan at a younger age.
• Maturity Age - The ideal term insurance plans are those that offer coverage till the assured attains old age, preferable for their whole life. Most term plans offer coverage to the insured up to 65-70 years of age. Term plans that have a higher maturity age also charge a higher premium as life risk increases with age.
• Claim Settlement Ratio - It is an important parameter that the assured must be evaluate before settling on an insurance partner. The insurance companies which have a higher claim settlement ratio are considered more reliable to invest is as well as prompt claims payers.
• Survival Benefits - A regular term plan does not have any survival benefits. However, with the evolving of the life insurance industry in India, many companies have launched term insurance plans with survival benefits called Term Return of Premium (TROP) plans, where in the insurance company refunds some portion of the premium at the end of the tenure of the term plan.
• Additional Rider Benefits – Most Term plans offer Additional Benefits such as Critical Illness and Accidental Death/Disability or Accelerated Sum Assured, which can be opted for by paying additional premium.

There are a few types of term insurance plans sold in the Indian market from different insurance providers. They include:

• Standard Term Insurance Plans – these are the most common types of term plans where the assured pays an annual premium for pure risk cover.
• Term Return of Premium (TROP) Plans – In this term insurance plan the insurer refunds the premium paid for the cover to the life assured on surviving the policy period.
• Term Insurance Plans by Number of Years – Some insurance providers also offer term plans for a specific number of years. These plans offer the same level of death benefit during the policy period. Some insurers also offer a variant know as “Credit Shield” typically along with Mortgages and other high value loans. Here companies provide decreasing term sum insured options which are in relation to the principle outstanding of the loan
• Group Term Insurance Plans – These term insurance plans that are specially customised for corporates looking to cover their employees under a group policy.

These plans are offered both and online to customers with the objective of reaching as wide an audience as possible. Normally online plans have a cheaper premium given that there is no intermediary between the insurance company and customer since the customer is going online directly and choosing their insurance plan.

To select the best term insurance plan, a policyholder should evaluate the following factors:

• Reputation and Reliability of the Insurance provider – since this is a long term contract with an insurance provider, the assured should choose an insurance provider who will be able to service them at a later date
• Premium – this is offcourse an important factor, given that since this is a term plan, the premium payable is for pure risk and there is no return of premium on survival. Some insurers offer a lower premium for non smokers and women.
• Claim Settlement Ratio - A higher claim settlement ratio indicates that the insurance provider has been prompt and efficient in it’sclaim settlement process and timelines
• Solvency Ratio - As per IRDA guidelines, every life insurance company should maintain a solvency ratio of at least 1.5. This ratio presents the financial strength of the insurance provider to ensure timely claims settlement.
• Add On Available – Different insurance companies offer varying add ons to the vanilla term plan, like Critical Illness, Accidental Death & Disability etc. Some also offer a Premium Waiver on being detected with a Critical Illness.
• Claims Settlement Payout Options – Insurers offer the assured different claims settlement options at the time of a claim, which they will have to decide at the time of taking the policy. They can choose between Lumpsum Settlement, Part Lumpsum + Regular Monthly Payout or only a Regular Payout Option – this will be based on their financial position.

Riders are also known as Add-ons and they can be purchased by the assured along with the basic term plan to ensure comprehensive coverage for the assured and their family. These riders carry an additional premium payable by the assured to include them under their insurance plan. Some of the common riders include:

• Critical Illness Rider – this is perhaps the most common and opted for rider along with the term plan. The assured receives a lump-sum payment on detection/diagnosis of a covered critical illnesses under the policy. These critical illnesses differ from insurer to insurer but normally include first heart attack, cancer, paralysis, stroke, kidney failure, coronary artery bypass surgery (CABG), major organ transplant, etc.
• Accidental Death Benefit (ADB) Rider – As the name suggests, this is for additional coverage in case of the unfortunate accidental death to the assured. This offers a lump sum on death due to an accident.
• Accidental Total and Permanent Disability Rider – Similar to ADB, this rider benefit offers additional cover if the assured suffers an accidental permanent or partial disability leading to unemployment or an inability to continue in the activity they were performing prior to the accident.
• Waiver of Premium - Under this rider, in case the assured suffers a disability or loss of job , then all the future premiums of the term plan are waived off and the policy will remain active
• Income Benefit Rider - Under this rider, the insured’s family receives additional income every year for the tenure upto10 years (depending on the chosen option), along with the regular sum assured amount

Most insurance companies offer term insurance plans for durations between 5 to 40 years. Ideally, if one is employed, it is recommended that his/herretirement age be considered when determining the duration of the policy. There are also certain plan which cover the assured till the age of 99 years, depending on the financial dependency of the family on the life assured.

The main benefit of providing riders/add-ons by the insurance company is that it provides the assured an opportunity to avail additional relevant insurance coverage on their existing life insurance policy. One can get riders/ add-ons by paying some extra premium over and above the basic policy premium.

No, there is no maturity benefit as part of the term plans. The premiums paid under term insurance plans are for purely risk and will pay the nominee/beneficiary only in case of the assured’s death, disability or critical illness. However, on survival of the duration of the policy, nothing will be paid back to the assured. Recently some insurance companies have started offering Term with Return of Premium option (TROP) which has a maturity/survival benefit as part of the plan. The survival benefit is the premium paid under the policy which is returned to the assured individual at the end of the policy term.

No, the premium payable for smoker with all other parameters remaining the same, is highervis-à-vis a non smoker given that the mortality rates for a smoker are relatively higher due to an increased risk of lifestyle ailments including heart and lung diseases and cancer. Given this higher risk, premiums are higher.

There are a couple of stages prior to the commencement of one’s life insurance policy. Please note that unlike most other retail insurance policies, the life insurance cover doesn’t commence on payment of premium. As per the process the individual will need to submit supporting KYC and income documents along with the premium and the proposal form. Post this the life insurance company will review the application form and then grant approval, reject the application, or grant the approval with a counter offer (this could include a premium loading or introduction of an exclusion). On acceptance of the proposal form, the insurer will forward a written confirmation to the assured and then the coverage is in force.

No, unfortunately since the term plans collect only pure risk premium from the individual for the policy period and they don’t have maturity/survival benefits, one can’t avail loan on term insurance plans.

It is not mandatory that in all cases, the proposer and the insured are the same person. The proposer is the one who is making an application for life insurance for the insured. They have an insurable interest in ensuring the insured has a life insurance cover and hence propose the same by filling in an application form and submitting the same along with the relevant documents of the insured to the insurance company. If one is applying for Life insurance for themselves, then the proposer and insured are the same. But if an individual A is applying for a Life insurance policy for his/her spouse B, then A becomes the proposer and B the insured.

The review of the individual’s application involves consideration of several factors such as your age, lifestyle, medical history and occupation. The application form (online or offline) provides all this information to the insurance company to evaluate the risk and then approve or reject an application. Also if the individual has a pre-existing medical condition,this may result in an increased premium for the same coverage. Once these factors are reviewed and the policy is issued, then the assured remains covered for all risks, except the excluded ones.

A Non-smoker generally referto people who does not consume tobacco in any form. Preferred non-smoker are people who does not have any Pre-existing medical conditions, no known Cardiac ailments, Cholesterol and Blood Pressure under control at the time of availing the life insurance policy.

Yes, an individual is entitled to get life insurance cover even if they are a smoker or tobacco user. Premium rates are higher for a smoker, given the additional risk from an underwriting perspective. One must ensure that they declare this in the proposal form. Even if they are occasional smoker or given up smoking (in the last 5 years), will be considered as a smoker as far as the insurance company is concerned.

Yes, an individual is entitled to get life insurance cover even if they consume alcohol on a regular or periodic basis. Premium rates are higher for a person consuming given the additional risk from an underwriting perspective. One must ensure that they declare this in the proposal form.

If the insured starts smoking or drinking after buying the policy, it will not affect the base cover since the coverage is already in force.

Every insurance policy has a policy number which is unique to the life assured and this number should be kept handy at all times while interacting with the insurance company/TPA. It is the number by which the insurer keeps the track record of your policy details.

No, premium amount will not change during the policy tenure, provided one continues paying your premiums on time.

Today in the Indian market, the life assured has many ways of remitting premium for the opted life insurance policy. All insurance companies offer their Policyholders options life:

• Payment Online through the customer’s web aggregator/broker
• National Electronic Fund Transfer (NEFT) directly to the insurance cpmpany’s account
• Net Banking / Credit card / Debit card
• Payment Wallets
• Electronic Clearing Services (ECS)
• Direct payment at branch offices

Based on the premium payment frequency, all life assureds have to ensure remittance of the premium on time to the insurance company. However for whatever reason, if the assured individual is unable to make the payment on time, there is a further period of between 15-30 days (from the due date of payment) known as the grace period within which time the applicable premium has to be paid without fail. Failure to pay the premium within the grace period, will move the insurance policy from an active state to a lapsed state and in this state, the life insurance coverage is not longer available to the individual insured. Hence one must ensure premium remittance is made in a timely manner. Even after this lapsed state, the insurance company provides an option for reviving the policy by paying the premium in arrears, with interest, depending on the type of policy.

Also known as protection plan, income replacement plan is a non-linked and non-participating term plan, that in case a policyholder dies within the tenure , the death benefits is paid out to the nominee in two parts – 1) lump sum payment for around 50% of the benefit at the time of demise of the life assured and 2) monthly payoutfor a family for specified number of years thereafter.

Post issuance of the life insurance policy by the insurance company, they provide the assured individual a period of 15 days from the date of receipt of documents to review the terms and conditions of the policy. If the insured is not agreeable to the conditions, he has the option to cancel the policy, return the document and inform the insurance company to refund the premium paid, subject to the mandatory deductions. This 15-day period is also called Free Look Period. Incurred charges like stamp duty, pro rata premium basis for the days covered and medical test charges are normally deducted from the refund.

The documents are as follows:

• Mandatory Documents for Death Claim are
  • Claimant's (Nominee*/ Assured Family Member) statement / Claim intimation form
  • Copy of Death Certificate of the assuredissued by Local Municipal/Government Authority
  • Medical Records like Admission Records, Discharge/Death Summary
  • Original Policy document
  • KYC Documents of Claimant - Copy of Photo Identification Proof & Current Address Proof + Cancelled Cheque of account into which payment will be made
  • On Maturity or for Money Back / Pension Plans - Annuity Claim Documentation list
• Additional Documents for Accidental Death
  • Copy of Medico Legal Cause of Death Certificate
  • Copy of FIR/ Panchnama/ Inquest Report & Post Mortem Report for Accidental Death &Suicide cases
  • Hospital Certificate to be filled by the treating doctor / attending physician
  • Certificate from Employer in prescribed format (for salaried individuals)
  • Copy of Driving License if Life Assured was driving the vehicle at the time of accident - if 'Accident and Disability Benefit Rider' is opted
  • Newspaper cutting / Photographs of the accident - if available

Most life insurance companies commit a TAT of 14 days post submission of all required documents…although it generally takes 8 – 10 working days for verification and settlement of a claim. In case, the claim warrants further investigation , the insurance company keeps the applicant informed regarding the same and then the overall TAT will depend on the investigation and the outcome of the same.

While applying for the life insurance policy, the assured needs to also submit a nominee, who will be eligible to receive the policy benefits post the unfortunate passing away of the primary assured. The nominee last recorded under the policy is entitled to receive the claim benefits in case of death of the policy holder.

While appointing a nominee, the policy holder provides the name, address, age, and relationship with your nominee to the insurance company. Yes, the policy holder can change their nominee by filling up the nomination form and submitting it to the life insurance company anytime before the maturity date of your policy.

If the life insurance claim gets rejected/repudiated, the nominee can choose to appeal against the decision of the insurance company. For that, they will need to submit a written application to challenge the insurer’s decision of repudiation of your claim. If the nominee doesn’tget a favourable verdict from the insurance company,they can then approach the local Insurance Ombudsman (for claims up to Rs. 20lakhs) or the Consumer Court(for claim for above Rs. 20lakhs). Both the ombudsman and the consumer court have the power to review the claims and decision of the insurance company and pass judgement based on the merits of the case.

Some of the key reasons claims may get rejected include:

• Exclusion under the plan: All policies have exclusions and if there is a claim based on an exclusion, the claim will not be settled
• False Information: If some information on the application is false, it could lead to a claim rejection
• Lapsed Policy: No claim is payable on lapsed policies since the insurance companies are not on risk any more since premiums have not been paid on time.
• Mandatory Medical tests: Some insurance plans require mandatory medical tests before the insurance company assumes the risk, which the assured may have avoided or test results didn’t clear the requirement of the insurer

Nominee is the individual nominated by the life assured to receive the policy benefit money in case of death/disabilityof the policy holder. On the other hand, Assignee is to whom the legal rights of the policy holder have been transferred.

Offcourse, the policyholder can apply for a duplicate copy from the insurance company for which there is a fee charged by the insurance company and submit an indemnity bond regarding the loss of the policy document

Yes, one you can purchase Term insurance from two companies, provided they have disclosed complete details of the previous policy to the second insurer, regarding the first policy.Each insurance company may have their own terms and conditions that need the individual to opt for two policies. If there is an unfortunate demise of the policy holder, the nominee can make a claim with both the insurance companies.

Why should I buy Life Insurance?

You must check and see whether or not there is availability of guarantee of return, what the lock in period is, details of premium to be paid, what would be implications of premium default, what the revival conditions are what the policy terms are, what are the charges that would be deducted, would loan be available etc.

The disclosures made in a proposal are the basis for underwriting a policy and therefore any wrong statements or disclosures can lead to denial of a claim in the future.

An intermediary has a distinct role to play in the entire life cycle of a Life Insurance product, from the point of sale through policy servicing, up to claim servicing. An intermediary shall provide all material information with respect to a proposed cover to enable the prospect to decide on the best one. The intermediary is expected to advise the prospect with complete disclosures and transparency.. After the sale is effected, the intermediary must coordinate effectively between the customer and the insurer for policy servicing as well as claim servicing.

In case of certain proposals, depending upon the age of entry, age at maturity, sum assured, family history and personal history, special medical reports may be necessary for consideration of a risk. E.g. if the proposer is overweight, special reports like Electro Cardiogram, Glucose Tolerance test etc could be required, while for underweight proposers, X-ray of the chest and lungs with reports could be required.

Usually the Insurance Company will send intimation attaching the discharge voucher to the policy holder at least 2 to 3 months in advance of the date of maturity of the policy intimating the claim amount payable. The policy bond and the discharge voucher duly signed and witnessed are to be returned to the insurance company immediately so that the insurance company will be able to make payment. If the policy is assigned in favour of any other person the claim amount will be paid only to the assignee who will give the discharge.