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    Life Insurance
    • Premiums as low as Rs.17/day for sum assured of Rs.1 crore*
    • Claim up to Rs. 1,50,000 deduction under section 80C**
    • Choose between annual and monthly premium payment options

    Approximately 22,500 people lose their lives each day in India. This essentially means that 940 people die each hour. While Life and Death are a parcel of life, the loss of a loved one can leave a void which might never be filled. A life insurance policy helps fill certain aspects of this void, ensuring that the financial health of the insured’s family is taken care of.

    Life Insurance in India has yet to become popular among the masses, with the total insurance penetration in India being just 3.44%, with life insurance accounting for 2.72%. Non-life insurance accounts for 0.72%. Given these numbers it is easy to understand that a majority of our population is not covered, leaving millions of Indians unprotected.

    What is Life Insurance?

    Life Insurance Policy
    Life Insurance

    Life Insurance, in simple terms, is a contract which is signed between an individual and an insurance provider, wherein the insurance provider guarantees to pay a certain sum of money (sum assured) in case of the insured individual’s death. In order to avail this protection, the insured pays a certain amount as premium towards maintaining the policy.

    It is nothing but a safety net which provides financial security/protection against loss of life. The primary purpose of a life insurance policy is to protect the financial interests of the insured’s family.

    While one might think that this is a recent concept, studies have shown that it has been around for centuries, with different variations of insurance dating back to 1750 BC.

    There are 3 basic aspects related to life insurance, namely:

    • Premium – An individual is accorded cover only if he/she pays a certain sum of money towards the policy. This is termed the premium. One can consider it to be the initial investment which offers returns in the future.
    • Death Benefit/Sum Assured – This is the money which the insurer assures to pay to the nominee/beneficiary of the policyholder after his/her demise. This varies based on a number of parameters.
    • Term – An insurance policy provides protection for a certain period of time. This is called the term, and it could vary based on the type of policy chosen.
    Insurance Provider
    Features
    Highlights
    Online premium calculation
    98.39% Grievances Solved 97.11% Claim Settlement Ratio*
    No upper limit Maximum Cover (Sum Assured) 80 years Maximum Maturity Age*

    Online tracking of applications

    99.09% Grievances Solved 93.29% Claim Settlement Ratio*
    No upper limit Maximum Cover (Sum Assured) 80 years Maximum Maturity Age*
    Presence in over 75 locations in India
    99.31% Grievances Solved 89.53% Claim Settlement Ratio*
    No upper limit Maximum Cover (Sum Assured) 75 years Maximum Maturity Age*
    Exclusive plans for women and children
    99.38% Grievances Solved 97.62% Claim Settlement Ratio*
    No upper limit Maximum Cover (Sum Assured) 75 years Maximum Maturity Age*
    Claims can be registered online
    99.87% Grievances Solved 96.68% Claim Settlement Ratio*
    No upper limit Maximum Cover (Sum Assured) 75 years Maximum Maturity Age*
    Hassle-free claims settlement
    100% Grievances Solved 97.81% Claim Settlement Ratio*
    100 crores Maximum Cover (Sum Assured) 85 years Maximum Maturity Age*

    Types of Life Insurance Policies Available in India

    Insurance in India is monitored by the Insurance Regulatory and Development Authority of India (IRDAI). As of March 2016, the country had 54 insurers, with 24 of these offering life insurance products. These insurers offer a diverse range of products, which can be categorised into six broad types, namely:

    Term Insurance Plans:

    These are plans which provide life cover for a fixed period of time. They can be either long-term or short-term plans, with the term ranging from a minimum of 5 years to a maximum of 60 years (or more) in certain cases. The insured individual is protected during this term, with the insurance company paying his/her nominee the sum assured on his/her death during the policy term. No protection is provided if the insured dies after the term.

    These can be considered as the simplest insurance plans available. While they are affordable, they might not be the ideal option, for there is no protection after the said period of time. These plans do not provide a maturity benefit in almost all cases. One should consider these plans if he/she foresees their demise within a specific period (though it would be close to impossible to predict the accuracy). This could be viewed as ‘temporary insurance’, and is also referred to as pure life plans by certain insurers.

    Life Insurance Plans
    Life Insurance Plans

    Unit Linked Insurance Policies (ULIPs):

    Individuals looking for protection plus returns can consider unit linked insurance plans. These policies are ‘linked’ to market products like mutual funds, bonds, stocks, etc. There is a certain amount of risk associated with ULIPs, with this risk falling on the policyholder.

    Most insurers invest a certain portion of the premium into market units, keeping the remaining portion aside for the base sum assured. It is important to keep an eye on the performance of the funds, for the returns could be negligible if there is a market crash. As such, the choice of insurance company is critical. ULIPs can be a smart option for the savvy investor who wishes to invest in a life insurance policy. Insurance companies have dedicated fund managers who oversee the investment.

    Endowment Policies:

    An endowment plan serves a dual purpose, offering not just life cover, but also doubling as a savings instrument to cater to any future needs. Under these plans, the policyholder is rest assured of an amount, even on maturity of the policy.

    Individuals who are looking to protect themselves financially during the future can opt for such plans. These are ideal for people who might encounter expenses after a specified period of time. These plans attract a higher premium when compared to regular term plans.The premium is split into two major portions, with one of it going towards the basic sum assured and the other portion utilised as an investment tool to offer returns on maturity.

    While it is possible to have unit linked endowment policies, most insurers in India offer non-linked endowment plans.

    Whole Life Policies:

    A whole life policy, as the name implies, offers protection for the entire lifetime of an individual. Certain insurers can have an upper age limit for maturity of policy. These can be in the form of insurance plus investment plans, wherein a death benefit is provided to the nominee on demise of the policyholder. If there is a maturity benefit associated with the plan, a maturity amount will be paid when the policyholder attains the upper age limit associated with the scheme.

    While one might consider a whole life plan to be similar to a term plan, there are a few subtle differences. The premium for a whole life plan is typically higher, but these plans also offer a maturity benefit, which is not assured in case of a term plan.

    Pension Plans:

    Retiring from work can often be hard, given the fact that money might become a constraint. Retirement plans, also known as annuity/pension plans can be used by individuals looking to financially secure their retired life. These are mostly single premium policies, wherein a lump sum amount is paid to the insurer.

    One can choose the frequency of payouts they wish to receive, with the insurer paying them an amount after they retire.This amount is paid throughout their lifetime, guaranteeing financial security even when one doesn’t work. Certain annuity plans are unit linked, offering market based returns to policyholders.

    Money Back Plans:

    Money back policies are a subset of endowment plans which provide a survival benefit to the policyholder. These take multiple contingencies into account. While a death benefit is payable on the demise on the policyholder, the survival benefit will be paid if he/she survives for a certain period of time.

    Insurers pay a certain percentage of the sum assured at regular intervals, with this plan offering an additional source of income to policyholders. These plans are ideal for individuals who want a regular source of income, but are not keen to take risks associated with market instruments. The survival benefit is paid until maturity of the policy. These plans are known for the liquidity they offer, making them a popular option in the country.

     

    • Ways Your Insurance Policy works for you

      You must have heard various point in time in your life regarding the importance of having a life insurance policy since it provides life coverage to you. However, a life insurance policy serves a greater purpose and helps you in various another manner. Some of it is given below:

      • Taking care of your loved one: A life insurance policy is designed to take care of your loved ones in case you are not around in future. Having a life insurance policy means that your family members will be financially covered and protected from any monetary burden even if you are not around in the future.
      • Helps in taking care of any financial liabilities: You may have invested in various market instruments or taken a loan which is your financial liabilities. In case something happens to you, having a life insurance policy means that your financial liabilities will be paid off in case something happens to you. In case of your death, the nominee will receive a lump-sum amount called the death benefit which can be used in order to clear your financial liabilities and ensure that your family does not go through any financial trauma.
      • Provides cover in case of illness: You can never be sure when you can get diagnosed with a serious health condition. If you are the sole earning member of your family, taking an extended period of leave can be financially difficult for your family. The cost of treatment of the condition only adds to the expenses and thus various life insurance policies offer riders such as critical illness rider plan which not only provides an extra layer of protection to you from a financial point of view in case you get with a serious health condition but also takes care of your medical expenses.
      • Retirement benefits: It is always advisable to plan for your life post-retirement. You may have dreams which you may fulfill even after you are no longer working and thus a regular stream of income is required to help you achieve your goals. There are life insurance policies such as pension plans which allows you to build a corpus and help in fulfilling your future goals.
      • Helps in savings: Having a life insurance policy instills in you a sense of financial discipline as it teaches you to save in order to pay your premiums on time.
      • Provides steady income: There are life insurance products which is designed not only to provide you life coverage but also allow a regular stream of income to get credited to your account. Insurance products such as money back or endowment plan not only provide you with a life coverage but also ensures that a regular flow of income is credited to your account so that you can take care of your day to day needs.
      • Other benefits: An insurance plan such as a term insurance plan provides your nominee with a lump-sum amount called the death benefit in case of your death, and the plan ceases to exist. However, there are insurance products such as whole life insurance which not only provides your nominee with a death benefit in case of your death but also provides a lump-sum amount called the maturity benefit in case you survive the term.
      • Helps in achieving your long-term goals: There are products such as ULIP which not only provides you with an insurance cover but also allows you to maximise your savings by investing your money in different market instruments. The return you get allows you take care of your long-term goals such as buying a house for yourself, taking care of your children’s education, etc.
      • Option to take a loan: There are life insurance policies which allows you to withdraw a certain amount of money as a loan in case you are in extreme need of money. You can withdraw a certain percentage of your cover amount depending on the terms and conditions laid down by the insurance company.
      • Tax benefits: This goes without saying that on availing a life insurance policy, you can enjoy various tax benefits under Section 80C of the Income Tax Act,1961.

       

      Hence, having a life insurance policy is beneficial in many ways. Apart from providing life cover, there are insurance plans which allow you to build a corpus by investing your money in various market instruments. There are plans which ensures that a regular stream of income is credited to your account so that you can take care of not only your day to day needs but also your future goals. Products like whole life insurance plans not only provide the nominee with a lump-sum amount called the death benefit in case something happens to you but also provides you with maturity benefit in case you survive the term. Apart from that, you can avail riders or add-on plans which provides an extra layer of protection to you, as well you can avail various tax benefits under Section 80C of the Income Tax Act,1961.

    • Things Policyholders should Know About when Purchasing Life Insurance

      Matters to be Stated in a Life Insurance Policy

      As per the IRDAI regulations, a life insurance plan should clearly state the following:

      • The name and the Unique Identification Number (UIN) that is allotted by the Authority to the product that is governing the policy, the code number, the terms and conditions, name, and contact number of the sales person involved in selling the policy.
      • Whether the policy is linked or non-linked, and whether it is participating in profits or not.
      • The manner/method of vesting and the payment of profits, such as the deferred bonus, simple and compound reversionary bonus, and the cash bonus.
      • The benefits that are payable by way of the policy, the conditions based on which these benefits are payable, and any other terms and conditions of the contract.
      • The name and age of the nominee and their relationship to the life assured, and also the name of the guardian in case the nominee is a minor.
      • All details pertaining to the riders that will be attached to the base policy.
      • All relevant dates, including the date of maturity, the date of commencement of the risk cover, and the dates as on which the survival benefits are payable.
      • The premium amount payable, periodicity of the premium payment, grace periods that are allowed for payment of due premiums, the date of the last instalment of the premium payable, the implications of missing a premium payment or discontinuing premium payments, provisions of the surrender value payable.
      • Any detail pertaining to revival schemes that are provided for reviving lapsed insurance policies and the requirements that are to be submitted for the revival of the policy.
      • The name, date of birth, address, and age of the life assured, as on the date of the commencement of the risk cover.
      • Policy conditions for surrender of the policy, conversion of the policy into a paid-up policy, non-forfeiture, foreclosure, provisions for discontinuance in case of unit-linked policies.
      • Contingencies that are excluded from the scope of the insurance policy’s coverage. This will be applicable to both the base policy and riders.
      • Provisions for assignment, nomination, loan against the policy, and a statement regarding the interest rate which will be payable for any loan that the policyholder might avail.
      • Special clauses, conditions, and exclusions that may be imposed on the insurance policy.
      • The email ID and address of the insurance firm, which the policyholder might use to communicate.
      • Notes to the life assured highlighting the importance of notifying the insurer in case of any change in address, in a timely manner.
      • Details pertaining to the insurer’s Internal Grievance Redressal Mechanism in addition to the contact details and address of the Insurance Ombudsman, in whose territory the office of the insurer/residence of the policyholder is located.
      • All documents that are to be submitted by the claimant to the insurance company, at the time of making a claim.

       

      Free-Look Cancellation of a Life Insurance Policy

      • As per the IRDAI regulations, the insurer will have to inform the policyholder that he/she has a 15-day free-look period from the date of receiving the policy document. In case of policies that are sourced through electronic means or through distance marketing, the free-look period may be extended to 30 days. During the free-look period, the policyholder has the right to return the policy for cancellation to the insurer in case he/she disagrees with the policy terms and conditions. The life assured will also have to state the reason for cancelling the policy. Post this, he/she will be entitled to receive a refund of the first premium paid. The insurer is, however, entitled to deduct a proportionate portion of the premium amount for the duration of the policy cover, medical examination charges, and stamp duty charges.
      • In case of unit-linked policies, in addition to the regular deductions applicable when cancelling a policy, the insurer is also entitled to purchase all the units at whatever price the units are available, as on the date of cancellation.
      • If the insurer has received a cancellation request for a policy during the free-look period, the insurer will have to process the request and refund the premium paid within a period of 15 days, post receiving the request.

       

      Claims Procedure in Respect to Life Insurance

      • As per the regulations provided by the IRDAI, a life insurance firm that receives a death claim is expected to process the claim at the earliest, without any delay. If the insurer is in need of additional documents or has any queries, the request will have to be raised at once and not in a piecemeal fashion, within 15 days of receiving the claim.
      • A life insurance company is liable to either pay or reject a death claim by providing the relevant reason for the decision within a period of 30 days, from the date of receipt of the claim form and supporting documents. In case any further investigation needs to be conducted, the investigation should be initiated at the earliest and completed within a period of 90 days. In such a case, the claim will also have to be settled within a period of 30 days thereafter.
      • If the insurer delays in settling the claim, the insurer will have to pay an interest at 2% over the prevailing bank rate, from the date of receiving the last claim document.
      • Except for claims for which an application was made under Section 47 of the Act to the court, if the insurer has not settled the claim despite the claim being ready for settlement, the life insurance firm is liable to pay an interest amounting to the bank rate from the date on which the claim was ready for settlement.
      • With regards to survival benefit claims, annuities, and maturity benefit claims, the insurance firm is required to initiate the process by intimating the policyholder well in-advance, credit the claim amount to the claimant’s bank account, or send a post-dated cheque to the claimant, before the completion of the due date. In case of delay in settling such types of claims, the insurer will have to pay an interest at 2% over the bank rate, from the date of receipt of the last supporting document or the due date of the payment.
      • With regard to policy surrender, free-look period cancellation, withdrawal of the policy, refund of the proposal deposit, or refund of any outstanding proposal deposit, the insurer is liable to process and pay the same within a period of 15 days from the date of receipt of the request or the last supporting document. If the payout is delayed beyond this period, the insurer will have to pay an interest at 2% over the bank rate.
      • All interest payments that have been referred to above will have to be paid by the insurer suo moto, i.e., without the policyholder/claimant having to make a separate request or demand for the same.

       

      Note: The information mentioned above has been taken from the notification provided by the IRDAI.

    Which Type of Life Insurance should you Buy?

    Given the amount of choice in the market, you might find yourself confused when it comes to deciding which type of life insurance policy you should purchase. Most leading life insurance firms offer a range of plans including term life plans, whole life plans, endowment plans, money back plans, ULIPs, etc. to customers. Any one of these policies might be the right choice for you based on your coverage needs, financial goals, and premium paying ability. A few key types of policies with their corresponding purpose is mentioned in the table below.

    Type of Policy Purpose of Policy
    Pure Term Insurance Policy A term life insurance plan is the most basic and cheapest type of insurance policy that you can buy. These policies do not have a cash value attached to them, and thus only provide a death benefit. You should purchase a term life policy if you want to avail a life cover at an affordable cost.
    Whole Life Policy Whole life policies provide a life cover for the policyholder’s entire lifetime. They charge a level premium for the entire policy tenure. These policies offer a range of benefits to the policyholder and also accumulate a cash value over a period of time. You should purchase this type of a life insurance policy if you would like to have a life cover for a longer period of time.
    Endowment Policy Endowment plans provide a risk cover and a savings option to policy buyers. Thus, in addition to the risk cover, these policies provide a survival benefit which will be payable at the end of the policy tenure. An endowment plan is ideal for policy buyers who are looking for a protection cum savings option.
    Money-Back Policy Money-back policies provide regular payouts to the policyholder by way of survival benefits, in addition to the life cover and related benefits provided by the policy. Money-back policies can be purchased by individuals looking for liquidity in order to attain key milestones of their life.
    Unit Linked Insurance Plan (ULIP) Unit Linked Insurance Plans or ULIPs provide a risk cover against death to the policyholder and also allow policyholders to invest in certain funds and avail the returns. ULIPs are ideal for policy buyers who would like to invest in funds as per their appetite for risk and receive the corresponding returns.
    Pension Plans Pension plans, also known as Annuity plans and Retirement plan, provide financial security to policyholders after their retirement, by way of regular annuity payments. A pension plan is an ideal buy for individuals looking to secure the golden years of their lives.
    Group Plans Group life insurance plans provide a life cover to a large number people under one master policy. Such type of a scheme/plan can be purchased by a group of people seeking an insurance plan with similar benefits, such as employees of an organisation or affinity groups.

    Differences between Various Types of Life Insurance Policies

    A life insurance policy isn’t a one size fit all. These policies should meet individual requirements, and given the various options available it is possible to get confused. The table below showcases the basic differences between the six insurance policy types.

    Insurance type Premium Cover duration Maturity Benefit Death Benefit Ideal for
    Term Insurance Cheapest Entire term chosen Not applicable Paid if death occurs during policy term Individuals looking for protection for specified period of time only
    ULIPs Amount varies based on sum assured – More expensive than Term Insurance Equivalent to policy term Payable (depends on policy chosen) Paid if death occurs during policy term Individuals looking to get a return on their investment. Serves as investment plus insurance
    Endowment High Equivalent to policy term Paid on completion of policy term Paid if death occurs during policy term Individuals looking to get a lump sum amount at a future date. Serves as insurance plus savings
    Whole Life The premium is higher than other plans Entire lifetime of individual/specified period Payable Paid when death occurs Individuals looking to protect the well-being of their loved ones
    Pension Single premium Till demise of policyholder NA Payable on death Individuals looking for a regular source of income after retirement
    Money Back Varies based on sum assured Policy period Regular amount is paid until maturity Payable on death Individuals looking for liquidity

     

    • NOT TO BE MISSED..

      Embracing Digital Innovation just like Aviva

      The consumer behaviour is evolving which has affected the traditional growth levers such as television advertising which has made it necessary for the insurance companies to shift to online and other mobile channels. Aviva Life Insurance, with the help of telematics, better computing power, and rich customer data has shifted to digital innovation in order to increase their engagement with their customers.

      The insurance industry which was earlier not so famous for digital innovation is seeing major insurance players working hard to meet the demands of their customers who are becoming increasingly tech-savvy in nature. The customers are demanding for digital-first-distribution models which have forced Aviva to strategise their models.

      The behavioural pattern of the customers along with the demography of India is changing. While a major part of the population in India are underinsured, the millennials who constitute 34% of the total population of India are realising the importance of having insurance.

      Aviva was compelled to evolve and keep up with the changing dynamics since most of the millennials prefer to spend time in front of their computer screen and are more tech-savvy in nature. Aviva hence launched ALISHA (Aviva Life Insurance Self Help Assistant) an AI-enabled chatbot which provided round-the-clock assistance to its customers and provided instant information and quotes about various insurance plans to its customers. The chatbot was designed by Findability Sciences on the IBM Watson platform.

      There is also an SMS Bot launched by Aviva. The consumers can ask questions to this bot and instantly get information about a particular insurance product.

      Aviva Life Insurance Company is also adopting various other strategies to stay in the game such as hiring developers, analysing customer data, developing user-friendly apps, and investing in digital channels to improve their customer engagement.

      The insurance company has also developed an online platform called Aviva Kid-O-Scope, which is a dedicated channel for parents and allow them to nurture the talents of their kids. The platform also has blogs curated to provide various parenting tips.

      Aviva has also realised that one of the major changes is that earlier a male would make all the financial decisions in a family, but the trend today is changing. This prompted the insurance company to conduct a survey through which they found out that today women are catching up with men and are becoming more adept at making financial decisions. The survey also showed women to be more accepting of the digital modes post demonetisation and paid more attention to the education of their children. The survey also showed that women showed more faith in the concept of insurance and believed in how having insurance was helpful.

      The people are also becoming aware of the medical expenses that are rising appreciably. People have realised that as the life expectancy is rising so are the risks of getting diagnosed with a critical illness in coming years.

      Data have shown that only 14.1% of people in rural areas and 18% percent of people in urban areas have purchased health insurance policies for themselves. It is also revealed that the current mindset among the people is that they are focussed on the returns they get depending on the investment they made in an insurance policy. Most of the people looked to purchase the cheapest insurance policy which promised of giving the highest return.

      Secrets to affordable life insurance that you probably did not know about

      It is no secret that you would like to purchase an insurance policy which is cheap and affordable in nature and also provides you with a proper cover. As you know, the premium that you will pay for your policy depends on your age, annual income, medical history, lifestyle habits, etc. Similarly, if you have purchased a motor insurance policy for yourself, then your driving history is also taken into account before the insurance company decides the premium that you must pay. Here, we will look at some of the methods through which you can ensure that you are able to purchase a cheap and affordable insurance policy for yourself.

      • Check your lifestyle while purchasing a insurance policy: We all know how dangerous cancer can be. In case you suffer from the disease you may face a lot of problem in purchasing a cancer policy not only because the premiums will be high but also the waiting period and the survival period are also high, due to which purchasing a cancer policy can become an expensive affair. Insurance companies also look at your lifestyle habits before deciding the premiums to charge for the policy. The safest way to go forward is to quit hazardous habits, such as smoking, so that when you purchase any form of insurance, including term or cancer insurance, you would not have to pay a high premium since your lifestyle does not include smoking, drinking or any other habit which puts you at risk of being diagnosed with a critical condition like cancer.
      • Speeding tickets: When you purchase a motor insurance for yourself, the insurance company does take into account your driving records. If you are someone who has been known to run red lights, change lanes in an unsafe manner, indulging in speeding, or not drive without a valid driving licence and other documents, the insurance companies to take into account these factors and may ask you to pay higher premiums. Hence, the safest way to ensure that you are paying cheap and affordable premiums is to follow the road and safety rules and carry proper vehicle-related documents at all times.
      • Lose some weight: Your weight can be a reason for the insurance company to charge you higher premiums. Increase in weight may lead to obesity which in turn can become a reason for you suffer from some of the most common health conditions such as stroke, heart diseases, etc., due to which you might be required to pay higher premiums. Thus, losing some weight and ensuring that you are fit will result in you paying lesser premiums.
      • Take medical examinations: Before you purchase an insurance policy for yourself, the insurance company may or may not ask you to take a medical examination. In case the insurance company asks you to undergo a medical test, you must not refuse. Even if they don’t offer, you can ask the insurance company to take your medical examination for a very simple reason that you are providing them with the first-hand proof about how your health is. This also helps during claim related processes as the insurance company cannot reject your claim since you have provided all the details about your health and were checked by a doctor appointed by the health insurance company.
      • Buy a plan when you are young: One of the best ways to ensure that you do not have to pay higher premiums is to purchase a policy when you are young, since that is when you are healthier, and less likely to suffer from a health condition. While purchasing an insurance policy at a young age, you would be able to choose not only a higher cover for yourself but also pay affordable premiums for yourself, while also deciding on the tenure for which you would like to be covered.
      • Get term insurance for a longer period of time: Term insurance is one of the cheapest insurance products that you can avail for yourself. Term insurance provides only a lump-sum amount to the nominee called the death benefit in case of your death, following/after which the plan expires/becomes void. You do not receive any other benefits apart from the death benefit and thus the premiums that you pay are cheaper. Also, it is recommended that you purchase a term insurance policy for a longer period of time, as not only does it allow you to take care of your financial liabilities and stay covered for a longer period of time, but is also available at lower premiums. Thus, always go for term insurance plans if you wish to pay affordable premiums.

       

      Thus, these are some of the ways through which you can ensure that you are saving on the premiums and lowering the cost of your term insurance policy. Keeping yourself healthy and adhering to the road and safety rules are some of the ways through which you can ensure that you are purchasing an affordable and cheap insurance policy for yourself. It is also important that you properly research and compare different plans as it will not only provide you with information regarding the premiums that you will be required to pay but will also help you determine the most suitable insurance scheme for yourself.

      Mutual Funds with Free Life Insurance – Should you opt for it?

      Of late, many mutual fund houses have started to offer free life insurance covers to individuals who opt to invest in Systematic Investment Plans. While this may seem like an interesting benefit to those who are looking to earn market-linked returns by way of investing in mutual funds, it is important to remember that it beneficial to also have an independent life insurance cover for yourself.

      A life insurance policy can help you provide financial security to your dependents in case of an unfortunate eventuality. Having an independent life insurance policy with an adequate sum assured will help you ensure that the financial needs of your dependents are taken care off, regardless of what may happen in the future.

      How to Save on Tax with a Life Insurance Policy?

      A life insurance policy, in addition to providing the policyholder and his/her dependents financial security, can also help one save on tax payments. The various tax benefits offered by life insurance plans, under the Income Tax Act, 1961

      • Premiums paid towards a life insurance policy are eligible for tax rebates under Section 80C of the Income Tax Act and under Section 80CCC of the same act for pension plans and Unit Linked Insurance Plans (ULIPs).
      • Tax benefits can be claimed up to a sum of Rs.1.5 lakh under Section 80C and Section 80CCC of the Income Tax Act. These benefits can be claimed for premiums that you pay towards maintaining your policy and for premiums that you pay towards your spouse’s or child’s insurance policy.
      • The sum of money that you invest into a life insurance policy, the interest earned by the investment, and the final sum of money that you receive are all exempted from tax deductions.
      • If you have a unit linked insurance plan, you can switch between various funds offered by the insurer. These switches will not be taxed.
      • At completion of the policy tenure, if you are eligible to receive a maturity benefit, this benefit too will be eligible for tax benefits under Section 80D of the Income Tax Act, 1961.
      • A third of the amount that you receive at the time of retirement, via your pension plan, is also eligible for tax benefits.
      • Life insurance providers offer various riders and add-ons that can be attached to one’s base plan. These riders also offer you tax benefits.

       

      Thus, with a life insurance policy, not only can you achieve your long-term financial goals and safeguard your dependents, but you can also save on tax every fiscal year.

      A Taxpayer's Wish List for the Union Budget 2018

      The Union Budget 2018, which is the last Budget before the upcoming General Elections next year, is one that is much-awaited by all Indian citizens. After all, every Union Budget does bring hope to all taxpayers. Given that, here’s a list of 5 things we are all wishing/should be wishing for from the Budget 2018.

      • Increasing the Tax Slab: The current tax slab dictates that any individual earning under Rs.2.5 lakh is exempted from paying tax. However, with the increase in cost of living, more and more people are expecting this limit to be increased as well, at least by a modest Rs.2 – Rs.3 lakh over the existing limit.
      • Extending Tax Benefits under Section 80D: You can claim tax benefits for the premiums that you pay towards maintaining your health insurance policy, up to certain predefined limits. The highest tax deduction that can be availed for health insurance premiums is Rs.30,000. However, this benefit is solely available for senior citizens over the age of 80 years. Requests have been made to the government to extend this benefit to people over the age of 60 years, in order to increase their disposable income and help them reap more tax benefits.
      • Separate Tax Limits for Term Insurance: Most people shy away from purchasing term insurance plans, although they provide a high risk cover at an affordable rate, simply because they do not offer any payouts at maturity. Creating a separate exemption just for term insurance would be a smart way to attract people’s interest.
      • Increasing Fixed Deposit Interest Rates: Fixed Deposits are a safe choice for risk-averse individuals. However, in recent times, the interest rates for FDs have reduced greatly. Thus, increasing the interest rate would be great way to improve the returns of people investing in these avenues.
      • Creating a separate Exemption Limit for Home Loans: As of now, you can claim a deduction of Rs.1.5 lakh for home loan repayment, under Section 80C of the Income Tax Act. However, with the increase in land/home rates over the past few years, people are paying higher EMIs these days. Hence, a separate tax exemption for home loan repayments is extremely desirable.

       

      Here’s hoping that the Union Budget 2018 gives us cause to celebrate!

      Life Insurance & Suicide

      Dealing with the loss of a loved one is one of the most difficult thing which anyone can go through. It not only wrecks an individual emotionally, and mentally, but often, also physically. One of the many causes of death in India is suicide. 17% of the 8,000,00 suicides which are committed globally, are committed in India. What is alarming, is that the rate of suicides in the country only seems to be rising with passing time. So much so, that India has now come to be included among the top 12 countries with respect to the number of suicides committed yearly.

      The loss of an income earning member of the household can not only be emotionally traumatizing but also lead to adverse financial consequences. The life insurance payout, which is often the sole financial security for the future of the grieving family, is not payable as per standard life insurance exclusions if death has been caused following a suicide.

      Revision in Suicide Clause By IRDAI

      When it comes to life insurance, one must never forget, that it is not charity, but a business. As a result, insurers tend to exclude several life-related preventable risks by categorizing them under exclusions, for which the policy does not make a payout. This can be especially negative, in case of suicide, where the family has not only lost an earning member, but also the hope of being able to secure their future with whatever funds they receive under the policy payout. To remedy this, the insurance regulator, IRDAI (Insurance Regulatory & Development Authority of India) made a revision in the regulations governing the suicide clause in insurance policies, which came into effect starting 1 January 2014.

      Policies Issued Before 1 Jan 2014

      For life insurance policies that have been issued before 1 January 2014, the suicide clause governs that in case the life assured has committed suicide within a year of policy commencement/policy revival, either in a sane or insane state of mind, there will not be any claim payout, and the policy shall turn void. However, if the policyholder dies following a suicide after a year of policy commencement/revival, the death benefit shall be payable then. Certain insurers do provide cover for death due to suicide, but on the condition of a waiting period, which is usually 2 years or more.

      Policies Issues Post 1 Jan 2014

      Following a revision in regulations governing the suicide clause, changes have been made to different types of life insurance policies.

      1. Market-linked life insurance plans – In case the policyholder dies after committing suicide within 12 months of policy commencement/revival, their nominee will be eligible to get 100% of the fund value of the policy.
      2. Non-linked or Traditional life insurance plans – If the policyholder has died after committing suicide within 12 months of the date of policy commencement/revival, their nominee will be entitled to a death claim amount which is 80% of the total amount paid towards policy premiums.

      How Are Third Parties Affected

      In an event where the policyholder, who has taken a loan against their life insurance policy, commits suicide, the loan will be repaid by the insurer, who will be liable to prioritize the interests of the third party, be it a bank or a housing loan company. However, this arrangement is subject to the condition that the insurer must have acknowledged receiving the notice of policy assignment one month before date on which the policyholder has passed away.

      Suicide & Group Insurance

      Claim payout in the event of death for a group insurance plan will be decided by the employer/organization which has provided life cover to its employees. In this case, the employer is the master policyholder, and employees are the ‘group insured’ or beneficiaries. Unless the employer has chosen otherwise, death due to suicide will not result in a death benefit payout.

      Keep in mind

      • If the policyholder has provided any incorrect or deceptive information on their policy application, then at the time of making a death claim following suicide, the policy will be canceled.
      • In case the death claim following a suicide is made during the policy grace period, the outstanding premium will be deducted from the final sum assured that is payable.
      • If policyholder commits suicide within 12 months from the date of issue of a revived policy, the claim will not be honoured.

    Group Life Insurance Plans

    A group life insurance is a type of policy that provides protection for a group of members under a single policy. Group policies are typically bought by employers to provide coverage for their employees. In addition to employees of an organisation, other members of a group including business groups, housing societies, customers of a bank, etc. can also avail group life insurance coverage. Similar to individual life insurance plans, group life insurance plans come in different forms.

    Types of group life insurance policies

    Some of the common types of group life insurance policies available are as follows:

    • Group term insurance plans: All members of a group will be covered under the same term insurance plan. In case of the death of an employee during employment, the insurer will pay the sum assured amount mentioned in the policy schedule.
    • Group investment-linked insurance plans: In addition to insurance coverage, these plans also offer maturity returns through market investments.
    • Group gratuity plans: This plan helps employers provide gratuity to their employees after they have worked for at least 5 years in the company. Employers can invest in these gratuity funds and pay the amount from this fund.
    • Group critical illness riders: This can be taken along with any group insurance plans available in the market. This cover can be used to provide protection against various life-threatening illnesses faced by policyholders.

    Features of group life insurance

    Some of the notable features of group life insurance are listed below:

    • All members of a group must be named in the policy document. The policy will be issued in a single document to the company. The company may share the details of the coverage with their employees.
    • The company may choose the sum assured amount based on the requirements of their employees. A fixed sum assured amount chosen by the employer will be applicable for all employees in the company.
    • The beneficiary may provide the nominee details to the company while beginning their employment in the organisation. In case of the death of the employee during the policy term, the nominee will receive the compensation from the insurer.
    • In group life insurance, the coverage is provided only till the employee remains employed with the company. The coverage will cease upon their resignation, retirement, or termination.

    Benefits of group life insurance

    Group life insurance coverage provides the following advantages to policyholders:

    • Cost: The cost of group life insurance is much cheaper than an individual life insurance policy. The premium amount is typically paid by employers as a part of their salary package to employees.
    • No waiting period: Policyholders will not have to deal with any waiting period requirements while availing a group life insurance policy.
    • No pre-insurance medical examination: There are no medical tests required when signing up for a group life insurance policy. Hence, people with pre-existing conditions may also avail group life insurance coverage from their place of employment.
    • Tax relief: The premium amount paid by employers is eligible for tax relief. Also, the benefit obtained from this life insurance cover is eligible for tax relief.
    • Hassle-free claim settlement: In case of a claim, the nominee may simply contact the employer and provide the required details. Once the claim is initiated by the employer, the insurer will provide the settlement amount without any issues.

    Limitations of group life insurance

    While group life insurance offers various benefits to policyholders, it also comes with its own set of limitations. Some of the limitations of group life insurance are given as follows:

    • Group life insurance cannot be customised to the specific requirements of a particular member. It is not possible for members to buy riders separately to enhance their coverage.
    • The sum assured amount offered under a group life insurance policy is fixed by the employer. Members cannot choose the sum assured amount they need.
    • Since the coverage terminates as soon as a member leaves the organisation, there might be a little uncertainty associated with this coverage.

    Basic Life Insurance Terms You should Know

    A number of us are overwhelmed by the terms associated with insurance. Failing to understand these terms can dilute the value of a policy, often leading to confusion during crucial moments. While we might not think of them as important, getting acquainted with commonly used terms can help us enjoy all the benefits provided by a policy. Additionally, one can also be rest assured that they will not be taken for a ride by the insurance provider.

    • Annuity – This is a policy wherein an income is provided at regular intervals throughout the lifetime of the individual.
    • Age limit – Every individual is expected to satisfy certain age-based criteria. Insurance providers will not offer a policy to people who do not fall within the minimum and maximum age limit bracket.
    • Assignment – This is the transfer of the ownership of the insurance policy from the original policyholder to another individual.
    • Proposal/Application form – This is a form which has to filled by the individual looking to purchase an insurance policy.
    • Claim – This is a notice sent to the insurer informing them about a situation wherein they are expected to pay the nominee/beneficiary, as the case may be.
    • Beneficiary – This is the individual who is entitled to receive any benefit from the policy after the demise of the policyholder. A policyholder can choose said person.
    • Coverage – This is nothing but the protection provided by the policy. Each policy accords different cover.
    • Grace period – Policyholders who fail to pay the premium amount on the due date are provided an additional period of time within which they can make the payment. This is termed the grace period. This period varies based on the premium payment mode chosen by the policyholder.
    • Premium – Each individual is expected to pay a certain amount to avail cover under a policy. This is termed the premium. One can view it as the investment one makes to buy the policy.
    • Premium payment modes/frequencies – These are the different options available when it comes to paying the premium. In essence, they refer to the frequency of premium payments. The mode options include: monthly, quarterly, half-yearly, or yearly.
    • Exclusions – An insurance policy does not provide cover in all cases. Insurers cannot be held liable for payment if demise occurs due to certain incidents. These are termed the exclusions.
    • Fiduciary – A beneficiary can choose an individual who can act on his/her behalf. This person is termed the fiduciary.
    • Free-look period – Individuals who do not agree with the terms and conditions of a policy can choose to return it within a specified period of time. This period is termed the free-look period.
    • Participating policy – A participating policy is one which participates in the profits of the insurance company. Such policies earn a bonus when the company registers profits. The quantum of bonus is decided by the Board of Directors.
    • Non-participating policy – This is a policy which does not earn any bonus/partake in the profits of the insurance company.
    • Policyholder – This is the individual who owns the policy. He/she might not be actual individual insured under the plan.
    • Life assured – The life assured individual is the person whose life is insured under the policy. He/she might not be the policyholder, for an individual can purchase a policy in the name of a different person.
    • Paid-up insurance – A paid-up policy is one wherein the death benefit is payable even if future premiums are not paid.
    • Lapse – A policy can be terminated if the premium is not paid. Such policies become lapsed.
    • Maturity Benefit – This is the benefit the insurer pays to the policyholder on completion of the policy term. Not all policies offer this benefit.
    • Death Benefit – This is the amount paid by the insurer to the nominee/beneficiary if the policyholder passes away while the plan is in force.
    • Survival Benefit – This is a benefit paid by the insurer to the policyholder after the completion of a specified period of time. The amount is paid while the policy is active.
    • Surrender – An individual who does not wish to continue with the policy can choose to surrender/terminate it. This can be done only when premiums for a specified period are paid. The insurer might pay a certain surrender benefit based on the premium paid until date of surrender.
    • Maturity date – This is the date on which the policy expires. The maturity amount, if payable, will be paid on said date.
    • Moral Hazards – These are certain conditions which the insurance company takes into consideration before providing a policy. These are related to the personal habits/lifestyle of the individual.
    • Nomination – The process of authorising an individual to receive the financial benefits of a policy is termed nomination.
    • Nominee – The individual who has been nominated to receive the benefits is termed the nominee.
    • Reinstatement – A lapsed policy can be reconverted into a regular policy. This process is called reinstatement. This can be done only if certain terms and conditions are met.
    • Renewal – This is the process whereby the policy continues to be in force after the premium is paid.
    • Rider - A rider is an add-on which can enhance the benefits provided by a base policy.
    • Vesting age – This is the age from which the pension is paid to the policyholder in case of a pension plan.
    • Underwriting – Each insurer evaluates applications based on certain established guidelines. This is called underwriting.

     

    • To be noted on Life Insurance

      Linking your Insurance Policies with Aadhaar and PAN

      The Insurance Regulatory and Development Authority of India (IRDAI) has made it mandatory for policyholders to link their insurance policies with their Aadhaar card and PAN. Insurance firms – both life and general – have been asked by the regulator to implement rules for the same without delay. Due to this, many insurance firms have started to ask customers to update their KYC details, including the Aadhaar card and PAN.

      Thus, in order to avail any financial service including insurance, it is mandatory for every policyholder, regardless of what policy they have, to link their Aadhaar and PAN at the earliest. In case one doesn’t have a valid PAN (Permanent Account Number), the individual can submit Form 60/61 in its place. Form 60/61 is submitted by people who don’t have a valid PAN when they are making a transaction that requires them to quote the PAN.

      This new rule came into effect after the Central Government. vide gazette notification dated 1 June 2017, notified the Prevention of Money-Laundering (Maintenance of Records) Second Amendment Rules, 2017, making the PAN/Form 60 and Aadhaar mandatory in order to avail any financial service. The Insurance Regulatory and Development Authority of India (IRDAI) further clarified that this rule will be applicable to all life insurance and general insurance firms, including standalone health insurance firms.

      The IRDAI was formed by an act of Parliament in order to protect the interests of policy buyers and to ensure that all policyholders are treated fairly. The IRDAI’s 10-member committee consists of a chairman, 5 full-time members, and 4 part-time members. Currently, India has 24 life insurance firms and 33 general insurance firms (which includes standalone health insurance companies) that are operating in the country.

    What are the Principles Behind Life Insurance?

    Life insurance, in its current avatar is based on a number of principles. These are modified and adapted to the market, ensuring that insurance companies make a profit, while offering security to insured individuals.

    One can say that there are four major principles applied in India, with these being:

    • Insurable Interest – This basically pertains to the interest an individual is expected to have in a policy. An individual who is looking to purchase a plan for someone else should have a connection with him/her. This could be a family bond, personal relationship, etc. An insurance company can choose to reject an application if there is no insurable interest involved. This is done in order to protect against the misuse of a policy.

    For example, Mr. Jay decides to purchase an insurance plan for his mother. The life assured in this case is his mother, while the policyholder is Jay. In case Jay decided to purchase a policy for his neighbour’s mother the insurance company would deny it as there is no insurable interest in this case.

    • Law of large numbers – It is next to impossible to predict the death of an individual. Insurance companies utilise the law of large numbers to generate a death rate which can be applied to a particular sample size. This probability is used by insurers while offering a policy. This law is used to minimise losses and provide a certain level of stability.
    • Good faith – Purchasing an insurance in bad faith is something which is bound to dilute the value of the plan. Insurance, being a contract, should be entered into in good faith, with all details provided honestly. Hiding information can result in consequences in the future. While the buyer is expected to be honest while providing personal information (ailments, lifestyle, etc.), the insurer should explain all aspects related to the policy, ensuring that there are no hidden clauses and that the applicant is made aware of all terms and conditions.
    • Risk/Minimal loss – Insurance companies are legitimate businesses who aim to make profits. This can be extremely hard to do if there is a high risk factor. The principle of minimal risk states that the insured individual is expected to take necessary measures in order to limit damage to self. This could include following a healthy lifestyle, eating light, exercising, quitting smoking, etc.

    Best Life Insurance Companies in India

    India is home to a total of 54 insurance companies (as of March 2016), with 24 of them offering life insurance products. Both public sector and private sector companies have noticed the huge potential for insurance in the country. Among the 24 life insurance companies operating here, only 1 is in the public sector. The presence of international giants who have teamed up with local companies has resulted in improved quality of service and attractive products on offer.

    The table below lists the top 10 insurance companies in India based on the premiums collected by them.

    Insurer name Premium amount
    Life Insurance Corporation of India Rs.3,00,487.36 crore
    ICICI Pru Life Rs.22,354 crore
    HDFC Standard Life Rs.19,445.49 crore
    SBI Life Rs.21,015.13 crore
    Max Life Rs.10,780.4 crore
    Bajaj Allianz Rs.6,183.32 crore
    Birla Sun Life Rs.5,723.96 crore
    Reliance Life Rs.4,026.82 crore
    Kotak Mahindra Rs.5,139.55 crore
    PNB MetLife Rs.3,236.08 crore

    “The data listed above is as per the report released by IRDAI (2016-17).”

    Statistics of Life Insurance Companies (2016-17)

    LIC continues to be the dominant name in the Indian insurance industry, with private players lagging behind in terms of premiums collected and lives covered. This, however, is changing, with a number of individuals opting for private insurers on account of their improved services and cheaper products.

    The table below highlights the various aspects related to life insurance companies in India during 2016-17.

    Insurer Name Claim settlement ratio (%) Percentage of grievances solved Solvency Ratio (for the quarter ending on 31/03/2017) Assets Under Management (in crores) (as on 31/03/2017)
    LIC 98.31% 100% 1.58 22,75,276.59
    Aegon Life Insurance 97.11% 100% 2.08 1,939.99
    Aviva Life Insurance 90.60% 100% 3.46 9,062.11
    Bajaj Allianz Life Insurance 91.67% 100% 5.82 48,278.57
    Bharti AXA Life Insurance 92.37% 99.82% 1.82 3,726.23
    Birla Sun Life Insurance 94.69% 99.84% 2.00 34,709.34
    Canara HSBC Oriental Bank of Commerce Life Insurance 94.95% 100% 4.01 11,282.68
    DHFL Pramerica Life Insurance 90.87% 99.93% 7.68 2,635.56
    Edelweiss Tokio Life Insurance 93.29% 100% 2.20 1,476.20
    Exide Life Insurance 96.40% 100% 2.52 10,842.90
    Future Generali India Life Insurance 89.53% 99.70% 1.61 2,839.94
    HDFC Standard Life Insurance 97.62% 99.89% 1.92 91,331.56
    ICICI Prudential Life Insurance 96.68% 99.96% 2.81 1,19,534.68
    IDBI Federal Life Insurance 90.33% 100% 3.52 5,862.94
    IndiaFirst Life Insurance 82.65% 99.06% 1.84 10,600.36
    Kotak Mahindra Life Insurance 91.24% 97.37% 3.00 20,550.20
    Max Life Insurance 97.81% 100% 3.09 44,054.00
    PNB Met Life Insurance 87.14% 98.41% 2.03 15,156.26
    Reliance Nippon Life Insurance 94.53% 100% 2.72 17,089.74
    Sahara India Life Insurance 90.21% 90.91% Not Received 1,195.01
    SBI Life Insurance 96.69% 99.98% 2.04 96,873.87
    Shriram Life Insurance 63.53% 99.74% 2.03 2,980.46
    Star Union Dai-ichi Life Insurance 84.05% 100% 2.78 6,200.80
    Tata AIA Life Insurance 96.01% 100% 3.15 20,693.11

    Claim settlement ratio (CSR) – This is the ratio of the number of claims settled by the insurer to the number of claims it receives in a particular year. It highlights what percentage of claims have been paid. A high claim settlement ratio indicates that the insurer is more likely to settle a legitimate claim.

    CSR = No. of claims approved/No. of claims received

    It is a smart option to choose an insurer with a high CSR. As per the data released by IRDA for 2015-16, LIC has the best claim settlement ratio in the country, followed by Max Life, Tata AIA, and ICICI Prudential Life respectively.

    Choosing an insurer with a low CSR could jeopardise the chances of a claim being honoured, resulting in trauma for the family of the insured.

    Grievances solved ratio (GSR) – This is the ratio of the number of grievances solved by an insurer to the number of grievances received by it in a particular year. This reflects the service provided by the company, with it offering a peek into the how efficient the insurer is when it comes to sorting any problems. A number of insurance companies have a 100% GSR, highlighting their attention to customer issues.

    Solvency ratio – There have been instances in the past where insurance companies went bankrupt, leaving thousands of customers in a bind. Governments have had to bail out such insurers, resulting in losses to the tune of billions to the exchequer.

    In a bid to ensure that this doesn’t repeat, insurance companies are monitored regularly, with the IRDA checking their solvency ratio. This is nothing but the ratio of the assets of an insurance company with respect to its liabilities. It highlights the ability of an insurer to pay long-term debt.

    Insurers with a solvency ratio of under 1.50 are closely monitored, with a high solvency ratio preferred. DHFL Pramerica has the highest solvency ratio amongst Indian insurance companies during 2015-16, with LIC having the lowest.

     

    • 7 Biggest Life Insurance Myths Debunked

      Most people work all their lives to take care of their loved ones but miss out on minor things due to lack of awareness. This lack of awareness is something that can be seen quite often with life insurance. It is the main reason why life insurance penetration in India is at an alarmingly low rate. ‘Death’ is still a taboo topic to discuss in our country, and some people don’t engage in any kind of proactive planning that concerns death.

      The changing lifestyle of young professionals in India comes with its own risk. Hence, proper financial planning is essential for everyone. One of the major aspects of financial planning involves life insurance. Most people in India have a lot of misconceptions about life insurance. If you wish to plan your finances better for your dependents, you need to overcome these misconceptions and safeguard your family’s interests.

      Without further ado, let’s check out the 7 biggest myths about life insurance that people have today.

      • Life insurance is too costly.

         

        Affordability is the main concern for most middle-class people in India. Whenever the issue of life insurance arises, people dismiss it as something that is too costly. However, this is far from the truth. With the diverse range of plans available today, pretty much anyone can afford to buy life insurance. The cost of life insurance is determined based on various factors like age, sum assured chosen, smoking habits, etc. If you feel that life insurance coverage is costly, you can choose the sum assured amount based on your affordability. There are about 24 life insurance companies in India. They have plenty of products in their lineup. With simple research, you can easily find the one that you can afford.

      • Life insurance is not needed for single people.

         

        Life insurance is a must for everyone whether you are married or single. Even if you are single, you might have other responsibilities and liabilities. You can also have life insurance with your parents as beneficiaries. You can use the life insurance coverage to take care of your loans and liabilities. There are plenty of benefits to life insurance even if you are single. Even if you are single, you can start investing in wealth funds or retirement funds. In the case of term plans, the cost is much lower if you enter young. For term plans, the premium will remain the same throughout the policy term. Hence, the best time to enter a life insurance cover is when you are young and single.

      • Life insurance is needed only for primary earners.

         

        The emotional impact of losing a family member remains the same whether or not the person is a primary earner. While the financial impact is not the same, even losing a stay-at-home parent comes at its own price. Various activities like home maintenance, childcare, cooking, etc., can be very expensive following the unexpected loss of a homemaker. Most of the time people don’t realise the monetary value of these tasks. Spending money on these tasks could take away a large chunk of your monthly earning. Hence, it is not right to say that life insurance is needed only for breadwinners.

      • Life insurance is mainly for tax saving.

         

        This is one of the worst misconceptions about life insurance in India. Many people think that insurance is primarily for getting tax relief. While tax relief is a major aspect of life insurance coverage, it should not be the primary reason why one should take life insurance. Make sure that you understand your coverage requirements before you purchase a policy. Choose a policy that benefits your dependents by providing them with financial security. Tax relief you get on the premiums of a life insurance policy is just an added advantage.

      • I have to pay income tax on life insurance proceeds.

         

        As per Section 80C of the Income Tax Act, the premiums paid for life insurance are exempt from income tax. The same tax exemption is also applicable for the proceeds obtained from term policies, endowment policies, and ULIPs. The lump sum death benefit offered to the dependents of the insured is exempt from income tax. In case of pension plans, the lump sum amount paid by the insurer upon maturity is exempt from taxes. However, the annuity amount paid to the policyholder is taxable. Hence, you must understand that all proceeds from life insurance covers are not taxable.

      • Group life insurance is adequate for me.

         

        For some people, the group life insurance provided by their employers may seem adequate. However, the reality is that it is never adequate. Group life insurance stays active only as long as the person is employed with the particular employer. As soon as the employment ceases, the coverage stops. Most importantly, you cannot customise group life insurance according to your requirements. If you wish to have riders to enhance your protection, you cannot do that with group life insurance. Even if the employer-provided life insurance policy is good, it is always better to have one privately.

      • I don’t need life insurance if I had enough savings.

         

        The main focus of life insurance is to provide coverage against uncertainty. Even if you have enough savings, it may not be enough to take care of all the requirements of your dependents. Monthly expenses of the family are just a part of one’s responsibility. You have to pay for your children’s higher education and marriage. Also, you need to have provisions for unexpected medical expenses. Even if you have savings to take care of all these expenses, some extra protection at an affordable price will always come in handy for your family.

      Conclusion

      Life insurance is all about securing the livelihood of your dependents. The premium you pay for life insurance should never be considered a waste. This is just a small price you pay for the financial security of your family. One of the great things about life insurance is that it comes with flexible options to take care of your needs. With the right type of coverage, you can be proactive with your financial planning and secure your family’s interests.

    Why is Life Insurance Important?

    The average life expectancy in India is around 68 years, but we all know people who passed away before they reached this age. The unpredictability of life can cause irreversible damage to our loved ones. A good life insurance plan can help minimise the financial burden associated with the loss of a dear one.

    Given the stress associated with our daily life, we often come across cases of people meeting an untimely end, often leaving entire families shattered after their demise. Here are three main reasons why one must consider investing in a life insurance plan.

    • Peace of Mind – Peace is something we all run after, with only a few people succeeding in ever finding it. Purchasing an insurance plan can provide a certain amount of peace, knowing that the welfare of your loved ones is taken care of in case of any unfortunate event. This enables one to continue with life, providing an opportunity to live to the fullest without worrying about what the future holds.
    • Financial security – An insurance plan takes care of any financial requirements the nominee/beneficiary could have. One can customise a policy to meet individual expectations. Additionally, a number of us take loans to meet certain expenses. This loan amount needs to be paid back, even if the borrower passes away. The burden of repayment falls onto the family members in such cases. A life insurance plan can provide sufficient funds to repay any amount, ensuring that there are no additional liabilities to take care of.
    • Additional income – Certain life insurance plans are designed to offer an additional source of income to the insured during his/her lifetime. These keep pace with inflation, providing decent returns on the initial investment. One can plan for the future by investing in a life insurance plan today.

    Understanding How Life Insurance Works

    It isn’t hard to understand how life insurance works, with insurers aiming to simplify the entire process to generate more interest in this product. The steps below elucidate how exactly life insurance works.

    • Determining one’s need – Before one decides to buy a life insurance plan it is imperative to understand his/her needs. This includes computing the sum assured amount, the type of policy, the premium payment capacity, the term, etc. Once this is determined one needs to decide on the beneficiary who will receive the amount in case of loss of life.
    • Choose the insurer and policy – The next step involves choosing a policy based on one’s needs.
    • Pay the premium – Once the policy is chosen the individual is expected to pay the premium amount. In case of regular premium payment policies, the premium should be paid at the agreed upon frequency.
    • Avail the cover – The insured individual is covered for the period chosen by him/her, subject to payment of the premium.
    • On death – In case of demise of the policyholder/life insured during the policy period, the insurer will pay the sum assured. This amount is paid to the nominee.
    • On survival/maturity – On survival of the life insured until maturity, a maturity benefit might be payable to him/her. This depends on the policy chosen and whether or not it has a maturity benefit under it.

    The policy will cease to exist when the death benefit is paid. Note that certain policies provide an option of cover to the spouse of the insured, wherein the policy will cease after the death of the spouse.

    Benefits of Buying a Life Insurance Plan

    Purchasing a life insurance plan comes with a range of benefits, with the primary ones highlighted here.

    • Peace of mind – Most of us live in stressful environments, with our lifestyle and health taking a beating due to this. The added burden of what the future might hold is bound to increase this stress, which could lead to illnesses and/or breakdowns. Purchasing an insurance plan provides peace of mind, enabling us to continue with our lives without having to think about what could happen in the future.
    • Protects interests of family – A number of us work to provide the best for our families. A good life insurance plan ensures that the family of an insured individual is financially taken care of even after his/her death. One can purchase a policy to fund the education of a child, provide money for the wedding of a loved one, etc.
    • Savings – While a life insurance plan might not be intended towards inculcating the habit of saving, it can help one save money for the future. Certain policies offer returns which are linked to the market, while other offer bonuses on maturity.
    • Tax benefits – Investing in a life insurance plan helps one save tax. Individuals can avail tax benefits or tax rebates under various sections of the Income Tax Act. While there is a limit on the deductions permitted on premiums paid, the amount received as a death benefit does not attract any tax.
    • Added income – Insurers offer additional benefits to individuals looking to purchase a life insurance plan. A pension plan helps one get regular income after retirement. Similarly, there are other plans which offer periodic payouts.
    • Loan – One can avail a loan against a life insurance plan. This depends on the policy in force and could vary from insurer to insurer.
    • Planning – A life insurance plan helps one plan for the future. One should take various scenarios into account before buying the policy.
    • Offsets liabilities – Any liability which an insured individual has is likely to be transferred to his/her family after his/her death. A life insurance plan offsets these liabilities, providing funds to repay any outstanding debt, ensuring that the family is not plunged into further darkness.

    Points to Remember Before Buying a Life Insurance Plan

    A life insurance plan can be a great asset if chosen wisely. With hundreds of options in the market today, it is possible for one to buy a policy which does not do justice to their needs. Keeping these simple points in mind before purchasing the policy can ensure that one gets the best out of it.

    • Assess your needs – A life insurance plan is unlike other purchases, for it has the power to change the outcome of our lives in certain scenarios. The first thing one needs to do is assess his/her needs. Questions like ‘How many people depend on my earnings?’, ‘What sum of money might be required to fund the education of my children?’, ‘Can I survive on my current income in the future?’, ‘Have I borrowed money which needs to be repaid?’, etc. should be asked in order to determine the purpose of a life insurance plan. Failing to do this could result in one buying a policy which does not cater to his/her needs.

    One should remember that a life insurance plan is not a ‘one size fit all’ product. It needs to be customised to meet personal requirements.

    • Check your finances – How many times have we ended up buying things we do not use, paying an amount for them and compromising on other important items? It is imperative that we check our finances before buying a life insurance plan, especially if the policy involves payment of premiums at regular intervals. A policy for which the premium hasn’t been paid could lapse, reducing the benefits. Always ensure to choose a policy which is affordable.
    • Choose the right cover amount – The cover amount we choose should match the monetary requirements of our loved ones. Opting for a limited cover could result in hardships for them. Inflation is one parameter which should always be kept in mind before choosing the sum assured. An amount which seems sufficient now might not be sufficient a few years later. Any changes in our lifestyle should reflect in the sum assured to ensure that the quality one is used to remains the same even after the demise of a loved one.
    • Research and compare – Gone are the days when there were one or two insurers offering a limited number of products. Today, India is home to 24 life insurance companies, with each offering multiple plans. It is imperative that we research these plans, finding one which matches our expectations. Research not only helps narrow down the options, but can also help us land a great deal, for certain insurers could offer a plan at extremely affordable rates.

    Another critical aspect which should be researched is the history of the insurer. Insurers with a bad track record should be avoided, for they could create issues when it comes to claim settlement. The IRDA provides statistics related to all the insurers operating in India, one should check these before making any decision.

    • Select an insurer to match your needs – The performance of an insurance company is not sufficient when it comes to choosing an insurance partner. The services offered by them are also important. Select an insurer who has a ‘human touch’ associated with them. This can be useful at the time of a claim. Insurers nowadays not only pay the claim amount, but also provide counselling to help loved ones handle the loss.
    • Choose and understand the policy – Once a policy has been chosen, it is important to understand it thoroughly. A number of us merely go by the word of our agent, buying a policy without truly understanding it. Make sure to go through all the benefits offered, the premium expectation, etc. A policy could lose its value if it is purchased without understanding.
    • Get a second opinion – Getting a second opinion is always a good idea, especially when the purchase can be a life-changing one. The second opinion should be taken from people who are aware of how insurance works. This could be a family member who has previously invested in a life insurance plan, a friend, a colleague, or even neutral websites which compare various products and provide reviews.
    • Understand all terms and conditions – How many of us actually take the time to read the terms and conditions associated with a product we purchase? Most of us tend to skip this part, ignoring points which could be critical to avail the benefits associated with the item. Doing the same when it comes to buying an insurance plan can come back to haunt us. An insurance company can deny a claim for various reasons, which could result in our investment becoming null and void. Never sign off on a policy without reading these minute details.
    • Continue paying premiums – Once a policy is bought, it is imperative to maintain it. This means that premiums should be paid regularly. Failing to do so will result in the lapse of the policy, with the insurer not offering a cover/providing limited cover in such cases. It is a good idea to constantly check the policy to ensure that it is active at all times.

    How much Insurance should I Buy?

    This is a question most of us end up asking. The insurance cover one needs depends on a number of factors and the answer to this question might not be universal. However, there are a few basic aspects which should be taken into account while choosing the insured amount.

    • Current income – The premium payments begin immediately after the policy is purchased. This implies that the current income should be sufficient to handle the onus of these payments. Experts state that the insured amount should be anywhere between 10 to 12 times the gross annual income of an individual. So if your gross annual income is around Rs.5 lakh, a good sum insured could range from Rs.50 to Rs.60 lakh.
    • Age – The age of a policyholder/insured plays a key role in determining the sum insured which might be required. An individual in the higher age bracket (50+ years) might have different commitments compared to an individual who is in his/her thirties. The more the responsibilities one has the more the cover should be. Additionally, an individual with a number of years of work experience might be in a position to afford a higher premium, which results in an increased sum assured.
    • Current expenses – The expenses should be taken into consideration before buying the policy. There is no point of purchasing a plan if one finds it hard to pay the premiums on account of existing financial obligations. Deduct the expenses from the annual income in order to determine the actual budget for an insurance plan. One should choose a sum assured which is around 5 to 6 times the total income plus all miscellaneous expenses.

    For example, an individual who earns Rs.10 lakh per year has annual expenses to the tune of Rs.5 lakh. These include the car loan EMI, home loan repayment, school fees, etc. The cover in this case should ideally be around Rs.75 lakh.

    • Inflation – Inflation is a reality we cannot ignore. We see the price of basic essentials going up each year, with these likely to increase in the future as well. Make sure that the insured amount factors inflation as well. Choosing a sum assured based on the current costs might result in the amount being inadequate in the future. Ensure that inflation at the rate of 5-6% per year is adjusted while the sum assured is being decided.
    • Family requirements – Securing the future of our family is one of the main reasons why most of us buy an insurance plan. One should always keep the requirements of the family in mind while choosing the sum assured. The number of children one has, their age, their future educational needs, the income of a spouse, needs of parents, etc. should all be taken into account. For example, an individual with children aged 6 and 8 years might think of taking a sum assured which can cater to their educational needs in the future. Similarly, if one has a working spouse/an additional source of income, he/she can choose a relatively lower amount when compared to an individual who is the sole breadwinner of the family.
    • Future obligations – These could include repayment of loans, cost of medical treatments for parents, etc. The insured amount should be sufficient to take care of any expense which might arise in the future.
    • Other savings/investments – An insurance plan, though designed only to provide security, can also offer decent returns in some cases. Individuals who have other modes of investment can choose a policy which offers pure insurance, whereas those without any other investment might be forced to choose an investment cum insurance scheme. This has a bearing on the premium one pays, for a pure insurance plan can be purchased at a lower premium when compared to other plans.

    In case there are other investments/savings, one can choose a lower sum assured. If there is no other investment, the cover taken should be on the higher side.

    Individuals who are unsure of the cover they require can approach agents/use online calculators to determine an amount which might be sufficient for them.

    Is there a Right Time to Buy Life Insurance?

    The answer to this question goes beyond a yes or no, for there is no set age bracket which is considered the best period to invest in life insurance. However, there are a few key parameters which can help one determine the right time to buy it.

    • Age – The younger an individual is, the cheaper an insurance plan will be. Most youngsters refrain from purchasing a policy, thinking that they do not require it immediately. This, however, might not be the smartest move, for the cost of a life insurance plan increases each year. Statistically speaking, there is an 8-10% rise in the premium amount every year. Simply put, delaying the purchase of a life insurance plan can become an expensive proposition.

      We can take the example of Jay to understand how this works. Jay, currently aged 30 years checks the cost of an insurance plan for Rs.10 lakh. The premium works up to around Rs.27,000 per year. He chooses to forego this purchase, deciding to wait instead. At age 50, he considers the same policy. The premium at this age is more than double the premium he was expected to pay when he was 30 years old.

      Insurers charge a higher amount with increasing age. A smart option is to buy the policy at a young age. This enables one to enjoy the benefits of the policy without having to pay an exorbitant amount.

    • Health – The healthier an individual is the less likely it is for him/her to fall ill. A healthy lifestyle is known to increase the longevity of people, with insurers looking at this before providing a policy. Individuals with medical issues might be expected to undergo tests, with insurance providers having the right to deny an application based on the outcome of these tests. The healthier an individual is, the better are his/her chances of getting a good deal on the premium amount.
    • Finances – Individuals with an alternate source of income might think that a life insurance plan is not needed for them. One should consider the current financial situation and future obligations to make sure that a life insurance plan is utilised effectively. As one ages, there are chances for debt to increase, which might prevent one from spending on a life insurance plan. On the other hand, buying a policy when there is no debt can help one utilise resources more effectively.

    Given these points, it is safe to say that the best time to buy a life insurance plan is NOW. Delaying a purchase provides no added benefits. Irrespective of the position one is in currently, investing in a good policy can offer security and stability, in addition to savings.

    With it close to impossible to predict life, it would be a smart option to consider the option of a life insurance plan immediately.

    Life Cycle of Life Insurance

    Understanding the life cycle of life insurance is not complicated, for it is visible around us. One can essentially break this cycle into four different stages, corresponding to different stages in an individual’s life.

    • Early age/No insurance – The first stage corresponds to the early lifetime of an individual. This phase can be considered to be from the time of birth till the time one reaches an age of 18/19 years. Here, there are no responsibilities/liabilities one has to deal with. On the contrary, this is the period when someone else is spending money on the individual. One can typically say that there is no need for life insurance during this period.
    • Youth/limited insurance – This is the age when most individuals begin to venture out. They complete their education, get their first job, stepping into a new phase of life. The liabilities and responsibilities in this phase are limited, meaning that only a limited minority of people in this age bracket opt for life insurance. One could assume this bracket to be in the range of 20 to 25 years.
    • Middle age/High insurance – This is the phase when life truly begins to change. Responsibilities increase for most people during this period. One might get married, have children, buy a home, etc. These mean that there are people dependant on him/her. A life insurance plan becomes essential during this stage of life, with most people purchasing it as and when their responsibilities towards others increase. This period typically lasts for around 20-25 years.
    • Old age/limited insurance – This is a period when responsibilities reduce. Their children are grown up and are capable of handling themselves, most loans are cleared, and the expenses have reduced. The need for insurance comes down, but this does not mean that it can be avoided. There are still a few requirements which need to be met, which can be done by the policy.

    We could take the example of Rakesh to understand the life cycle of life insurance. Born into a middle-class family, Rakesh had a good upbringing. At age 21, he completes his formal education and begins work. Until now he had no life insurance plan. Given the fact that he is independent, he chooses not to buy a policy immediately.

    At age 25, he decides to get married. At age 27, he takes a home loan to buy a house. His responsibilities have now increased and he chooses to invest in a term insurance plan with a tenure of 25 years. Within the next few years he becomes a father, with added financial obligations. He increases the cover under his plan to meet them.

    At age 52, his children are grown up and are on the verge of completing their education. His home loan is cleared and his financial obligations have reduced. The term plan is about to expire but he still feels the need to provide for his wife. He now chooses to invest in a whole life policy, ensuring that he is protected for as long as he lives.

    Which Documents should I Submit in Order to Purchase Life Insurance?

    Insurance providers require a few basic documents in order to process an application. These include:

    • ID proof – Most insurers insist on a government approved photo ID proof as part of their KYC process. This could be a passport, driving license, Aadhar, etc.
    • Address proof – This could be a rental agreement, utility bill, voter ID card, etc. The insurance company will use this address for all communication associated to the policy.
    • Age proof – An individual is expected to provide proof of his/her age. As stated earlier, the age of an applicant has a huge bearing on the premium. Accepted documents include PAN card, Aadhar, driving license, Voter ID, etc.
    • Proof of income – The proof of income is required to check whether an individual can afford the premium for a particular sum assured. One could submit either their payslip, bank account summary, Form 16, or their IT return as proof.
    • Recent photograph – A recent passport size photograph is needed in some cases.
    • Medical certificate – Individuals over a certain age might be asked to undergo medical tests. A medical certificate will be needed in such cases. The certificate should be issued by competent doctors. Each applicant might not be asked to undergo medical tests, with this varying from case to case.

    Note that an insurer could ask for other documents in order to process an application. These could be related to the nominee/beneficiary.

    Is it Important to Compare Life Insurance Plans Online?

    Yes, it is extremely important to compare the different life insurance plans offered before one decides to buy them online. Comparison becomes even more important when everything is being done online, for one might not have the help of experts.

    Traditionally, insurance agents would explain a plan before the purchase was completed. The virtual world, however, might not always come with assistance.

    With hundreds of plans available it is imperative that one searches and compares the different features of each plan, ensuring that the selected plan suits the personal requirements of the individual. There have been instances of people purchasing a policy without comparing them which have resulted in problems during the claims process.

    Almost all insurers have a presence online, with it easy to find details about their products. Not only does this help save time and effort (when compared to offline comparison), it can also help one get a better deal on the premium amount.

    Reviews of products and services by people who have invested in them can be an added bonus, offering an insight into what one could expect.

    While one can go ahead and buy a policy without comparing it, a smarter option would be to check all other alternatives, enabling one to get the best product in the market.

    Popular Riders for life insurance policies Offered in India

    Riders are add-on covers taken in addition to a base life insurance cover. The main purpose of buying a rider cover is to enhance the coverage offered by the base cover. In other words, riders provide coverage for things that are not primarily covered in the regular insurance policy. One of the advantages of having riders is that policyholders can customise their policies based on their specific requirements. Policyholders may choose multiple rider covers by paying additional premiums for those covers.

    Some of the common riders available with life insurance policies are as follows:

    Accidental death/disability benefit

    This rider protects policyholders from the damages sustained from an accident. In case of accidental death of the policyholder, the benefit offered under this add-on cover shall be provided to the nominee. This cover also has provisions for different kinds of disabilities including permanent total disability, temporary total disability, permanent partial disability, etc. In case of disabilities, compensation will be provided to the policyholder based on the extent of disability suffered.

    Term assurance rider

    This rider is offered alongside various endowment policies and ULIPs. Similar to a term cover, this provides additional coverage (equivalent to the base sum assured amount) in case of the premature death of the policyholder within the policy term. This cover is useful if the policyholder wants to boost the death benefit of his/her insurance plan at an affordable price.

    Critical illness rider

    In case of the first diagnosis of any of the named critical illness, this rider cover pays lump sum payment to the extent of the additional sum assured amount. Some of the common life-threatening conditions covered under this rider include cancer, stroke, kidney ailments, heart attack, major organ transplant, etc. The number of critical illnesses covered may vary from one company to another.

    Accelerated death benefit rider

    This rider works more or less similar to a critical illness cover. Here, the insured person may get part of the sum insured amount in advance following the diagnosis of life-threatening conditions such as cancer, AIDS, stroke, etc. This lump sum advance amount obtained from the insurer can be used for treatment of the disease. This one-time benefit can also be used to supplement the living expenses of the insured person.

    Waiver of premium rider

    Upon purchase of this rider, the future premiums of life insurance will be waived following the occurrence of any of the named contingencies including death and disability. For instance, if the parent of a child covered under a child plan dies during a policy term, the coverage will remain active through the policy term but the future premiums can be waived. Similar benefit may also be applied following the disability of the policyholder within the policy term.

    Spouse insurance cover

    This rider provides additional coverage for the primary policyholder without the need for him/her to purchase a separate policy. This cover is ideal for couples who wish to save money on their insurance premiums.

    Surgical assistance benefit

    In case of a major surgery, policyholders can receive additional financial support by taking this cover. Hospitalisation expenses that do not require surgery are not covered under this rider policy. Also, pre-existing conditions are not covered under this rider. Policyholders may have to check the policy document for the specific conditions that may apply to this rider policy.

    The rider covers available along with a life insurance plan may vary from one insurer to another. It may not be completely possible to anticipate the occurrence of any of the events mentioned above. However, policyholders can pick their riders based on various factors such as age, family health history, existing health condition, etc.

     

    • Postal Life Insurance

      Postal Life Insurance is a life insurance scheme that was initially offered only to postal employees. With time, the scheme was extended to other government organisations such as the telegraph department, P&T department, government-aided educational institutions, nationalised banks, and so on. Offering coverage to the para-military forces and defence services, more than 46 lakh policies have been issued as on 31 March 2017. The Directorate of Postal Life Insurance not only provides individual policies but offers group insurance schemes to extra departmental employees such as those serving under the Gramin Dak Sevaks.

      With more than 1.5 lakh branches in the country, India Post offers the Postal Life Insurance to the remotest areas of the country. There are six different plans available under Postal Life Insurance that differ in the salient features and the sum assured amounts offered under each of them. The six plans under Postal Life Insurance are:

      • Whole Life Assurance (Suraksha)
      • Convertible Whole Life Assurance (Suvidha)
      • Joint Life Assurance (Yugal Suraksha)
      • Endowment Assurance (Santosh)
      • Anticipated Endowment Assurance (Sumangal)
      • Children Policy (Bal Jeevan Bima)

       

      These plans not only provide the nominee with a death benefit upon the death of the assured but also provide financial assistance on a regular basis depending on the type of plan chosen.

     

    • Rural Postal Life Insurance

      The rural postal life insurance scheme was created as per the recommendation of the Malhotra Committee which observed that only 22% of the Indian population was covered by life insurance policies in 1993. Also, only 10% of all savings instruments constituted life insurance bonds. In order to increase the insurance penetration, as well as increase awareness about the importance of life insurance among the masses, the rural life insurance scheme was introduced for the rural populace of the country.

      India Post was picked to carry out the life insurance scheme as it was believed that the post masters of rural areas were highly respected and trusted. The people of the rural regions would, hence, understand the importance of insuring one’s life and also using it as an instrument to save for the future through them. The vast network of India Post would also benefit the cause of spreading awareness and increasing the life insurance penetration.

      As many as 146 lakh policies have been issued until 31 March 2017 under Rural Postal Life Insurance. There are six plans available under the Rural Life Insurance scheme, they are:

      • Whole Life Assurance (Gram Suraksha)
      • Convertible Whole Life Assurance (Gram Suvidha)
      • Endowment Assurance (Gram Santosh)
      • Anticipated Endowment Assurance (Gram Sumangal)
      • Children Policy (Bal Jeevan Bima)
      • 10-year RPLI (Gram Priya)

       

      The different insurance plans offered provide the benefit of covering a person’s risk as well as using it as a means to save for the future.

    Pros and Cons of having Multiple Life Insurance Policies

    As an individual, you may tend to double check things in order to eliminate risks. You might have the same thought process when purchasing insurance policies. Having a life insurance policy means that you are ensuring that the future of your loved ones is safe and secure in case something happens to you and you are not around for your loved ones. Hence, you might think that having more than one life insurance policy might be a very good idea so that you can have the surety that your loved ones are financially covered even in your absence.

    The insurance policy can never heal the pain of your absence that your family will feel, but it will ensure that they are financially covered and not compromising on their dreams. In case something happens to you, the nominee receives a lump-sum amount called the death benefit which allows your family members to take care of their day-to-day needs.

    There are various types of insurance policies that you can avail for yourself. It is important that before you purchase any type of insurance product for yourself, you properly research and compare various plans and after evaluating your family’s needs you purchase a plan that you feel is suitable for you. There are primarily two types of insurance products that you can purchase for yourself - term insurance and whole life insurance. A term insurance plan is a pure vanilla insurance product which provides you with a protective cover. In case of your death, the nominee receives a lump-sum amount called the death benefit and the plan ceases to exist. Whole life insurance provides coverage for life and there are various subcategories of such types of plans such as universal life insurance, traditional whole life, variable life insurance, variable universal life insurance etc.

    It is also important to note that unlike whole life insurance, term insurance does not consist of any cash component. Hence, the premiums are lower and term insurance is extremely cheap and affordable in nature. You can choose the period for which you will require coverage and one of the reasons why term insurance is probably the best insurance product to avail is that it provides large coverage for a very affordable premium.

    If you are looking to purchase multiple life insurance policies, then it is important to understand its pros and cons and based on it decide whether you require more than one insurance policy or not.

    Pros

    Simply having a single insurance policy may not suffice for you. Therefore, it is recommended that you purchase more than one insurance policies that provide you coverage and ensures that the future of your loved ones is completely safe and secure. It is also not enough to just have only life insurance policy, and since the medical inflation is on a rise and cost of treatment for various health conditions is expected to become more expensive, it is thus important that you have a health insurance policy as well. If you have elder people in your house then you must insure them by purchasing a mediclaim policy as well. One of the benefits of having all these insurance plans is that the premiums you pay are exempted from being taxed under Section 80C of the Income Tax Act, 1961.

    Cons

    It is recommended that you treat insurance policies purely as products that provide you cover and don’t look at it from an investment point of view. Though having insurance policies means that you will be able to enjoy certain tax benefits, you will also have to do away with a major chunk of your savings. Having multiple insurance policies means that you will have to remember the premium payment dates for each of them and thus managing all your policies may become difficult provided that you also need to have an understanding of your insurance plans. No insurance policy comes for free and thus you will have to pay a lump-sum as premiums for each of your plan, which might take a toll on your pocket. Also, having too many insurance policies means that there might be a lot of paperwork involved as well. It is recommended that you do not purchase more than one term insurance policy for the sake of getting the extra death benefit. Since no term insurance plan is designed to have any cash component, you will not receive any benefits if you survive and the policy term comes to an end.

    Life insurance, in the end, is designed to ensure that you lead a tension free life and hence it should not be a burden on you from a financial point of view. Hence, you must choose an insurance plan which not only provides adequate cover to your family but also do not put you under any type of financial burden. It is also important to understand that your family will enjoy the benefits of an insurance policy only after your death and you will not be directly enjoying them. However, in the end, having a term insurance plan is necessary and you must research, compare and then purchase a suitable insurance policy for yourself.

    How Do I Calculate the Premium for My Life Insurance Plan?

    Insurance companies charge a certain amount as premium to provide cover under a policy. This premium is computed after taking a number of factors into consideration. Probability plays a big role in determining the premium amount, with insurers looking at the lifestyle, medical history, and age of the applicant before deciding the premium.

    While insurance companies hire expert statisticians to look into the process and come up with the premium, a regular individual can check the premium amount by using different online tools.

    Most insurers have a premium calculator which showcases the premium amount for different permutations and combinations. Alternately, one can also use third-party website tools to compute the premium. One will have to enter details like their age, the term of the plan, the sum assured they wish to avail, the premium payment frequency, add-ons, etc. Once they enter these values into the premium calculator they will be provided the premium amount for the chosen variables.

    Higher the chances of a claim being made higher is the premium amount.

    Steps To use a Life Insurance Premium Calculator

    Cost is one of the major factors people consider when looking for a new life insurance policy. Considering the range of policies available in the market, people compare the cost of these plans before making a final decision. The premium of a life insurance policy is influenced by various factors such as age, chosen sum assured, lifestyle habits, health condition, etc. It is a time-consuming affair to contact every insurer with these details and get a quote for your desired plan. Besides most companies have different products in their lineup to choose from. This is where a premium calculator comes in handy.

    A premium calculator is a simple tool offered by most life insurance companies. These calculators can be accessed simply by visiting the official website of the insurer. You may also use the premium calculators offered by third-party aggregators like Bankbazaar to compare the different policies offered by various insurers. With this tool, you can calculate the premium of a specific plan available in the market and make an informed decision based on that. This main purpose of this calculator is to compare and filter out the policies before even contacting the insurance company.

    How to use life insurance premium calculator

    The life insurance companies in the market have their own versions of life insurance premium calculators based on the policies they offer. Though there are some minor differences among the life insurance premium calculators available in the market, they more or less function the same way when it comes to seeking inputs and giving the output.

    Here is a step-by-step instruction on how to access the premium calculator offered by the country’s largest life insurance company LIC:

    • Step 1: Visit the official website of LIC India.
    • Step 2: Click on the ‘Premium Calculator’ tab on the homepage of the site.
    • Step 3: Once you open the premium calculator, fill in your basic details such as name, age, and gender.
    • Step 4: Upon entering the basic details, choose the desired policy in which you want to enroll.
    • Step 5: Upon choosing the policy, enter the policy details such as the desired sum assured amount and policy term.
    • Step 6: You must also enter your smoking habits on this page.
    • Step 7: After clicking on ‘quote’, you will get the premium details for the specific policy you have chosen.

    When you calculate the premium using the above-mentioned method, you will get detailed information about your half-yearly, quarterly, and monthly premiums for the chosen policy. Since LIC offers a diverse range of plans including term plans, ULIPs, endowment plans, retirement plans, etc., you may check the premium amount of these plans and choose the best one that fits within your budget.

    The exact procedure for calculating the premium may differ from one insurer to another. For instance, the premium calculator of ICICI Prudential can be used in the following ways:

    • Step 1: Visit the official website of ICICI Prudential Life Insurance.
    • Step 2: On the home page, click on ‘term insurance premium calculator’.
    • Step 3: After opening the premium calculator, enter your basic details such as gender, date of birth, and smoking habits.
    • Step 4: Upon clicking on ‘show my quote’, you can find the annual premium of the online term plan offered by ICICI Prudential.

    The premium calculators offered by other companies follow a similar procedure. All you have to do is visit the official website of these insurers and locate the premium calculator. If you visit the website of a third-party aggregator, you will be asked to enter your personal details and smoking habits. Based on the information entered, you will be offered a list of plans from various insurers in the market.

    When it comes to life insurance, term insurance plans are the cheapest ones since there is no maturity benefit involved here. You may also use the premium calculators for calculating the premiums of various endowment policies and ULIPs before choosing your desired plan.

    Can I Cancel My Life Insurance Plan?

    Yes, it is possible to cancel a life insurance plan, subject to certain restrictions. As per IRDA regulations, an individual who has p a policy can return it within the free-look period if he/she does not agree with the specified terms and conditions of the policy. This period typically ranges between 15-30 days, depending on the mode of purchase.

    This can be done by providing reasons for the same. The insurance company is bound to return the premium after deducting the expenses incurred by them while providing the policy. These could include costs associated with the stamp duty, medical check-up, etc.

    Once this period has passed, there are other possibilities when it comes to policy cancellation. In certain cases the policy lapses if premiums are not paid. Alternately, a policyholder can choose to surrender the policy or turn it into a paid-up policy. These options are available only if the policy in question has been in force for a specified minimum period of time.

    If one opts for conversion of the policy into a paid-up policy, the policy will remain, albeit with a reduced sum assured. Such policies are not entitled to earn any bonuses.

    In case of surrender of policy, the insurer will pay a surrender amount to the individual (if the policy has acquired a surrender value). The policy will cease to exist once this amount is paid.

    It is important to consider all possibilities before one decides to cancel a policy, for doing so lifts the protection provided by the plan.

    Reasons Why You Should Not Cancel Your Life Insurance Policy

    Purchasing a life insurance policy is one of the best investment decisions that you can take in your life. Life is unpredictable, and you may never know when something can happen to you which can put your family under severe financial distress. You work to achieve your financial dreams and in the process, you have various financial liabilities to take care of. Purchasing an insurance policy can help you ensure that in case something happens to you, your loved ones do not have to face any financial trauma in your absence.

    However, there are various types of life insurance products that you can purchase for yourself. In order to get benefits from it, it is important that you stay invested in it for a good period of time. Sometimes you may feel that you are not getting anything in return, and might get compelled to cancel your policy. Patience is the name of the game and hence you must be completely sure about the product you are purchasing, and how it will be beneficial for you.

    Sometimes, cancelling your insurance policy means that you may have to pay surrender charges in return and not receive any benefits whatsoever.

    There are various reasons why you should not cancel your life insurance policy. Some of the reasons are:

    • Financial security: The best part of having a life insurance policy is the financial security it provides. In case something happens to you, the nominee appointed by you receives a lump-sum benefit called the death benefit which helps them in taking care of their day-to-day needs. In case you have purchased a whole life insurance policy, and you survive the term, then you also receive a maturity benefit. There are certain plans such as ULIPs and endowment plans where not only you receive protection but they also allow you to invest your money and receive returns based on your appetite for risk. Hence, life insurance provides financial security and thus becomes one of the major reasons for you to not cancel your policy.
    • Protective coverage: The main aim of any insurance policy is to provide you and your family protective coverage. In case something happens to you, you do not have to worry about the future of your loved ones as your insurance policy would compensate them and allow them to take care of their future needs.
    • Takes care of financial liabilities: One of the reasons why you should not cancel your life insurance policy is because of the fact that as long as you are earning money, you will have financial liabilities to take care of. You may take a loan so that you can buy a new house or a car, or may have to take care of your children’s education. In case something happens to you, your family may face problems taking care of their financial needs. Your life insurance policy helps your loved ones take care of these financial liabilities and you can have that peace of mind knowing that even if you are not around in the future, your loved ones would still be able to take care of their needs.
    • Investment options: There are certain products such as ULIPs or endowment plans where you have the option of investing. You are required to stay invested for a good period of time in order to receive decent returns from the plans. These plans have lock-in periods which means that you will have to pay surrender charges in case you decide to cancel the policy before the lock-in period ends. You must be patient when purchasing such types of products and stay invested for a minimum of five years before you start receiving returns. Hence, due to these reasons, you must not cancel your life insurance policy.
    • Premiums become expensive with age: Imagine that you cancel your insurance policy and then decide to purchase another insurance policy. The chances are extremely high that you will have to pay higher premiums as compared to what you might have been paying for the previous policy. Your premiums increase with time and age and hence you must think twice before cancelling your policy.

    Hence, these are some of the major reasons why you should not be cancelling your insurance plan. It is important that you properly research and compare various plans before settling down for the plan which you feel will be suitable for you. You must also take care of a financial advisor so that you are completely sure about the insurance plan, and what you are set to receive so that you do not have to cancel the plan at any given point in time. Patience is the key and you must stay invested in your policy for a considerable period of time before you start receiving its benefits. Purchasing insurance is one of the best investments you can make as you secure the future of your loved ones and you must invest in it for a considerable period of time in order to reap the benefits.

    What are the Do’s and Don’ts When it Comes to Life Insurance?

    Investing in a life insurance plan results in a partnership between the insurer and the insured. Doing justice to both can be hard, but keeping these do’s and don’ts in mind can help one enjoy all benefits to the max.

    Do’s Don’ts
    While buying the policy
    • Provide accurate information
    • Fill all columns
    • Clear all doubts with the insurer. Take help if needed
    • Select the policy term, policy type, premium payment mode, etc.
    • Provide information pertaining to the nominee
    • Do not hide any information. This includes past medical history, current ailments, etc.
    • Sign blank proposal forms
    • Ignore any doubts
    After buying the policy
    • Follow-up with the insurer
    • In case there is no communication from the insurer it is important to write to them about the same
    • Provide any additional documents, if asked by the insurer
    • Check the policy bond and understand all conditions associated with it
    • Wait beyond two weeks to receive communication from the insurer
    • Ignore to read the terms and conditions
    Policy maintenance
    • Pay all premiums on time
    • Ensure payment reaches the insurer
    • Intimate the insurer if there is a change in communication address
    • Miss payments
    • Wait for the insurer to send a notice for missed premiums
    In case of loss of policy
    • Contact the insurer immediately
    • Apply for a duplicate policy
    • Ensure that the duplicate copy has the same rights/features as the original
    • Ignore the loss
    In case of a claim
    • Inform the insurer
    • Provide all documents to the insurer
    • Assist the insurer in the process
    • Wait for a certain period to inform the insurer
    • Provide fake documents

    Impact of GST on Life Insurance

    The Goods and Services Tax has changed the way India does business. Effective from the first of July 2017, it has had an impact on the price of multiple products and services. The insurance industry also falls under the ambit of GST, with several changes implemented by insurers across the country. Purchasing and maintaining an insurance plan has now become costlier, with the table below highlighting the changes post GST implementation.

    Product/Service Old service tax rate New rate post GST implementation
    Term Insurance 15% 18%
    ULIPs 15% 18%
    NB Premium 3.75% 4.50%
    Renewal Premium 1.85% 2.25%
    Premium for Annuity Plans (single premium) 1.50% 1.80%

    In addition to the aforementioned changes, insurers will also charge GST on the interest which is typically charged when premiums are delayed.

    Service tax exemptions which were previously accorded to certain plans/schemes will continue to be effective even after GST, with these provided in the case of the following plans:

    • Pradhan Mantri Jeevan Bima Yojana
    • Pradhan Mantri Jan Dhan Yojana
    • Pradhan Mantri Vaya Vandana Yojana
    • Insurance schemes notified by state governments/central government
    • Aam Aadmi Bima Yojana
    • Janashree Bima Yojana

    How Much Does it Cost to Purchase and Maintain a Life Insurance Plan?

    A study done by the Environmental Protection Agency in the USA estimated the value of each life to be around $9.1 million, or just around Rs.57 crore. This, however, might not be the actual amount each individual is worth, for there are a number of factors which can change this value.

    Similar studies done in the United States have estimated the cost of a life insurance plan for a healthy 30 year old male to be around $150 for a cover of $250,000, with the policy period being 20 years.

    This amount, however, is not universal, for an insurance plan is designed to cater to an individual, with personal traits and habits influencing the premium.

    In India, insurance companies determine the premium for a particular plan based on four main criteria:

    • Age – The lower the age of an individual the cheaper the premium. Each additional year can increase the premium amount. Buying a policy at a younger age can help one enjoy the cover without spending more.
    • Sum assured – The premium amount has a direct correlation to the cover chosen by an individual. The higher the sum assured, the higher the premium.
    • Habits – The personal habits of an individual can either increase or decrease the premium. For example, non-smokers are eligible for discounts which is bound to reduce their costs, whereas those who smoke on a regular basis will end up paying more. Similarly, the nature of one’s job can also have an impact on the premium. Individuals in risky fields will be required to pay more compared to those who work regular jobs.
    • Plan type – The premium for different plans can vary. An individual who wishes to buy a whole-life policy would end up paying a lot more than he/she might have to pay for a limited term policy. Similarly, if one is purchasing a ULIP he/she might pay a differential amount compared to a pure protection plan.

    We can understand how these parameters work by using the example of Mr. Jay.

    Jay, who is currently aged 35 years invests in a term life insurance plan. He chooses a 30 year term and opts for a sum assured of Rs.50 lakh. As a smoker his premium amount comes up to around Rs.14,000 per year. If he were a non-smoker he would have to pay an annual premium of around Rs.8,600 for the same term and sum assured.

    Now, if he had chosen to buy the same policy when he was 25 years old, the annual premium amount would be around Rs.7,500 (if he was a smoker at that age). If he refrained from smoking the premium would be just around Rs.5,000 per year.

    From this, we can see how the lifestyle and age can impact the premium amount.

    Similarly, if he opted for a sum assured of Rs.1 crore the premium would increase.

    The table below highlights how the premium amount varies under different conditions:

    Age Smoker (Y/N) Sum Assured Annual Premium
    25 years Yes Rs.50 lakh Rs.7,500 for male Rs.6,900 for female
    25 years No Rs.50 lakh Rs.5,000 for male Rs.4,800 for female
    40 years Yes Rs.50 lakh Rs.20,500 for male Rs.17,500 for female
    40 years No Rs.50 lakh Rs.13,000 for male Rs.11,000 for female

    The gender of the individual also has a bearing on the sum assured, with females paying a lower amount compared to males.

    Note: The premium amounts mentioned in the example are indicative. Different insurers could charge a different amount.

    Exclusions in a Life Insurance Policy

    A life insurance policy is the best way to protect a family’s financial security following the untimely death of the primary earner. In most cases, the settlement amount offered by a life insurance company will come in handy during various situations such as managing the family’s living expenses, children’s higher education, children’s marriage, etc. However, a life insurance policy may not provide this support to policyholders on all occasions. There are certain general exclusions for which the company is not liable to provide any settlement to policyholders.

    If the policyholder dies due to any of the following reasons, the company has no legal liability to provide any settlement to his/her family:

    • Suicide: This is one of the major exclusions outlined by a life insurer. If the policyholder commits suicide within one year of commencement of the policy, most life insurers in the market do not provide any compensation to the family. In this case, the dependents of policyholders may claim up to 80% of the premium amount paid.
    • Extreme activities: Most life insurers in the market forbid deliberate participation in various extreme activities. This may include adventure sports such as rock climbing, vehicle racing, paragliding, skydiving, combat sports, etc. If the policyholder suffers death due to any of these reasons, the family of the policyholder may not receive any compensation from the company.
    • Man-made disasters: While coverage is offered for deaths arising out of natural calamities, there will be no compensation for deaths resulting from man-made disasters. This may include war, riot, etc.
    • Criminal activities: If the policyholder suffers death due to participation in any criminal activities, there will not be any compensation to the family of the insured person. For instance, if the policyholder drives under the influence of alcohol and dies in a car accident, the company has no legal liability to provide compensation. Similar to this, death due to participation in any unlawful activity is grounds for non-payment.
    • Lifestyle related diseases: If the death of the policyholder arises out of any lifestyle related habits such as smoking and drinking, there will not be any compensation to his/her family. This is one of the main reasons why the policyholder must disclose his/her lifestyle related habits while subscribing to a policy. If an additional premium is paid for this habit, the policyholder’s family is eligible for settlement.
    • Drug abuse/overdose: This is another reason for which there will not be any settlement. Death arising as a result of drug abuse or overdose is not eligible to receive a settlement from the company.
    • Aviation-related loss: Death arising as a result of private airline crash is not covered by most insurers in the market. However, if the commercial airline following a specific schedule suffers a crash, the insured person travelling in it is covered by the insurance company.
    • HIV or sexually transmitted diseases: Death due to general physical ailments are covered by life insurance companies. However, if the death arises as a result of sexually transmitted diseases or HIV, there will not be any coverage offered by the insurer.
    • Maternity-related loss: Most companies in the market do not provide any compensation for losses arising out of maternity or childbirth. You must check with your insurer whether death due to pregnancy-related complications is covered by the policy.

    The list given above provides some of the general exclusions applicable to life insurance policies available in the market. In addition to this, some companies may also put forth some additional exclusions for their policyholders. Before you sign up for a policy, you must carefully read the policy documents to know the list of exclusions that are not covered by your insurer. If you have any specific doubts regarding the exclusions that may be applicable to you, you may contact the insurer directly through their customer service department and check it out. You may also visit the branch office to get detailed information about the exclusions that may be applicable.

    Life Insurance Against Home Loan

    It is a dream for any person including you to own a house of your own. If you are a young professional who as just started out, one of the best ways that you can realise your dream of buying a house for yourself is by availing a home loan. Today it is easy to get a home loan as many lenders offer them at a very affordable rate. However, getting a home loan is a huge financial responsibility, and in case something happens to you, your family would come under huge financial trauma. Hence, it is important to be prepared by purchasing a proper life insurance policy.

    When a lender gives you a home loan, there are certain risks involved from which they seek protection. Hence, the bank that lends you money as a home loan asks for a downpayment of 20% of the total value of the property. The default risk is low if you use your own funds to make the down payment. In case you falter and is unable to pay back the default, the lender can take over the property in order to recover their losses. Repayment of the home loan is a long-term commitment and hence bank do consider your repayment capacity before they offer you a loan. Hence, the payments that you will make on a monthly basis will be made in such a way that the installment is within 50% of the total take-home income. This ensures that you are able to make monthly installments on time and without having to go through any financial problems over a course of your loan term.

    One of the best insurance products that you can use to protect yourself against loans is by availing a term insurance plan for yourself. The reason term insurance is recommended since it is cheap and the benefits offered are multiple times higher as compared to the benefits given by other life insurance products. In case of your untimely death, the nominee receives a lump-sum amount called the death benefit which can help in paying off the loan amount. Thus, it is always recommended that the sum assured chosen by you should be high so that not only does it cover the loan amount but also helps in taking care of the other day to day needs of your family. You must also ensure that your policy term is higher than your loan repayment term.

    Various life insurance companies in India sell a type of cover called the loan protector covers. These types of covers help in taking care of the outstanding loans that you may have to repay in case of your untimely death. These type of covers are generally sold as a single premium plan which ultimately takes care of the loan amount in case something happens to you. These type of covers are more expensive as compared to a normal term insurance cover.

    Term insurance covers and loan protector cover are two different products which help in taking care of the outstanding loan amount in their own manner. However, it is important to know the difference between the two types of cover and how they provide coverage against home loan.

    Term insurance cover Loan protector cover
    This can be purchased either as a single premium cover or an annual premium cover. This can be purchased as a single cover for a specific period of time depending on the duration of your home loan.
    This is a pure insurance cover which provides a lump-sum amount called the death benefit in case of your death. This type of cover only pays the loan amount in case of your untimely death. Nobody is paid any additional compensation.
    The benefit remains unchanged throughout the term The benefit continues to deplete as the loan amount gets covered over a period of time.
    The benefit is only paid in case of your untimely death. This type of benefit is payable against your death or if you suffer from any form of permanent disability.
    This type of cover remains active throughout the policy term as long as you are paying your premiums. This type of cover ceases to exist once the loan is paid completely.
    Your nominee will receive the benefits even if you die naturally. This type of cover is payable only if you die due to an accident or due to some form of critical illness.
    This type of cover ceases to exist at the end of the chosen term. This type of cover also ceases to exist at the end of the chosen term.

    If you are the sole earning member in your family and have availed a home loan, it is your duty to ensure that your family members are well protected from the burden of liabilities related to your home loan. Today various insurance company offers loan protection cover, as well as many lenders who offer the same in order to protect their investments. However, it is suggested that purchasing a term insurance plan is the best way to go forward as not only does it provides benefit in case of your untimely death so that the financial liabilities can be taken care of, but also allows your loved ones to take care of their day to day needs even in your permanent absence. However, in order for this to happen, your sum assured should be more than your outstanding loan amount.

    Life Insurance For Senior Citizens

    Most financial experts advise people to take life insurance as early as possible. When you purchase a life insurance policy at a young age, you can get access to high-value coverage at an affordable price. While the same cannot be said for senior citizens, there are still plenty of options available for them to get life insurance coverage. It is safe to say that life insurance is important for senior citizens who wish to take care of themselves financially without being dependent on anyone.

    Reasons why senior citizens need life insurance

    By the time of their retirement, most people would have already taken care of their future requirements through various investments. However, in certain cases, they might still have some obligations to meet and dependents to provide for. To take care of these responsibilities, senior citizens may require a life insurance policy even at an older age. Some of the major reasons why they would require life insurance can be listed as follows:

    • Loans and debts: There are many cases of people having outstanding debts even at the time of their retirement. If they wish to prevent their families from this burden, they may need a life insurance plan as protection.
    • Dependents: Even at an older age, people may still have dependents in the form of spouse, children, or grandchildren. In this case, it is a good idea to carry on with the life insurance coverage.
    • Medical expenses: In their old age, most people are prone to different kinds of health ailments. If they don’t have a comprehensive health insurance plan, they may end up spending money from their savings. A life insurance plan with good maturity proceeds may come in handy in such a situation.
    • Living expenses: Even after retirement, people need a regular income source to maintain their lifestyle. The regular payouts from annuity plans can be used to take care of one’s living expenses. With a proper life insurance cover, people can receive maturity benefits and take care of their day-to-day living expenses.

    Types of life insurance plans available for senior citizens

    In most cases, pension plans or annuity plans are suitable for the specific requirements of senior citizens in the country. However, other types of life insurance covers including term plans and whole-life plans are also suitable for them. Let’s take a look at the different types of life insurance products best suitable for senior citizens in India.

    • Pensions plans: If you feel that your retirement corpus may not be sufficient for your requirements, you may invest in pension plans to get regular payouts from your policies. There are different variants of pension plans available in the market and policyholders are free to choose the frequency of receiving payment.
    • Whole life insurance: This is something that provides coverage for a person throughout his/her life (maximum age of 100 years). Since there is no specific period for coverage, policyholders can meet the minimum requirement of premium payment and get coverage till the specified sum assured amount. Following the death of the policyholder, the maturity amount along with the bonuses will be paid to the family of the insured person. This is an effective plan if you wish to leave behind a specific corpus for your dependent family members.
    • Term insurance: It is best to purchase term insurance plans at a young age. However, senior citizens may also take term plans for any of the above-mentioned reasons. Most of the term insurance plans in the market have a maximum entry age of 65 years. If you get this cover at your old age, the policy term may be limited to a maximum of 10 years. Also, the premium for term insurance tends to be extremely high as your age increases.

    In addition to the plans listed here, senior citizens may also consider investing in other types of plans like money-back policies. Based on their risk appetite, senior citizens may also choose unit-linked insurance plans to maximise their investments. Most of the top insurance companies in the market have plans designed specifically for senior citizens. The country’s largest life insurance provider, LIC, also offers many plans designed for senior citizens in the country. Based on the benefits offered under these plans, you may pick the best plan suitable for your specific requirements.

    Life Insurance For Women in India

    Life insurance is essential for everyone irrespective of their age, income, or gender. Despite this, life insurance penetration in India is considerably lower among women compared to that of men. This situation is even worse among homemakers in various households. Women who subscribe to health insurance plans are mostly working women. However, life insurance is essential for homemakers as well. Some financial planners are of the opinion that people don’t need life insurance if they don’t earn. However, this is far from the truth. Women play a crucial role in the financial planning of a family irrespective of whether they earn or not. Hence, life insurance coverage is vital for all women.

    For insurance companies, women occupy a large chunk of their target market. This is the main reason why insurers have developed policies exclusively for women. Women can avail any kind of life insurance plans including term plans, endowment policies, ULIPs, pension plans, child plans, etc. Before we take a look at some of the top plans available for women, let’s understand why life insurance is essential for women in India.

    Why is life insurance essential for women?

    The following reasons paint a clear picture of why life insurance is essential for women in the country:

    • Financial security of family: There are also many cases of women being the primary earners of their families. In these cases, the loss of the primary earner will have adverse consequences on the finances of the family. To ensure the financial security of the family, women must have a life insurance cover that meets their specific requirements.
    • Dependent family members: Women have dependents in the form of spouse, children, and parents. If they want to ensure the financial security of these dependents, they must subscribe to a life insurance plan that offers comprehensive coverage. Women can also plan a corpus for the higher education or marriage of their children.
    • Retirement saving: Working women have to plan their retirement and their finances accordingly. Life insurance is one of the top investment opportunities available for them. Women can invest in pension plans to get regular payouts even after their retirement.
    • Protection against critical illness: The cost of managing critical illness is extremely high in India considering the skyrocketing medical expenses. A critical illness cover can be taken by women along with a life insurance plan. Some insurers in the market also offer critical illness policies specifically designed for women.

    Life insurance policies available for women

    Some of the top women-specific life insurance covers offered by insurers in India can be listed as follows:

    • LIC’s e-term plan: LIC’s e-term plan is available for both men and women in the country. Working women can also subscribe to this policy and get coverage. This plan is ideal for women who have dependents to take care even when they are no longer around. Unlike most other LIC policies, this policy can be bought online easily.
    • HDFC Life Smart Woman Plan: As the name implies, this is a plan designed exclusively for women in India. This policy is similar to any other unit-linked plan in terms of the investment potential. It comes with flexible options for women based on the variants they choose. One of the highlights of this policy is that it waives premiums for three years in case of life-altering events such as childbirth, malignant cancer, or death of the spouse.
    • SBI Life - Smart Women Advantage: This is a policy that aims to provide a combination of life insurance coverage, savings, and critical illness coverage under a single plan. This policy also comes with in-built premium waiver during life-altering events. This policy comes in two different options - gold and platinum - based on the level of coverage chosen.

    In addition to the ones listed here, women can also access life insurance through the array of plans offered by various insurers. The number of policies designed exclusively for women is limited in the market. However, women can subscribe to any of the regular policies available for both men and women.

    Life Insurance For Smokers

    Smoking is a terrible habit that results in various health hazards. Nevertheless, smokers deserve to have life insurance coverage just like any other individual. For an insurance company, smokers represent a considerable risk. Smokers are prone to various health risks, and the risk of premature death is extremely high among smokers. Life insurance companies don’t deny insurance for smokers unless they already have a life-threatening disease. However, insurers charge higher premiums for smokers compared to non-smokers.

    Difference in premium

    For instance, let’s consider LIC’s e-term plan. A 30-year old non-smoker male seeking a cover of Rs.1 crore for a 25-year policy term can purchase this policy for around Rs.13,000 per annum. For the same policy, smokers have to shell out more than Rs.18,000 per annum. This is the major difference in life insurance policies for smokers and non-smokers. The premium here is substantially different, and this is the price that smokers have to pay against the risk that they carry.

    Why is it a bad idea to hide your smoking habit?

    There are people who think that they can hide their smoking habit from the insurer to minimise their insurance costs. The first thing to note here is that lying to your insurer can be constituted as insurance fraud. In such a situation, the insurer has the right to take legal action against the policyholder. Also, if the death of the policyholder occurs as a result of his/her smoking habit, the insurer has the right to deny the claim settlement (provided it was not originally declared by the policyholder). If a claim gets rejected, family members who are financially dependent on this will suffer. Hence, it is not a good idea to hide your smoking habit while applying for a life insurance cover.

    How life insurers define smokers?

    Insurance companies define smokers as anyone who consumes tobacco or tobacco-related products. Even those who take only chewing tobacco are listed under the smoker’s category when they buy insurance. At the time of signing up, a questionnaire asking for the details of your smoking habit will be presented to you. Based on the answers you provide, the company will determine the premium amount for your insurance plan. It is worth noting that an insurer typically does not distinguish between frequent smokers and occasional smokers. Hence, even if you smoke once in a while, you may still have to pay higher premiums in order to prevent any future issues in claim settlement.

    General guidelines on life insurance for smokers

    Some of the general guidelines on life insurance for smokers are listed as follows:

    • Anyone over the age of 18 years can avail life insurance coverage.
    • Life insurance for smokers can be availed till the maximum age of 75 years.
    • The sum assured amount may vary from Rs.3 lakh to Rs.50 lakh.
    • Policy term for smokers may vary from 5 years to 30 years depending upon one’s requirements.
    • Premium for these policies must be paid every year.
    • Only those residing in India can take life insurance coverage.

    Medical examination

    Medical examination condition for life insurance varies from one insurer to another. It is mostly based on the age of the applicant. When you are applying for a cover at a young age, most companies do not require any medical examination. However, if you are over 45 years of age, you may have to undergo the medical tests prescribed by the company.

    If you are a smoker who wants to avail life insurance, you may have to research the market for the plans that are suitable for you. There are also many cases where people quit smoking in the middle of their policy term. If you quit smoking at any point of time, you can contact your insurer and ask the company to revise the premium rates. It is essential that you quit smoking for at least six months to one year in order to be considered for a premium revision.

    Life Insurance for Business Owners

    Some people are of the opinion that life insurance is beneficial only for salaried professionals who earn a fixed income every month. However, this is far from the truth. Life insurance is a must for everyone irrespective of their age, income, or profession. Life insurance is extremely important for business owners who have a lot more at stake than their own families. Business owners typically have a responsibility towards their employees and partners in addition to their families. Hence, it is crucial for a business owner to have a comprehensive life insurance coverage that takes care of their own families as well as other liabilities.

    The good news is that most of the top insurers in the market provide life insurance for self-employed professionals. The terms and conditions of coverage and the cost of insurance remains the same for both salaried as well as self-employed professionals. However, the procedure for signing up for a policy may differ as the income proofs are different for salaried people and self-employed people.

    Why business people should have life insurance

    The needs of self-employed, business people are just the same as those of salaried people. They have dependents to provide for and liabilities to manage. Life insurance can help them achieve this. Let’s take a look at the key reasons why business owners should have life insurance coverage.

    • Providing for dependents: Both small and large business owners have to provide for their dependents and secure their future. Life insurance provides the best opportunity to do that. Business owners can purchase any kind of life insurance based on their affordability and ensure the financial security of their dependents.
    • Emergency savings: Life insurance comes in many forms. Endowment plans are savings oriented plans that can provide returns upon maturity. By investing a small amount of their monthly income, business owners can build a large corpus for their emergency savings. This can also help them achieve specific goals with regard to their expenses. There are also money-back life insurance plans that provide periodic returns before the end of the actual maturity date.
    • Covering liabilities: Business owners typically have a lot of liabilities with regard to their businesses. In the case of their unfortunate death, the burden of responsibility falls on the shoulders of their family members. If they wish to avoid this situation, they must subscribe to a term plan that provides a huge compensation against the death of the insured. There are also loan protector riders offered by some life insurers in the market. These riders come in handy if anything untoward happens to the insured person.
    • Planning for retirement: Most earning professionals think about their retirement only at the later stages of their lives. However, it is a good practice to start this investment during one’s mid-thirties. Most of the top life insurers in the country offer retirement as well as pension plans for their customers. Business owners can plan for their retirement by investing in one of these plans. In the case of the death of the policyholder before the retirement age, the sum assured mentioned in the policy document will be provided to his/her dependents. This will be a great investment plan for business owners to take care of their post-retirement needs.
    • Financial discipline: Business owners often have the issue of unsteady income flow. Unlike salaried professionals, their income is not fixed every month. If they wish to practice financial discipline, they must invest in a life insurance plan that offers security. By investing in a flexible life cover, business owners can protect their interests and secure the future financial requirements of their families.
    • Tax relief: Tax is one of the major things that most business owners worry about. Life insurance policies provide them with one of the best possible ways to get tax relief. By investing their earnings in a life insurance scheme, business owners can get tax relief from the government. Also, it is important to note that all the proceeds from a life cover are exempt from income tax. By investing in endowment plans or ULIPs, business owners can get easy tax relief for their hard-earned money.

    How business owners can purchase a life cover

    The procedure for purchasing a life insurance cover remains pretty much the same for both business owners as well as salaried professionals. However, the documentation process is likely to differ a lot. If you are not sure about the documents required, you may get help from the customer service department of the insurer. Self-employed professionals may have to submit the following documents to obtain coverage from life insurers:

    • Identity proof (PAN, Passport, Aadhar, Driving License, Voter ID, etc.)
    • Address proof (Ration Card, Passport, Aadhar, Driving License, etc.)
    • Age proof
    • Business address proof
    • Income tax returns (for about three years)
    • Bank statements (for about three to six months)
    • Audit reports
    • Partnership agreement (if applicable)
    • Loan repayment proofs (if applicable)

    These documents must be submitted along with the application form. The company will verify these documents before providing coverage to the individual.

    Conclusion

    Life insurance comes with many benefits for both salaried personnel as well as business professionals. Considering the responsibilities that business owners have towards their families as well as businesses, life insurance is an absolute must for them. With proper financial planning, business owners can get the most out of a life insurance cover and secure the lives of their dependents.

    Life Insurance Policies for Entrepreneurs

    Despite its many rewards, entrepreneurship also brings with it a number of risks. Setting up your own business or expanding the business could translate into high initial costs, and many entrepreneurs usually take loans and debts to pay for such business needs. Many first-time entrepreneurs also pool in all the available money into their business without keeping a portion of their savings aside to ensure the financial well-being of their dependents in case something unfortunate were to happen to them.

    Thus, it becomes all the more important for entrepreneurs to purchase a life insurance policy in order to ensure that an untimely eventuality does not cause additional stress and hassle to one’s dependents and business partners. A life insurance policy will ensure that your dependents have the necessary finances to pay off any loans that you might have taken and will also help them set aside sufficient finances that will enable them to pay for their own immediate and long-term financial expenses. Read on to know more about some of the types of life insurance products that an entrepreneur can purchase and why it is necessary for entrepreneurs to always have a life cover.

    Types of Life Insurance Products an Entrepreneur Should Consider Purchasing

    • Life Insurance for Self: All entrepreneurs should ensure that they have a life insurance policy at all times. You can opt for a term insurance policy, unit-linked insurance plan, endowment policy, money-back policy, whole life policy, or annuity policy, based on what your financial goals and coverage needs are. Regardless of the type of life insurance policy that you purchase, it is vital to opt for a sufficient sum assured that will help your dependents tide over any financial hassles that might arise.
    • Keyman Insurance: If you are a business owner, you should also consider purchasing keyman insurance policies for all individuals who hold key positions in the company such as the CEO, project manager, stakeholders, etc. The untimely passing away of a key employee/stakeholder can cause significant losses to the company. Thus, it is necessary for a business owner to purchase a keyman insurance policy for employees holding important positions in the company.
    • Group Life Insurance: A group life insurance policy offers similar life insurance benefits to all enrolled members under a master life insurance policy. In this case, the employer/business owner will be the master policyholder and the life cover is provided to all the enrolled members. Under a group life insurance policy, if an enrolled member happens to pass away during the policy term, a death benefit payout will be provided to the concerned employee’s nominee. Providing a group life insurance cover to your employees is a smart way to retain your employees and attract new talent into the company.

    Why Should Entrepreneurs Purchase Life Insurance?

    • Fluctuating Income: One of the primary risks of entrepreneurship is unstable income. An entrepreneur who is just setting up his/her business, in most cases, cannot expect to get a fixed amount of money on a monthly basis, unlike a salaried employee. This can cause the individual to dip into his/her savings to pay for business needs and one’s own personal expenses. Thus, it becomes all the more necessary for entrepreneurs to purchase a life insurance policy since it will ensure that one’s dependents can lead a financially secure life even if something unfortunate were to happen to them.
    • Loans: It is not uncommon for entrepreneurs to take loans to set up their business or expand their business. In such a case, if the business owner passes away, the life insurance company will provide a payout to the nominee. This payout, in turn, can be used by the nominee to pay off any outstanding loans and dues.
    • Cover Against Financial Strains Caused Due to Loss of a Key Employee: Key members of the organisation such as the director of the company, CEO, stakeholders, etc., can bring value to the business. The loss of such an individual can have a financial impact on the business. For this reason, it is a must to purchase keyman insurance policies for certain employees in your organisation who hold important positions. Thus, if an individual who is covered under a keyman insurance policy passes away, the insurance company will pay the sum assured to the company. This sum of money will protect the business from the effects of any resulting losses and will also help the business owner hire a new senior executive.

    Purchasing a life insurance policy is a smart way to provide financial security to the people who count on you. However, before you purchase any life insurance policy, make sure to do your research, compare various policies, assess your coverage needs, and purchase a policy that provides the required coverage at a cost-effective premium rate. When purchasing a life insurance policy for yourself, you should also consider purchasing riders or add-ons to increase the coverage offered by the policy.

    Life Insurance For NRIs

    One of the general requirements for getting life insurance in India is that the applicant must be an Indian citizen. However, there might be situations in which an Indian citizen temporarily residing in a foreign country might need life insurance. Also, an existing life insurance policyholder may have to move to another country for work or education purposes. The good news is that life insurance companies provide coverage under both circumstances. As per the guidelines formulated by the IRDAI, a Non-Resident Indian (NRI) living in another country may also avail coverage from Indian life insurers.

    IRDAI’s rules about life insurance for NRIs

    Some of the general guidelines about issuing life insurance for NRIs are listed as follows:

    • At the time of issuance, a person must be a citizen of India. If a person has relinquished Indian citizenship, he/she is not eligible for coverage by Indian life insurance companies.
    • He/she can either be residing in India or living in a foreign country. If the person is living abroad, he/she must have a valid Indian passport.
    • If an applicant is planning to move abroad in the near future, it must be disclosed to the company at the time of application.
    • Once a life insurance policy is issued, it is valid across the world. So, if the insured dies unexpectedly while on a foreign trip, the family is still eligible to receive compensation from the company.
    • Indian citizens already living in foreign countries may also apply for life insurance from LIC and other India-based life insurance companies.
    • NRIs must satisfy certain specific conditions set for them before receiving coverage. For instance, the minimum sum assured requirement for NRIs is Rs.2 lakh under LIC. A maximum sum insured limit may also be set for NRIs.
    • If a policyholder is planning on giving up Indian citizenship altogether, the insurer must be notified.
    • The premium for NRIs remains the same as that of resident Indian citizens unless there are additional risks involved with regard to the country of relocation.

    Payment of premiums

    NRIs can choose either Indian currency or foreign currency for the payment of premiums. Existing policyholders who have moved abroad may continue to pay the premiums in Indian currency through their family members in India. If there are no family members living in India, policyholders also have the option of using their NRO or NRE accounts for the payment of premiums in Indian rupees. On the other hand, NRIs can pay the premiums in foreign currency through their online accounts. If the premium is paid in Indian rupees, the proceeds generated from a policy shall not be repatriated. However, if the premium is paid in foreign currency, all the proceeds from the policy shall be repatriated by the company. This applies to both death and maturity benefits.

    Term plans and maturity plans available for NRIs

    Both term plans and maturity plans offer global coverage for policyholders. In term plans, compensation will be issued to the family even if the policyholder dies in a foreign country. In case of maturity plans, the maturity amount will be paid to the policyholder even if he/she is living in another country. Since the life coverage is available even after moving to a foreign country, it is advisable to keep the policy active following relocation. On the other hand, if the policyholder is thinking of giving up Indian citizenship altogether, it is better to check with the company regarding the terms of the cover.

    NRI Centre

    Since it may not be possible for NRIs to visit the branch office of the insurer, some companies like LIC operate a dedicated help center for NRIs. This department focuses exclusively on providing service to customers living in foreign countries. If you are an NRI having trouble with the payment of premiums or any other service issues, you may contact the NRI Centre and air your grievances. This help center will assist you if there are any issues in accessing your policy.

    How Do Insurers Compute the Premium for Life Insurance Plans?

    Insurers compute the premium for a life insurance plan by analysing the probability of a payout on death. The higher the probability of a payout, the higher the premium amount will be. It is for this reason that individuals with an unhealthy lifestyle are charged a higher premium compared to those who look after their health.

    In addition to the factors which are used to determine the premium, insurance companies also charge money under the following categories:

    • Rider premium – This is the amount a policyholder is expected to pay to avail a rider. This sum varies based on the rider chosen, and is closely linked to the premium for the main policy.
    • Administration fee – Almost all insurers levy an administration fee for providing the policy. This could be a certain percentage of the premium amount a policyholder pays. Alternately, a few insurers have a fixed fee for their services.
    • Premium allocation fee – Associated with ULIPs, this charge is levied before the insurer invests the premium into units. A certain percentage of the premium is deducted for this. The units allotted are adjusted accordingly.
    • Fund management charge – This amount is charged by the insurer for managing the fund of a policyholder. This is computed on the basis of the assets under management and can range between 1 and 1.5% of the investment.
    • Fund switching fee – Policyholders have to option to switch between funds when they choose a ULIP. Insurers accommodate this transfer but charge a fee for the same. This amount differs for different insurers and can range between Rs.100 to Rs.500.
    • Mortality charge – This is an amount charged for offering death benefits to the insured.

    Note that the charges mentioned above could vary based on the type of policy chosen by an individual. It is advisable to check these charges before purchasing the policy.

    How Can You Save on Life Insurance Premium?

    A life insurance plan can be an expensive proposition, especially when one opts for it at a later stage in life. Paying a sum regularly can be draining on one’s finances. While there are no alternatives when it comes to paying the amount, insurers do offer discounts in certain cases.

    • High sum assured rebate – Almost all insurance companies provide a rebate for high sum assured. The higher the sum assured the higher the rebate. This rebate is offered primarily due to the reason that an increase in the sum assured results in reduced servicing costs associated with each unit of this amount, helping the insurer earn more profit.
    • Online payment rebate – Paying the premium online reduces the physical paperwork, helping a company save money. Certain insurers provide incentives for online payment, saving effort when it comes to physical collection of cash.
    • Rebates on premium payment frequency – Individuals who choose to consolidate their premium payments are likely to receive a rebate on the sum they pay. This is on account of reduced costs associated with processing the premium. For example, the insurance company will have limited processing costs for an individual who pays the policy annually when compared to someone who pays the premium each month. One can also choose to pay a single premium and get a higher rebate.
    • Pay premium on time – Delaying a premium payment can result in the policy getting lapsed. Reinstating/renewing such policies comes at a cost, for insurance companies charge an interest on the premium amount. Paying the premium on time can help one avoid this additional expense.

    Note: The rebate offered can vary and is at the discretion of the insurer.

    Payment of Life Insurance Premium Online

    Paying the premium for a life insurance plan is no longer a hassle, for insurers provide an option to pay this amount online. Almost all insurance companies in India are equipped to handle online payments, with a few even providing incentives to pay the sum virtually.

    Doing this is advantageous not only to the insurer, but also helps the policyholder save time and effort. Typically, this is a five-step process, which takes no more than a few minutes.

    1. Log on to the official website of the insurance company from whom the policy was purchased.
    2. Navigate to the online premium payment section and enter the policy number.
    3. Mention personal details like the date of birth, name, or contact number (as applicable) for identification.
    4. Choose the mode of payment. Insurers accept online payment via credit cards, debit cards, net banking, or online wallets.
    5. Confirm amount and complete payment. Once done, a message is sent out confirming the same.

    How to Revive a Lapsed Life Insurance Policy

    It is crucial that you pay the premiums towards your life insurance policy on a regular basis, as per your premium payment mode, to keep your policy from lapsing. However, if your policy has lapsed due to non-payment of premiums, most insurers will give you the option of reviving the policy. Thus, here are a few things you should keep in mind before reviving a lapsed insurance policy:

    • Time since lapse: Insurance companies usually specify the number of years within which you can revive your lapsed policy. Thus, make sure to check your policy brochure or contact your insurer’s customer service team to find out if your lapsed policy can still be revived. In general, insurers give a two-year period to policyholders to revive their policy. This revival period may vary based on the plan and the insurer.
    • Payment of due premiums with interest: If your policy can be revived, you will have to pay all unpaid premiums, from the date of the first unpaid premium, with the applicable interest to the insurer. Thus, at this stage, you will have to visit the policy-servicing branch or contact the insurer’s customer service team for the revival quote. Certain insurers will also levy a penalty charge, which you will have to pay at the time of reviving your policy.
    • Submitting a certificate of good health: If you have been uninsured for a certain period of time, your insurer might require you to submit a certificate of good health or might even want you to undergo a medical screening. Post this, you can submit this medical report to your insurer.

    It is advisable to revive your lapsed policy at the earliest since reviving it will help you avail the policy benefits as per schedule, as opposed to purchasing a fresh insurance policy and waiting for a longer period of time to receive the due benefits. Further, since the policy was purchased at an earlier date, the premium payable is likely to be lesser than that of a new insurance policy.

    Contestability Period in Life Insurance

    In life insurance, the contestability period refers to the period during which the company may investigate your claims. In most cases, the contestability period of a life insurance policy is about two years. This means that the insurance company has the right to investigate your claims and deny it if necessary (upon deduction of any fraud) within this period. However, it is worth noting that the insurer cannot deny your claim without any valid reasons. If there are any misrepresentations or fraud, the insurer is most likely to find about it during this contestability period and reject the claim.

    Grounds for rejection

    Life insurance exists based on the mutual trust between the insurer and the insured. If this trust is breached at any point, the coverage will not be deemed valid by the insurer. During the first two years of the policy, the insurer is likely to have strict investigative norms to prevent fraud against the company. Even if there is no claim, the insurer may verify the policy details and check if there are any misrepresentations. In case of fraud, the insurer will reject the coverage provided to the policyholder and initiate legal actions. Hence, it is always better to provide valid details while signing up for a policy.

    An insurer may reject a policy or claim due to the following reasons:

    • Misrepresentation of age: The cost of life insurance gets higher as people age. Any fraudulent attempt to get lower premiums through misrepresentation of age is grounds for legal action. If the documents are forged while signing up for the policy, it will add to the criminal offense of the policyholder.
    • Misrepresentation of smoking/drinking habit: Since the premiums are significantly cheaper for people who don’t smoke or drink, people might sometimes be tempted to hide these habits from the insurer. However, this is another case of fraud that is liable for legal action. If the claim from a non-smoker is related to a disease caused by smoking or if the insurance investigator later finds out about this deliberate misrepresentation, the claim is liable for rejection by the company.
    • Pre-existing conditions: If the applicant suffers from any major pre-existing condition, it must be disclosed to the company at the time of subscribing to a life insurance cover. Sometimes policyholders might hide their health issues from the insurer since there are no pre-insurance medical examinations till a certain age. If the company finds out about this during the contestability period, the policy will be cancelled.
    • Hazardous job profile: For an insurer, the level of risk increases based on the hazardous nature of the policyholder’s job. Hence, many life and health insurance companies consider this as a factor while determining the premium for an individual. Any misrepresentation about the job profile may also constitute a fraud. While investing a policy during this contestability period, the insurer will also look for claims originating from the hazardous nature of the policyholder’s job.
    • Drug abuse: Every insurer expects policyholders to be free of any instances of drug abuse. If an applicant happens to be a former drug abuser, it must be disclosed to the company at the time of signing up. In this case, the insurer might ask for additional medical check-ups to determine the health condition of the applicant. If this is not disclosed, the insurer has the right to contest the validity of the policy or claim.

    These are some of the major reasons for which claims could be rejected by the company. In life insurance policies, misrepresentation refers to deliberate attempts at defrauding the insurer. Unintentional typos in the name and address of the policyholder cannot be considered as misrepresentation. However, it is always better to fix these errors in a policy document if you ever come across such instances.

    Death claims during the contestability period

    If a policyholder dies during the contestability period, the company may investigate the validity of the claim based on the above-mentioned factors. If any fraud or misrepresentation is established during this investigation, the company has the right to reject the claim. Even the simple details people furnish at the time of applying for a policy are crucial when it comes to settlement of claims during the contestability period.

    In case of death claims arising immediately after taking the policy, the insurer may get suspicious and investigate the reason for death. The contestability period is established mainly to discourage fraudulent buyers who take life insurance with the sole purpose of defrauding the company. Just because a company investigates a claim does not mean that it is going to get rejected. If all the necessary details are properly furnished, there is no reason for a policyholder to worry about the contestability period.

    How it differs from the suicide clause

    All major life insurance companies in the market have an exclusion regarding the suicide of the policyholder. In most cases, the insurer has no obligation to provide any compensation if the policyholder commits suicide within 12 months from the date of inception of the policy. While the suicide clause is an exclusion, contestability primarily deals with the inaccurate information provided by the policyholder. Also, the suicide clause is limited to non-payment of the claim amount to the beneficiary whereas contestability deals with insurance fraud and criminal liabilities.

    Ways to avoid claim rejection

    Life insurance is all about protecting the family of the insured from financial troubles. There is nothing scarier than one’s claims getting rejected when the entire family is dependent on this compensation. If you wish to avoid claim rejection or policy cancellation during the contestability period, the best thing you can do is to make sure that there are no misrepresentations in your policy. Even if you come across an error after receiving the policy, you must contact the insurer immediately and update it with the correct details. If you have done everything right with regard to the information provided in your policy, you have nothing to worry about from the insurer investigating your policy during the contestability period.

    Difference Between Individual Life Insurance and Group Life Insurance

    An individual life insurance is something that you can take on your own after careful research of existing plans in the market. Here, you are at liberty to choose the sum assured amount, policy term, rider covers, etc. Alternatively, group life insurance is something that is typically offered by employers to their employees. While the coverage is offered for free, employees cannot choose the type of coverage they can obtain. Both types of policies come with their own set of pros and cons. Some of the key differences between individual life insurance coverage and group life insurance coverage are listed as follows:

    Individual life insurance Group life insurance
    Individuals can choose the coverage amount (sum assured) based on the premium they can afford. Employees cannot choose the coverage amount on their own. Employers decide the coverage amount suitable for their employees.
    The coverage can be enhanced with the help of riders or add-on policies. Employees are not free to choose rider policies.
    The insurance contract exists between the individual and the insurance company. The insurance contract exists between the employer and the insurance company.
    This policy remains active as long as the premiums are paid regularly. It can be cancelled only by the individual. The insurance company has the right to cancel the group life insurance policy, if deemed necessary.
    This can be ported to other insurance companies in the market. This cannot be ported to other insurers.
    For people over a certain age, the company may require medical examination before offering the coverage. No medical examination is necessary for group life insurance irrespective of the age of the members.
    The premium increases based on various factors such as age, location, smoking habits, health condition, etc. The premium charges are set by insurance companies based on contract negotiations with the employers. Typically, it is based on the average age of all employees in the company.
    Individuals can choose the policy term based on their own requirement and affordability. The coverage terminates when the employee leaves the job due to resignation or other reasons.
    The policy will be issued individually in the name of the insured. One single policy will be issued to the employer. The policy document must contain the names of all employees associated with the company.
    Most term plans allow unlimited coverage where the insured person can choose any sum assured he/she wants. The sum assured is based on the employer’s affordability. In most cases, it will be 1 to 3 times the employee’s yearly salary.

    Group coverage has a lot of advantages for employees of an organisation. However, it is always much safer to have an individual life insurance cover even if you are enrolled in a group insurance plan. Since the individual life cover terminates once you are no longer in a job, it is not a good idea to rely on it when you are in your middle or old age. For instance, if you quit your job at 40 years of age and start a business, you may have to opt for an individual life insurance cover after that. The premium charges will be much higher when you enter a policy at 40 years of age compared to 25 years of age.

    Employer-sponsored life insurance plans can be used as supplementary coverage in addition to your existing coverage. However, it is not a good idea to rely on them exclusively. If you wish to enter a term insurance plan, it is cost-effective to enter at a young age when the premiums are cheaper. Also, with individual life insurance, you can customise your policy based on your specific needs and get access to comprehensive life insurance coverage.

    Are there any Differences between Life Insurance and General Insurance?

    Yes, there are a few key differences between life insurance and general insurance. Before we highlight these, it is important to understand what general insurance exactly means. General insurance is typically defined as any contract which does not cover the life of the individual. It is a non-life policy which can be used to protect any material belonging of an individual. Health insurance also falls under general insurance.

    The table below highlights the major differences between Life Insurance and General Insurance:

    Parameter Life Insurance General Insurance
    Definition A contract under which the life of the person is covered/protected A contract which does not cover the life of the person. Eg: Fire insurance, car insurance, home insurance, etc.
    Duration Typically long-term (there is an option for short-term cover as well) Short-term in almost all cases
    Premium Typically paid over the premium payment term –spread over the years Typically paid as a single amount at the start of the policy
    Purpose Serves as an investment cum savings option Serves as protection against loss/damage
    Insurable interest criteria The insured individual should be present (alive) while the contract is being drafted. The person/object being insured needs to be present when the contract is being drafted as well as when the loss occurs.
    Savings component Present No scope for savings
    Insured amount An individual can choose the amount he/she wishes to be insured for The insured amount is determined based on the actual value of the loss/liability

    While both these products might have differences, it is a smart option to buy a good insurance plan. Staying covered can offset liabilities and help one get the most out of their belongings.

    Online Vs Offline Policies: Which one is Better?

    Following the emergence of e-commerce, various financial products are now being sold online by companies in India. Online sales enabled companies to serve a wider population without setting up sales offices in every location across the country. Instead, these companies can set up offices in select locations and major cities to provide customer service. Despite this advancement in e-commerce, there are many companies that still sell offline insurance plans that can be bought only by visiting a branch office.

    India’s largest life insurance company, Life Insurance Corporation of India (LIC) still sells most of its plans offline. However, more and more private insurance firms have now started offering online plans to cater to the needs of their customers. Some of the top private companies in the market including ICICI Prudential, HDFC Life, Max Life, Bajaj Allianz, Reliance, etc., offer plenty of online plans for their customers. There are plenty of benefits when it comes to choosing online life insurance plans. These benefits can be listed as follows:

    • Cheap price: Since there are no intermediaries involved in buying online life insurance, the cost of these plans is much lower than offline plans. A percentage of the premiums you pay will be paid to agents or brokers as commissions. In online plans, the amount saved in this way is typically passed on to customers. Hence, it is possible to save a significant amount when you opt for online plans.
    • Easy comparison: When you buy online, you can compare the features and benefits of various plans in the market before making an informed decision. There are hundreds of insurance policies available in the market, and it may not be possible to gather information about these plans while enquiring with an agent. Online plans allow people to compare policies easily and pick the right one based on their specific requirements.
    • Choosing the right policy: Most people compare plans based on the premium they can afford. Since you are making informed decisions on your own, there is no chance of getting manipulated by an agent or broker. Though it could take some time to choose the ideal plan, you can rest assured that you are choosing a plan that meets all your expectations.
    • Easy access: Online life insurance plans can be accessed easily by anyone at their own convenience. The policy can be bought anytime after a simple online research. Also, you can avoid the hassles of visiting a company branch and enquiring with an official or agent before buying a life insurance policy.
    • Other factors: When you do your research for choosing a life insurance cover, you also need to consider other factors like the company’s claim settlement ratio, customer feedback, etc. When you research online, you can find this information along with information about various insurance covers. Even if you need feedback about specific online plans, you can access them with your online research.

    Online policies are gaining popularity in the recent days among young customers who find it a hassle to visit a branch office for buying insurance. Since most financial products are now bought online, the number of takers for online insurance plans is increasing in the market. If you are someone who prefers face to face conversation and expert guidance, you can opt for an offline plan by visiting the company directly or contacting an agent. Most agents have expertise in this field and can guide you in the right direction. However, if you wish to do research on your own and choose the best one suitable for your needs, online life insurance plans are the best option available to you.

    Who is a Contingent Beneficiary?

    A policyholder can choose a beneficiary who will receive the assured amount in case of his/her death. This individual is termed the primary beneficiary. However, there could be certain cases where the primary beneficiary passes away along with the insured individual. This is where the need for a contingent beneficiary arises.

    A contingent beneficiary is an individual who will receive the sum assured if the primary beneficiary passes away. He/she is the second-in-line with respect to the amount. A policyholder can choose a contingent beneficiary at the time of purchasing the policy.

    It is possible to choose more than 1 contingent beneficiary, dividing the amount proportionally between all said beneficiaries.

    A contingent beneficiary needn’t be a person, for one can choose a trust/charity/organisation as the beneficiary.

    What is the Procedure to File a Life Insurance Claim?

    Filing a life insurance claim is a simple process. The need for a claim can arise in two circumstances, namely on death of insured or on maturity of the policy.

    1. On demise of life assured – It is imperative to initiate the claims process in order to avail the benefits provided by a policy. This can be done by following a few simple steps:
      • Intimate the insurance provider immediately after the policyholder’s death. Intimation could be done by either the nominee, a relative, or the agent from whom the policy was purchased.
      • Fill and submit the claim form. This form can be downloaded from the official website of the insurer/could be availed by contacting them for the same.
      • Provide relevant details pertaining to the policyholder and the policy. These include the policy documents, the death certificate, assignment/reassignment deeds (if applicable), details of the nominee, discharge form, etc.
      • Select the mode of payment.

      An insurer can ask for additional details in certain cases. These could include a request for the certificate from the hospital, a medical certificate, a letter from the employer, etc.

    2. On maturity – In cases where a policy offers a maturity benefit it is important to submit a claim for the same. This can be done by following a few basic steps:
      • Each insurer informs the policyholder before the policy maturity date. A discharge voucher is provided to the insured.
      • This discharge voucher needs to be signed by the policyholder. Before signing, one should check and confirm the maturity amount which is being offered.
      • The signed discharge voucher needs to be sent to the insurer. In addition to this, the original policy document should also be submitted.

      The insurer will pay the amount to the policyholder once the policy matures. In cases where the policy is assigned to a third person or an organisation, the amount will be paid directly to said assignee.

    Life insurance Frequently Asked Questions (FAQs):

    1. How do I choose the best life insurance plan?

      Choosing the right insurance plan boils down to a few simple points. The first step involves determining your individual needs. Ask yourself how much cover you need, the duration you wish to be protected for, the returns on an investment, etc. Once these questions are answered you can choose the type of plan which suits your needs. If you are looking for income post retirement choose a pension plan, if you wish to protect yourself against all odds choose a whole life plan.

      Once the kind of plan is selected it is important to compare the different options available in the market. Select an insurance company with a good track record. The IRDA provides information pertaining to how all insurers in the country have performed. Check the claim settlement ratio, the assets under management, the grievances solved ratio, the network a particular insurer offers, etc. Select an insurer who you think will be the right partner.

      Choosing the best insurance plan takes time and research. In case of doubts it is always a good idea to consult experts who can guide you.

    2. Why do term insurance plans offer higher life coverage compared to other types of life insurance plans?

      Insurance plans can be customised according to the need of an individual. As such, it is possible to choose a high cover under any plan option. The major difference lies with respect to the premium. While it is possible to opt for a high sum assured under other plans as well, the premium for such sum assured is much higher than the premium for the same sum assured under a term insurance plan.

      The main reason for this is the fact that a term insurance plan does not offer additional features which other plans come equipped with. For example, most such policies do not provide a loan option. Similarly, these plans do not meet any financial needs while the insured is alive. Most plans do not even offer a maturity benefit if the policyholder survives until the end of the term.

      Given these facts, insurers have to price term insurance plans lower in order to generate interest and increase sales.

    3. Is it safe to buy a life insurance plan online?

      Yes, it is absolutely safe to buy an insurance plan online. However, one should always double check the website from where the policy is being purchased. There are no risks involved when the plan is purchased from the official website of the insurer. There are a few websites which have been given permission by the IRDA to sell insurance plans. In case one is using such websites it is mandatory to check the IRDAI web aggregator licence before deciding to pay for it online.

      Never buy a policy from websites which are not authorised to sell insurance plans.

    4. When does my cover begin?

      The cover under a life insurance plan begins from the Effective Date. This is typically mentioned in the policy document. The effective date can vary from insurer to insurer, with the cover beginning after the premium has been paid in most instances. In certain cases the cover begins only after the policyholder accepts the policy .

    5. Are there any tax benefits offered on life insurance plans?

      Yes, life insurance plans not only provide financial assistance in case of any unfortunate event, they also help one save money on tax. Under Section 80C of the Income Tax Act, one can avail a tax deduction on the premium amount paid by them towards maintaining a life insurance plan. This benefit is also applicable if an individual pays the premium for his/her spouse or child. Both individuals and Hindu Undivided Families are eligible to enjoy tax benefits or tax rebates under this section.

      The maximum permitted deduction under Section 80C is Rs.1.5 lakh. This amount is decided by the government and can change yearly.

      Similarly Section 10 (10)D of the same act provides a provision for tax benefits on the amount received at death of the policyholder, or maturity/surrender of the policy. The amount received does not attract tax, subject to certain conditions. The Income Tax Department will levy a tax if the premium amount exceeds the limits specified by them.

      It is a smart option to consult a tax consultant or a tax advisor to utilise all the tax benefits provided by a life insurance plan.

    6. How do I choose the tenure and sum assured for my life insurance plan?

      The tenure and sum assured should be chosen after looking at your current life stage and link this to future expectations. Individuals who might encounter expenses in the future should opt for a high sum assured, ensuring that inflation is accounted for. Similarly, those who have opted for pension plans should ensure that the amount chosen is sufficient to help them continue with their existing lifestyle.

      There is no ‘one size fits all’ rule under life insurance. It is imperative to assess future requirements while choosing the sum assured. Similarly, the term should be long enough to cover any eventuality. There is no harm in choosing a longer term. On the other hand, if a short term is chosen, the benefits received might not match the expectations, especially in case of a term plan.

      While selecting the term and sum assured it is suggested that you visualise the future and base the decision on this.

    7. What are premiums?

      The premium is the amount each policyholder is expected to pay in order to enjoy the benefits provided by the policy. One can view it as the investment amount. The sum assured is determined on the basis of the premium, with it possible to increase this sum by increasing the premium amount.

    8. Can I pay the premium for my policy in instalments or am I expected to pay a single amount?

      The premium payment depends on the type of policy one purchases. While certain policies like annuity plans require the premium to be paid as a single amount up front, other plans offer flexibility in terms of premium payment.

      One can choose to pay the premium either annually, semi-annually, quarterly, or monthly, if the plan provides this option. Certain plans permit only annual payment of premium whereas others provide different alternatives, offering more flexibility to the policyholder.

      In cases where one chooses to pay the premium at regular intervals, the entire premium amount is split into the number of terms for which it is expected to be paid. One should check all the premium payment options before deciding to purchase the policy.

    9. What is a ‘bonus’ in life insurance?

      Certain life insurance plans mention the term ‘bonus’ in their brochures. A bonus is nothing but an additional amount which the insurer pays over and above the sum assured. This is similar to bonuses in other products.

      The bonus is the profit made by the insurer, with this profit shared among policyholders. The bonus amount is determined by the insurance company and might vary from year to year. Insurance companies are not obligated to offer a bonus, with this decision depending on the Board of Directors.

    10. How do I know if my insurance plan is eligible for a bonus?

      Not all life insurance plans are eligible for a bonus. One can check whether their policy qualifies to partake in the profit by going through the product brochure. Policies which fall under the ‘with-profit/participating’ category are entitled to receive a bonus if the company makes a profit. On the other hand, policies which fall under ‘non-participatory/without-profit’ are not eligible for bonuses.

      One should check whether their policy qualifies for a bonus before they buy the policy.

    11. What are the different kinds of bonuses provided by life insurance companies?

      There are three major categories of bonuses offered by insurance companies, with these being Terminal Bonuses, Interim Bonuses, and Reversionary Bonuses. Reversionary bonuses are further classified into simple reversionary bonuses and compound reversionary bonuses.

    12. What is the difference between terminal, interim, and reversionary bonus?

      A terminal bonus is provided only when the policy terminates, i.e., either on maturity of the policy or on the death of the insured. This is a one-time bonus.

      A reversionary bonus is a bonus component which is added at regular intervals. This can be yearly or after completion of a few years.

      An interim bonus is provided if the policy terminates before the completion of a financial year. Other bonuses are declared keeping the financial year into account, but this one provides a solution in cases where the financial year is not completed.

    13. What are the differences between a participating and nonparticipating policy?

      The primary difference between a participating and nonparticipating policy is that a participating policy partakes in the profits of the insurer whereas a non-participating policy does not partake in any of the profits. In simple words, a participating policy can qualify for bonuses whereas a non-participating policy will not earn any additional bonus.

    14. How do insurance companies compute the bonus amount?

      The sum assured is used to determine the bonus a policy is eligible for. Most insurers offer a bonus per Rs.1,000 sum assured (or any other fixed value). The bonus is a fixed amount per the selected unit.

      For example, if the company decides to give a bonus of Rs.30 per Rs.1,000 sum assured, the total bonus for a sum assured equivalent to Rs.10 lakh becomes Rs.30,000. If the period is 10 years, the overall bonus amount becomes Rs.3 lakh, subject to the same bonus being offered each year.

    15. What are riders and how can I buy them?

      A basic life insurance plan might not be sufficient to meet all the requirements of an individual. Instead of purchasing a new policy, one can buy a rider instead. A rider is nothing but an add-on which offers certain additional features and benefits, thereby enhancing the policy.

      You can buy a rider by contacting the insurance provider and paying the amount for the rider. There is also an option to buy a rider at the time of purchasing the policy.

    16. My policy mentions a free-look period. What exactly does this mean?

      There are numerous instances of individuals purchasing a policy and then realising that it doesn’t meet their requirements. Returning such policies is an option provided by IRDAI. This return is possible only within a specified period of time, termed the free-look period. A policyholder can return the policy to the insurer within this timeframe, subject to certain terms and conditions. The insurer will refund the premium after deducting their administration charges.

    17. What happens if I cancel my policy during the free-look period?

      If you choose to cancel your policy within the free-look period the insurance company will refund the premium amount paid by you. They will deduct all expenses borne by them to complete the formalities associated with issuing the policy and then cancelling it.

    18. What happens if the premiums are not paid during the grace period?

      If one fails to pay the premium amount within the grace period the policy either lapses or turns into a paid-up policy. The benefits and protection accorded by the policy automatically change in such circumstances.

      The policy will continue to be active during the grace period. It is therefore important to pay all dues before the grace period ends.

    19. What is the surrender value of a life insurance plan?

      There could be instances where a policyholder does not wish to continue with the policy. He/she can choose to surrender it under favourable circumstances. If the policy has been active for a specified period of time it is eligible to receive the surrender value.

      This is nothing but the amount paid by the insurer to the policyholder if he/she terminates (surrenders) the policy before its maturity date.

    20. How do insurance companies calculate the surrender value of an insurance plan?

      Companies compute the surrender value after taking the original term of the policy, the premium amount, and the period for which the premium was paid into account. Typically, premiums for a minimum of three years should be paid in order for a policy to be eligible for a surrender value.

      There are two types of surrender values, the guaranteed surrender value and the special surrender value.

      The guaranteed surrender value (GSV) is a certain percentage of the premium amount paid during the term of the policy. The premium for the first year is excluded while computing this sum. A certain percentage of the premium amount is paid to the policyholder as the guaranteed surrender value. For example, an insurer provides GSV of 30% of the premium. An individual who pays Rs.50,000 per year for a period of three years would be entitled to a GSV of:

      (1,50,000 – 50,000) x 30/100

      =Rs.30,000

      The special surrender value (SSV) is computed by taking the surrender value factor into account. This factor is a certain percentage of the paid-up value acquired by the policy. This factor increases with each active policy year.

      In essence, the longer the policy was active the higher the surrender value will be.

    21. My policy states something called assignment. What exactly does this mean?

      Assignment refers to the process of transferring the ownership of a life insurance plan to someone else. All rights associated with the policy would move on to the new owner. The assignor is the individual who chooses to transfer all rights, with the assignee being the individual to whom such rights are transferred.

      For example, an individual who avails a loan against a policy could be expected to assign the policy to the bank/lender. If the assignor were to pass away during the policy term the sum assured would be paid to the bank/lender.

    22. What are the important points I should consider before buying a life insurance plan?

      Purchasing a life insurance plan isn’t like other regular purchases we make. It can be extremely useful in the future, having the power to financially support our loved ones. As such, it is imperative to thoroughly assess one’s needs, research for the right product, determine the cover amount, calculate the effect of the regular premium payment on our budget and then take a step.

      Also, one must ensure that they don’t over-insure themselves, for an exorbitant cover essentially boils down to a high premium, which could strain the finances of the person. It is better to choose a sum assured which is affordable rather than choosing a high sum assured and miss payments, for this could result in the policy getting lapsed, thereby making the policy pretty much useless.

    23. I have been asked to undergo a medical test before I can purchase the policy. What medical reports should I submit to avail a life insurance plan?

      A medical report is required only in certain instances. In this case you will be expected to undergo tests specified by the insurer. A full medical test might include a physical exam which checks the height, weight, pulse, and blood pressure of the applicant. In addition to this other tests might be conducted to check the cholesterol, sugar levels, blood count, etc. A urine sample might also be taken.

      Insurers do these tests to check the functioning of vital organs, which can help them analyse the individual’s health.

      In certain cases one might also be asked to undergo a HIV Test to rule out the possibility of HIV. Additionally, one will have to provide all past medical reports, history of family illnesses, etc.

    24. Can I avail a loan through my life insurance plan?

      Yes, it is possible to avail a loan through a life insurance plan. However, not all policy types come with the feature of a loan. For instance, a loan cannot be availed against a term insurance plan.

      The policy brochure typically indicates whether the policy comes with a provision for loan.

    25. How can I determine if the agent who is selling the life insurance plan to me is authorised?

      The IRDAI has made it mandatory for all insurance agents to be registered. Check whether the agent has a licence issued by IRDAI. The licence should state that the said individual is eligible to sell a life insurance plan. There are different licences granted for different insurance products, with a separate licence given to general insurance agents. In certain cases a composite licence is given to an agent, enabling him/her to sell both life insurance and general insurance.

      Using references from friends/family members who have purchased a life insurance plan through agents can help alleviate any fear of a fake agent. Always question the agent and check his/her knowledge about the product before committing to a policy.

    26. My insurance agent has asked me to pay the premium amount directly to him. Is it safe to do so?

      Not all agents are authorised to collect premiums on behalf of the insurer. Before paying the sum to the agent, first verify his/her credentials. He/she must be authorised by the insurer to collect premiums. Ask for such authorisation. If all checks out you can pay the premium but make sure to collect a signed receipt for the same.

    27. Is it better to buy a life insurance plan through an agent or should I buy it online?

      Gone are the days when one depended on an insurance agent to buy the policy. Today, it is possible to buy a policy online, avoiding all middlemen. Choosing to buy a life insurance plan online is quicker and transparent, giving one the flexibility to complete the task at one’s own speed.

      Additionally, online purchases are safe even if the policy is purchased through an intermediary. There are no risks of the insurance agent absconding in case of online purchases.

      People used to rely on insurance agents to give them an overview of the product, but it is now possible to connect and chat with online representatives who can provide the same information.

      Additionally, one can also get a better rate on the premium if the policy is purchased online.

      Given these features it is a better option to buy a life insurance plan online.

    28. How does an insurance company ascertain individual risks before they sell a policy?

      Insurance companies use an algorithm which predicts the chance of a payout for each policy they sell. The higher this percentage, the higher the premiums are going to be. The risk is computed by taking factors like the applicant’s age, medical history, current lifestyle, work environment, etc. into consideration. They might also take factors like the average lifespan in a particular region, health issues faced by residents of a particular city, chances of infections leading to death, etc. into account.

    29. How often will I have to pay the premium amount?

      This depends on the type of policy chosen. Certain policies require only a single premium to be paid at the start. Others give an option to pay the premium at regular intervals. The premium amount should be paid for the complete duration of the premium payment term. This term might or might not be equal to the policy term. Most insurers provide an option to pay the premium at regular frequencies, which can be chosen by the policyholder. The available options include paying either yearly, every six months, every three months, or every month.

    30. Can I make changes to my insurance plan?

      Yes, it is possible to make a few changes to your insurance plans. These rights are laid down by the IRDAI. The changes which are permitted include:

      Changing the premium payment mode

      Changing the policy term

      Changing the sum assured (only an increase in this amount is possible)

      Switching between funds

      Redirecting the premium

      Any other change requests can be denied by the insurer. It is important to read the terms and conditions of the policy to comprehend the changes which are permissible under it.

    31. What is meant by premium redirection?

      Premium redirection is a concept which is primarily used in ULIPs. This is the process of redirecting/realigning the premium wherein one can tell the insurer to invest future premiums in specific funds. The current funds are not modified in this case.

      This can be understood through the example of Mr. Jay who has invested in a ULIP wherein his premium is split between equity and debt funds in a 50:50 ratio. Now, Mr. Jay senses a new investment opportunity wherein he feels that cash funds will offer better returns. As such he asks his insurer to redirect the future premium into cash funds. This ensures that all future premiums are invested into cash funds, with no changes made to the existing investments.

    32. What is a graded premium life insurance plan?

      There could be instances where an individual wishes for a higher cover but is not in a position to afford the premiums. A graded life insurance plan can come handy during such situations. A graded policy is one where the premium amount increases at regular intervals, stopping at pre-set limit. This enables an individual to avail the benefit of a high cover without having to exhaust all resources initially.

      It is a smart option for those who foresee an increase in their income, enabling them to afford a higher premium after a few years.

    33. Do life insurance plans cover only natural death or do they also cover death by accidents/illnesses?

      The cover provided by a life insurance plan can vary from case to case. Most of them cover death due to natural causes as well as accidents. Individuals can choose to add riders to a base policy in case it doesn’t cover death due to certain reasons.

    34. How important are proposals and all the disclosures that are made in them?

      Proposal forms are extremely important in life insurance plans, with insurance companies using them to gauge the eligibility of an individual. The proposal form is similar to KYC documents which banks and other establishments require. The applicant is expected to fill this form truthfully, providing all the information needed.

      Typical information requirements relate to the name of the individual, his/her income, lifestyle habits (smoking, drinking, etc.), history of personal illnesses, history of family illnesses, current medical condition, fitness levels, age, height, weight, etc.

      The information submitted here is used by underwriters to determine the premium amount. Any false information submitted in the proposal form could be grounds for rejecting a claim in the future. It is therefore critical to be honest and open while filling it.

      Insurers also use the information provided to gauge the premium payment capacity of the applicant. The final decision on whether the applicant qualifies for an insurance plan is determined on the basis of what is mentioned in the proposal.

    35. What are the formalities involved when submitting a maturity claim?

      A maturity claim is easy to file. Most insurers inform the insured/policyholder before the maturity date of the policy. This intimation is typically provided a few weeks before the actual maturity date, with companies also informing them about the maturity amount they are entitled to. In addition to this, the insurer will also send a discharge voucher to the policyholder.

      This discharge voucher needs to be signed and submitted to the insurer. Additionally, the original policy bond should also be sent over. On verification of the policy and the signature the insurance company will settle the amount on the date of maturity.

      A few insurers also ask policyholders to choose how they wish to receive the maturity amount. One is expected to furnish this information so that the amount is transferred accordingly.

    36. What are settlement options?

      Insurance companies provide options when it comes to payment of the sum assured. These options can vary from policy to policy and insurer to insurer but can be typically categorised into five types:

      Lump sum payment – Under this option the entire amount is paid as a single lump sum. No further amount will be paid after this. Nominees/beneficiaries who have immediate financial responsibilities after the demise of the policyholder can choose this settlement option.

      Fixed period – Under this amount the sum assured plus any interest accrued is paid at fixed intervals for a specified period of time. The entire amount is paid during this period.

      Fixed amount – This option involves the payment of a fixed sum of money at periodic intervals. The sum is paid until the entire amount is paid to the beneficiary.

      Lifetime income – Under this option a beneficiary can choose to receive a certain portion of the accumulated amount for the entire duration of his/her life. Insurance companies typically purchase a pension/annuity plan with the death benefit, with this policy in turn paying the amount.

      Interest only – Under this option a beneficiary can choose to receive only the interest at intervals chosen by him/her. The principal amount can be withdrawn as per his/her needs.

    37. How do I get the tax policy statement?

      Insurance companies are expected to file taxes based on their income and expenditure. As such they are also required to be transparent when it comes to their taxes. Most insurers send out a tax policy statement to policyholders after the completion of a financial year. This report contains everything associated with the taxes paid by them. This statement can be used by an individual to compute his/her own tax (in certain cases).

    38. Why does the premium increase with age?

      This is primary because the older one is the higher the chances of his/her death. This increases the chance of a payout from the insurer. While it might not be the case in all occasions, it is riskier to insure an older individual compared to a younger one. With insurance companies looking at the probability of a payout in each case, they are prone to charge a higher premium with an increase in this probability.

    39. What are the documents my nominee should furnish in case of my death during the policy term?

      In case the policyholder passes away during the policy term, the nominee can submit a death claim by submitting the following documents:

      Duly filled claim form which is signed by the nominee. The date, cause, and place of death need to be mentioned in this form

      Death certificate of the insured

      Original policy document

      Legal proof showing that he/she is the legal heir (in cases where the nominee hasn’t been mentioned)

      Discharge form

      Any assignment/re-assignment documents associated with the policy

      Certificate from the hospital

      Certificate from the employer (in certain cases)

      Copy of police report (if applicable)

      An insurance company can ask for additional documents if required.

    40. Can I find a policy that pays me money during the policy term?

      Yes, it is possible to find life insurance plans which pay money during the policy term. The money is paid as survival benefit, with the payment beginning after the premium payment term. A certain percentage of the maturity sum assured is paid at regular intervals until the policy matures.

      A number of Money Back policies come with this option. Individuals looking for such benefits should discuss the same with the insurance provider/agent in order to find a policy which pays them money during the policy term.

    41. Is it better to buy a life insurance plan at a young age?

      Yes, it is a better option to buy a life insurance plan at a young age. Premiums are cheaper when the policyholder is young. Insurance companies increase the premium amount with the age of the applicant. Additionally, they can also offer rebates on the premium amount in certain cases.

      A young policyholder can enjoy a high cover at affordable rates. Opting for a high cover when one gets older results in premiums which are considerably higher.

    42. Can I get a life insurance plan through my company?

      Most companies provide insurance to their employees. The insurance is purchased in the form of group plans. Employees who wish to avail an individual policy could get in touch with the group insurance provider and buy a new one.

      Most group insurance plans provide limited cover and should not be the only source of insurance for an individual.

    43. Can I buy an insurance plan for my parents?

      Yes, it is possible to buy a life insurance plan for your parents. Choosing to insure your parents can be a good option, ensuring that they needn’t rely on anyone if one of them passes away. Insurance companies provide options wherein an individual can cover two people in a single policy, making these ideal to insure one’s parents.

    44. Is it possible for senior citizens to buy life insurance?

      Yes, it is possible for senior citizens to buy life insurance plans in India. A number of insurance companies offer products designed for senior citizens. While it might be hard to buy a term plan, one can choose to invest in an annuity/whole-life policy.

      One major disadvantage of purchasing a policy at an old age is that the premiums are typically higher.

    45. Will my family have to pay tax on any life insurance payout?

      The amount received as payout under a life insurance plan is exempt from tax under Section 10(10D) of the Income Tax Act of 1961. While the death benefit is completely tax-free, there are certain exceptions when it comes to maturity benefit.

      In case of policies issued from 01/04/2003 onwards the benefit is exempted only if the premium for such policies is less than 20% of the sum assured. This limit is reduced to 10% for policies issued from 01/14/2012 onwards.

      The sum assured which is exempt from tax does not include the premiums which have been returned to the individual. This also does not include any bonus which exceeds the actual sum assured.

      It is advisable to consult a tax consultant or tax advisor to utilise all the provisions provided by the government.

    46. How long does it take for a policy to build cash value?

      The cash value is nothing but the money paid by the insurer if the policyholder cancels the policy. It is typically associated with whole life insurance plans. It normally takes anywhere between 12 to 20 years for the cash value to build up, depending on the premium amount paid and the policy type chosen.

    47. Who is the claimant with regards to a life insurance plan?

      The individual who makes a payment claim to the insurance company is called the claimant. With regards to a maturity claim the claimant is typically the insured/policyholder. In case of a death benefit claim the claimant can be the nominee/legal heir.

    48. What is modified death benefit?

      A modified death benefit is associated with Modified Benefit Life Insurance plans. These policies are not common in India, with them being more prevalent in western countries. Under the concept of modified death benefit, the sum assured is not payable in all cases. If the policyholder dies within two years of purchasing the policy the insurer will pay only the premiums plus an additional amount.

      The complete death benefit will be paid only if the policyholder dies after a specified minimum period. This is typically three years after the policy is purchased.

    49. Will the insurer pay the beneficiaries if the insured dies in an accident which was caused due to him/her being intoxicated/drunk?

      Yes, insurers will pay the death benefit if the insured dies in an accident which was a result of him/her driving under the influence of alcohol. However, it is possible for insurance companies to contest such claims if the policyholder had not mentioned the fact that he/she used to drink while purchasing the policy.

      Most life insurance plans have only one exclusion – suicide. If the policy mentions accidents caused due to drunk driving as an exclusion no benefit will be paid.

    50. Can life insurance payments be released to beneficiaries without going to probate?

      Yes, if the insured has specified a beneficiary in his/her policy. Probate is a possibility if no beneficiary was chosen/if the beneficiary passes away before the policyholder’s demise (with no other beneficiary selected by the policyholder).

    51. What is a premium quote? Is it necessary to request for a quote before investing in an insurance plan?

      A premium quote is an estimate of how much you will have to pay as premium for a life insurance plan. Before you purchase a life insurance plan, it is necessary to request for premium quotes from various insurers, either on the insurer’s official website or through third-party websites. This will help you compare between the premium rates offered by various insurers, and can thus help you choose a plan with competitive rates.

    52. Are there life insurance plan options available for children?

      Yes, you can purchase a Child Insurance Plan for you children. A child insurance plan can help you financially plan for significant milestones in your child’s future, thereby enabling you to secure his/her future. A child insurance plan is a smart way to build your savings and accumulate wealth for any needs that your child may have in the future.

    53. Should I invest in a Pension/Retirement Plan or a ULIP at the age of 40 years?

      Investing in a pension/retirement/annuity plan is a smart way to secure your post-retirement years as you will be guaranteed a fixed source of income. A ULIP or a Unit Linked Insurance Plan, on the other hand, offers policyholders the combined benefits of a protection cum investment option. However, with a ULIP, the policyholder will have to bear the risk. It is important to note that some insurers also provide retirement/annuity/pensions plans that are unit linked.

      Before you purchase any insurance plan, ensure that you consider your financial goals, needs of your dependents, liabilities/debts, your appetite for risk, etc., and make a decision accordingly.

    54. Are premiums fixed by the IRDAI or do they vary from insurer to insurer?

      Insurance premiums usually vary from insurer to insurer. Insurers consider factors like the sum assured, age at entry, policy tenure, risk undertaken, etc. when deciding a premium. Life insurance premiums are not directly fixed by the Insurance Regulatory and Development Authority of India (IRDAI).

    55. Will I receive any discount if I purchase my insurance plan online?

      Certain insurers may offer you a discount if you purchase an insurance policy online. However, insurers are not bound to provide this discount, and the percentage of discount may also vary from insurer to insurer. Having said that, purchasing an insurance plan online is both hassle-free and time-efficient.

    56. On what basis is the premium amount calculated?

      Your premium amount is based on the amount of risk that the insurer undertakes by selling you the policy. Thus, insurance providers calculate the payable premium on the basis of factors, such as your age at the time of purchasing the policy, the sum assured, riders opted for, policy tenure, premium payment term, etc. Make sure to request for a premium quote and compare premiums offered by various insurers before purchasing any insurance plan.

    57. What does a life insurance policy not cover?

      Most life insurance policies come with a suicide clause. Thus, if the insured individual commits suicide within a certain period of purchasing the policy, no death benefit will be paid to the nominee. Instead, the insurer may return a portion of the premiums paid during the policy tenure to the nominee. For a detailed list of exclusions, make sure to read your policy brochure.

    58. Can I increase my sum assured?

      Most insurers give policyholders the option of increasing the sum assured amount at the time of renewing their policy. However, this feature might vary based on your insurer’s terms and conditions. Thus, make sure to contact your insurance advisor or read through your policy brochure for more information.

    59. What is the duration of the grace period and can it be extended?

      For most life insurance policies, the grace period is fixed between 15 – 30 days. Thus, if you don’t pay your premiums within the end of the grace period, the policy might lapse. There is no option to extend the pre-defined grace period.

    60. Will my term insurance plan cover death that occurs abroad?

      Yes, a term insurance plan will cover death that occurs abroad. However, make sure to inform the insurer before you leave the country. In case you are travelling to a country that has been labelled as high-risk, the benefit payout may get affected.

    61. What is the claim settlement ratio?

      The claim settlement ratio is defined as the overall number of death claims that have been approved by an insurer against the total number of death claims it received. Insurance companies usually report this on an annual basis to the IRDAI (Insurance Regulatory and Development Authority of India) and the same is published on their website and annual report.

    62. I am an NRI. Can I purchase a life insurance policy from an Indian insurance provider?

      Yes, NRIs can purchase insurance policies offered by Indian insurance companies. Purchase of these policies can be done through online modes. However, make sure to compare the features and benefits offered by various plans on a trusted third-party website before you purchase your policy.

    63. I have recently lost my original policy document. What should I do?

      If you have your lost your original policy document, make sure to inform your life insurance provider about it at the earliest. The insurer might issue a duplicate policy to you. In some cases, a fee or penalty might also be charged for issuing you a duplicate policy.

    64. In case my nominee passes away before me, who will receive the death benefit?

      In case the nominee has passed away and no change has been made to the nomination, the death benefit will be paid to one’s legal heir.

    65. Will I get a full premium refund if I cancel my policy before making any claims?

      If you cancel your policy during the free-look period, you will receive most of the premium that you paid, minus a nominal amount. However, if you surrender your policy at any other time during the policy tenure, the insurer will pay you the surrender value of the policy, provided the policy has acquired a cash value.

    66. What is meant by the Grievance Solved Ratio?

      In insurance terms, the Grievance solved Ratio is an important indicator of the company’s post-sales service. This ratio is basically the number of grievances which an insurer has resolved, as against the total number of grievances that have been registered with the insurer in one year, or a specified period. Therefore, if an insurer has received a total of 100 grievances in a year, and has managed to successfully resolve 75 of those, then the Grievance Solved Ratio will be 75:100. Therefore it is safe to say that this ratio is a very crucial indicator of not just the quality of service provided by the insurer, but also its efficiency in terms of grievance redressal, which is an important part of any transaction.

    67. Do term plans have an investment component?

      No, term insurance plans do not have an investment component because they are meant to offer pure risk protection. This is one of the reasons why the premiums for a term insurance plan will always be much cheaper as compared to other types of life insurance plan such as a ULIP which does offer an investment avenue. Because there is no investment component, no part of the premium amount has to be re-directed towards managing your investment. The entire premium is directed only towards providing life cover.

    68. What is a Term Insurance Rider?

      Life insurance policies usually provide cover for a specified term. If you wish to extend the term of your life insurance cover, a term insurance rider can be a helpful option. This rider is basically a top-up which adds to the term of your policy. For instance, if you have a life insurance policy for a term of 20 years, but wish to extend the coverage to 25 years, you can do so by getting a term rider with a term of 5 years. Therefore, if the insured policyholder passes away during the extended term of the plan, the death benefit will be paid.

    69. Which are some of the lesser known riders available with a life insurance policy?

      Besides the usual critical illness rider, accidental death or permanent disability benefit rider, and waiver of premium rider, there are a number of other riders which many policy takers are not aware of. These include the term insurance rider, the Guaranteed Insurability Rider (where initial cover amount can be enhanced without undergoing a medical examination), Spouse Insurance Rider (to cover the spouse of the insured), Major Surgical Assistance Benefit Rider (for financial assistance for a major medical procedure), and the Family Income Benefit Rider.

    70. How can I calculate the premium for my life insurance plan?

      As a policyholder, or a prospective policy buyer, you can easily calculate the cost of premiums that will be charged under your policy by using a simple online tool called an online premium calculator. This tool can be found on many third party websites, and also some insurer websites.  To calculate premiums using this tool, you will typically be asked to provide details like the term of your policy, your age, sum assured you wish to take, premium payment mode, add-on riders 9if any), etc. After these values have been input in the calculator, it will instantly display the result, which will be based on the values which you would have provided.

    71. What are some of the components included in the cost of life insurance premiums?

      While a life insurance provider does take into account factors like the applicant’s age, income level, current health state, medial history, etc. to calculate premiums, there are also some other components which are a part of the premiums charged. The premiums include the cost of various other expenses like the rider premium cost, administration fees, premium allocation fee, fund management charge, fund switching fee (for investment-linked plans), and mortality charges.

    72. Are there any ways I can save on my life insurance premiums?

      There are many ways using which you can make significant save on your life insurance premiums. These include (i) Choosing a high sum assured amount for which most insurers will offer you a modest rebate; (ii) making online premium payments or even purchasing the policy online can help you save significantly on the premiums as the middleman cost is eliminated, as is the paperwork, (iii) If you choose to make premiums payments annually, instead of monthly, you can get a higher rebate as the costs associated with processing premium are reduced. The lower the frequency of making payments, the higher rebate you can get, and (iv) remember to pay your policy premiums on time, to avoid the policy from lapsing, following which you will have to pay reinstatement charges.

    73. Why is it necessary to check the solvency ratio of an insurance company?

      The solvency ratio is defined as the size of the insurance firm’s capital relative to the risk that the insurer has undertaken. In other words, since the solvency ratio is a measure of the insurer’s assets against how much the company owes to various parties, it measures exactly how financially sound the company is and how capable they are to payout claims. Thus, to ensure that your insurer is able to settle your claim, regardless of what may happen in the future, it is necessary that you consider the solvency ratio of a company before purchasing a life insurance plan from them.

    74. How do I decide how much life cover to purchase?

      Before you purchase an insurance plan, make sure to consider the points mentioned below in order to get a better understanding of how much life cover you need to purchase:

      • Current income and liabilities
      • Your current age
      • Inflation
      • Needs of your dependents
      • Financial goals for the future
      • Savings, investments, returns from various avenues
    75. I am a 50-year old individual with a good number of liabilities. Should I opt for a term insurance policy?

      Term insurance policies offer a high sum assured to policy buyers at a comparatively low premium rate. Thus, it is advisable to purchase a term insurance plan if you have a lot of liabilities and debts. However, the premium rate that is offered to you is linked to your age. Thus, at the age of 50, you can expect to pay a high premium rate for a term insurance plan. Before you purchase any insurance plan, you will need to check the various insurance plans that are available in the market, compare the features and benefits of each plan, request for premium quotes, and opt for a policy that offers you a suitable coverage at a competitive premium.

    76. Will I receive a discount if I pay my premium online?

      Insurers usually offer online premium payment options to facilitate or ease the premium payment process for policyholders. For this reason, most insurance providers do not offer a discount to policyholders if they pay their renewal premiums online. However, certain life insurance providers do provide a discount if you purchase the policy and pay the first premium online since it will result in reduced paperwork and eliminate the need for an insurance agent. Make sure to check with your insurance advisor or read through your brochure to know exactly what discounts are offered by your insurer.

    77. What is meant by ‘traditional life insurance plans’?

      Before the introduction of unit-linked insurance plans (ULIPs), insurance providers only offered traditional life insurance plans to policy buyers. Traditional insurance plans include term life plans, whole life plans, and endowment plans. These policies are risk-free, and are, thus, apt for risk-averse policy buyers. Traditional insurance plans provide guaranteed returns in the event of the policyholder’s death or at the completion of the policy tenure.

    78. What is the premium payment term (PPT)?

      The premium payment term refers to a particular period during which time the policyholder must pay the due premium. Thus, the actual PPT may be equal to the policy term or lesser than the policy tenure, in the case of limited premium payment plan. To know the premium payment term of your insurance plan, make sure to read through the policy brochure.

    79. In case the nominee is a minor at the time of the policyholder’s death, whom will the claim amount be paid to?

      If the nominee is a minor at the time of the policyholder’s death, the appointee can make the claim. In case no appointee has been assigned, the death benefit will be paid to the policyholder’s legal heirs.

    80. What should one do in case he/she is dissatisfied with the claims decision communicated by the insurer?

      Most insurance providers have a Claims Review Committee or a Grievance Committee. Thus, if you unhappy with the claims decision, you can inform the insurer’s Claims Committee in writing. Post this, the Committee will review your claim again.

    81. Can an individual with a pre-existing disease purchase a life insurance plan?

      Yes, unless this is listed as an exclusion in the product brochure. In several cases, insurance providers will charge you a higher premium if you have a pre-existing disease at the time of purchasing the policy. Certain insurance providers might exclude the disease or the condition from the policy coverage, even if they do provide you a policy. Thus, make sure to compare various plans available in the market and opt for an insurance policy that provides you coverage despite your pre-existing disease/illness.

     


    Life Insurance Claim Acceptance/Rejection Scenarios

    1. I am a 30-year old unmarried man. I am working as a marketing professional in a private company. I earn Rs.70,000 per month. I am currently supporting my parents with my income. I don’t have any siblings. Apart from the insurance offered by my company, I don’t have any health or life insurance policies. My company offers both and my parents are included in health coverage. Is it necessary for someone like me to get insurance? Since I don’t have any other dependents, is it necessary to opt for high-value coverage?

    2. Health insurance and life insurance is an absolute must for everyone. Since your company offers both, you may explore some options with regard to this. However, employer-provided insurance is very limited and it may not be adequate for you. With that being said, you may get a high-value coverage for health insurance by including your parents. If you get a health insurance plan with a deductible (by choosing your employer-provided sum insured as the deductible), it could be extremely cheaper. You can explore this for health insurance.

      Coming to life insurance, it is much better to have a cover on your own. Term insurance is a must for everyone. Even though you don’t have any dependents now, you might have in the future. At that time, it could be must costlier to enter the policy. This amount may also be helpful in clearing your liabilities and securing the lives of your parents if something happens to you. So, this is the best time for you to enter the term cover. You need to choose the sum assured amount as at least 10 times your yearly salary.

      Apart from term insurance, you may opt for other policies like endowment plans and retirement plans as per your future requirements. Before entering a policy, make sure that you do necessary research about the benefits you can get. Term insurance is a pure insurance cover and it is the cheapest option. It is cheap when you enter young. Hence, check out for term plans first even if you are not considering other insurance covers.

    3. Are there any provisions in life insurance to keep the maturity amount invested and continue to earn interests? My life cover is maturity next month. I don’t have any need to withdraw the amount right now. Can I keep continue to keep this money in the policy without withdrawing? Will the insurer pay earnings on this investment?

    4. There are some policies where you can continue your investment even after the policy tenure and continue to accumulate earnings. This is typically provided with unit-linked investment plans. Your investments will continue to remain active and you can withdraw it whenever you want. This option is known as ‘settlement option’, and it is offered only under select plans. You need to check your policy document to know whether there is such an option under your cover.

      If you are not able to find it out on your own, you may check with your insurer by calling the customer service department. Provide your plan details and check whether you can continue the policy even after the maturity date. If this option is not available in your policy, you may get the maturity proceeds and invest the amount in a different plan. There are plenty of options available when it comes to investing your maturity proceeds. This time you can choose an investment plan that offers the flexibility to withdraw the amount whenever you want.

    5. I am a single parent and I have a car loan that I am paying regularly through EMIs. My daughter is a minor and there are sufficient investments and support structures already in place for her. But is it possible to designate the proceeds of my life insurance towards repayment of the car loan, in case something happens to me, as I don’t want my daughter to bear the burden of repaying the loan?

    6. Yes, it is possible for you to designate your life insurance proceedings towards your loan. You will have to get in touch with your financier and assign the policy to him/her. In case something happens to you, the cover amount will be used directly to clear the outstanding loan amount during that period of time. You will also have to fill an assignment form with the insurance company in order to get the proceedings of your cover amount towards your loan.

      Only the assignee can revoke the assignment. Once, all the loans are cleared, the financier will re-assign the policy to you i.e. the policyholder.

    7. My house in Chennai is insured against natural calamities and I have paid all premiums. I want to add two rooms and a kitchen to the second floor. Will my existing policy suffice? If I need to take a new policy, will I get any benefits for having had this policy for so long?

    8. Your existing policy will cover the additional rooms added by you. However, it is also important that you increase the cover amount but only after the construction has been completed. Standard home insurance covers are applicable only for completed house structures. In case you want to cover a building still under construction, you must purchase a separate policy called Construction All Risk.

      Since there is no waiting period for home loan covers, you will not receive any benefits if you decide to transfer from an old policy to a new policy.

    9. I want to buy a life insurance but can I avail of a loan for it? I got an SMS stating loan facility as an exclusive benefit for a life insurance from a leading insurance company.

    10. No, there is no provision for getting a loan if you want to purchase a life insurance policy for yourself. Even, insurance companies are also not known to offer a loan if you wish to purchase an insurance policy. In fact, a loan is available against surrender value of the life insurance policies. However, this facility is restricted to only certain selected insurance policies. You cannot avail this offer if you have purchased a term insurance plan or an endowment plan for yourself.

    11. Is medical test mandatory while buying life insurance policy? Will my premium increase after I undergo the medical test?

    12. In major cases, it may not be necessary for you to undergo a medical examination. However, if the option is available, it is highly recommended that you do undergo the medical examination for a very simple reason that you or the nominee does not face any problem during the settling of claims. Insurance companies employee their own doctors who conduct a thorough check on you to ensure that you are healthy or not based on which your premium amount is decided. Once you undergo the test, the insurance company has the proof of your health and on no grounds can they deny you the claims. Hence, keeping in mind that your loved ones do not face any claim related problems, make sure to undergo the medical examination. Your premiums will certainly rise if you are found to be suffering from any health-related issue. However, the premium amount can fall if you manage to overcome the health condition. You will have to inform the insurance company about it. Once they conduct a medical examination on you and are satisfied that you do not suffer from any medical condition, the will reduce the premium amount. However, you need to be transparent and honest with the insurance company so as to ensure that there are not claim-related problems in the future.

    13. I purchased a life insurance policy before marriage and it has my maiden name. Now that I am married how can I change the name in the policy document? And how can I change the bank account that I had given for this policy?

    14. Yes, you can easily get your name changed on your policy document. You will have to contact the insurance company which has issued you the policy and inform them regarding the change in your name. The insurance company will then help you with the process of how you can get your name changed on the policy document.

    15. I am a 30-year old businessman who has plenty of savings and other investments. I have invested in mutual funds, real estate, and government bonds. I have also taken a loan for my home to save tax. My son is 2-years old right now. Is it necessary for me to invest in a life insurance cover? I don’t have any kind of life insurance so far. Please clarify whether my savings and investments are adequate for my family.

    16. The primary use of a life insurance cover is to provide protection against uncertainty. Since you are a businessman, you must know about the uncertainty associated with businesses. You may come across a scenario where your business needs extra money. Also, life insurance is mainly for the needs of your dependents. It is always better to have at least a term insurance policy to secure the financial needs of your family. Since you are only 30 years old, you can still buy a high-value cover at an affordable price. Compared to your other investments, this could be meager. However, the high-value protection offered here cannot be compared to any other investments in the market.

      In addition to term insurance covers, you may also explore the options offered by other covers like endowment policies, ULIPs, money-back plans, retirement plans, etc. These plans can be helpful during a time of need. For instance, a money-back plan offers a periodic return of the invested money. This could come in handy during the time of your need. Also, you can use life insurance to plan for specific milestones like building a home, children’s education, children’s marriage, etc. Considering all these factors, life insurance could be extremely beneficial even if you are in a good financial position.

    17. My father died two years back. While doing renovation at my home, I came across a life insurance policy document in his name. There are not many details about the policy value and sum assured. Can I approach the insurance company with this document and seek more information? I am his only son. Can I get the money without any problem even if I was not nominated in the policy?

    18. You can certainly approach the insurance company and seek more details about your policy. If you have the policy number, it will be a quick process to get all the required information. You may even check the details by calling the company’s customer service department.

      Once you have information about the policy details, you can file a claim request with the insurer with the necessary documentation. You need to provide various details like death certificate, medical certificate, legal heir certificate, etc. It is highly likely that your father must have nominated your name or your mother’s name as the beneficiary. Even if there is no nominee information, the legal heir is entitled to receive the settlement amount. If you have all the necessary documents, you will not face any issues in getting the settlement amount.

    19. How much insurance should I buy? I am 28 years old and earning Rs 8 lakh. I am not married and living with my parents. Should I buy now or wait till I am married?

    20. You should purchase a life insurance policy for yourself as soon as possible. As you grow with age, you also have financial dreams that you would like to fulfil for yourself. However, you can never predict what can happen to you in life and you would not want your loved ones to face any sort of financial problems in case of your absence. Also, at the same time, it is always recommended that you purchase a life insurance policy for yourself when you are young as not only you can choose a higher cover amount, the premiums that you will pay will also be cheap and affordable in nature. It is generally recommended that the best insurance product that you can buy for yourself is the term insurance plan. However, you must evaluate your future needs and based on that you should select an insurance policy for yourself. If one of your parents are working then you can most probably select a term insurance plan. However, if you are the sole earning member then you must evaluate your needs not only keeping in mind the needs of your parents but also keeping in mind the needs you will have to fulfil when you will get married and will have kids in future. 28 years is a very good time to purchase a life insurance policy and since you are doing pretty well in your life you are at a very good space to purchase an insurance policy which will provide you with a lot of other benefits keeping in mind your annual salary and the premium which you will be able to pay. You need to properly research and based on your future plans, select an insurance plan accordingly for yourself.

    21. I am a 42-year old man thinking of buying life insurance. The problem is that I have type II diabetes. I have a wife and two children. My children are aged 12 and 10. I don’t have any other loans or liabilities. My financial position is pretty decent and I own the home in which we live. What are my options for life insurance?

    22. It is quite tricky to get life insurance if you are diabetic. Considering your age, your options are very limited for life insurance. Most life insurers in the market may load the premium if you wish to sign up for a life cover. If you have not applied already, make sure that you apply for a lower sum assured amount and smaller term. If you are thinking of securing the financial needs of your children, you may opt for a term cover with a policy term of 10 years. Also, opt for a sum assured amount of Rs.50 lakh. If your application gets turned down by one insurer, it may be a little harder to get it from another one in the market. You may consult with the company directly before submitting a formal application. For the insurance company, the risk is quite high in this case. If you are insulin dependent, this risk gets even higher. So, explore your options in multiple ways before deciding on a specific cover.

    23. I am a 35-year old male working in a private company. I earn about Rs.12 lakh per year. How much coverage will be adequate for me? Also, what are the other things I must consider other than the premium amount?

    24. You can determine the adequate sum assured amount by calculating your family’s future requirements and your current liabilities. Calculate the current expenses of your family and estimate how much they would require for the next 20 or 30 years adjusted for inflation. You must also allocate provisions for your children’s marriage and higher education.

      If you have any liabilities like home loan or personal loan, you must add that to the sum assured your family might require. Once you have calculated everything, you can determine the sum assured amount that could keep your dependents covered for the next 20 to 30 years. As a general rule of thumb, most people take coverage for at least 10 times their annual salary. However, the requirement may differ from one individual to another.

      The premium amount for your life insurance plan will be influenced by the sum assured amount you choose for your policy. When buying a term insurance plan, you may also consider other factors like company’s claims settlement ratio, add-on covers, special discounts, service quality, etc.

    25. Life insurance covers come with a lot of add-on covers or riders. These covers are said to enhance the coverage offered by a life insurance policy. What is the benefit of accidental death and disability rider? Since life insurance already covers accidental death, what is the additional benefit I can get from this rider policy?

    26. If you buy a life insurance cover with the accidental death and disability rider, the death benefit is twice the original sum assured amount of the base cover. In case of accidental death of the insured, the dependents will get the sum assured amount of the base cover and the sum assured amount of the rider policy. This extra money will help the family avoid the financial insecurities associated with the loss of the primary earner. Also, the additional premium paid for the accidental death and disability benefit is negligible compared to the premium paid for the base cover.

      Another added advantage of these policies is that most of these riders also offer disability benefit in case the insured survives the accident. For permanent total disability, the full sum assured amount of the rider policy is paid as a lump sum payout. In case of partial total disability, the insured will get half the sum assured amount chosen under the rider cover. Some of the personal accident covers also have provisions to pay periodic payments in case the insured suffers temporary disability.

      Considering the advantages provided here, it is always better to pay a little extra for the accidental death and disability cover if the rider option is provided along with your base life insurance cover. With this enhanced coverage, you can safeguard the financial interests of your family and provide for them in case of your unexpected demise. You may also check out the other riders offered by your life insurer including critical insurance rider, family income protector, loan protector rider, return of premium rider, waiver of premium rider, etc. With the right mix of rider covers, you can enhance the protection of your base life insurance policy significantly.

    27. I am a 26-year old NRI living in London for the last 6 months. I’ve never had life insurance coverage till date. I don’t plan on settling in London, and I would most likely come back to India in about 5 years. Can I buy life insurance in India while living as an NRI in London? Also, are there any single-premium policies available for life insurance covers? I am worried that I might forget to pay the annual premium when it is due. Please help.

    28. As per the guidelines issued by IRDAI, NRIs can buy life insurance policies in India. They may contact the company directly through email or phone and get more details about the policy. Some companies like LIC even have a dedicated NRI center to provide service to policyholders living abroad. So, buying life insurance in India is not a problem even if you are living in London for the time being. The only condition here is that you must not relinquish your Indian citizenship anytime soon. In your case, that is not a problem.

      Life insurance covers are available as single premium policies as well as regular premium policies. Single premium policies typically require a huge upfront payment for the desired coverage you intend to have. You may opt for it if affordability is not a concern for you. If you are worried only about missing premium payments, you can rest assured that there are easy ways to tackle it. Most insurers allow you to automate premium payment through your NRO or NRE accounts if you are paying the amount in Indian rupees. Also, they send regular reminders at the time of policy renewal to keep you informed. If you are opting for regular premium payment, you need to pay the premium within the grace period to avoid lapsation.

    29. I am a 38-year old working professional who has two children. I have a term insurance cover for Rs.2 crore. My wife and children are already named as nominees in the policy. I have a 32-year old brother who is also a working professional. Can I also include my younger brother as a nominee? Are there provisions to include family members who are not financially dependent on me?

    30. You can include any of your family members as your nominees irrespective of their financial dependency. There are no specific rules that say that a nominee must be financially dependent on you. However, insurance rules state that only your parents, spouse, and children can be nominees. Your brother will not be considered as your legal heir in this scenario. It is, however, possible to include your brother as a non-beneficial nominee through a Will.

      You may have to discuss this with a lawyer while drafting your Will. You also need to consult with your family members to avoid any future hassles. Once your brother is included in the Will, he will receive the benefit as per the Will.

    31. I am a 25-year old working professional who has just started my career. I earn Rs.6 lakh per year. How much life insurance will be adequate for me?

    32. Most industry experts state that your insurance should be at least 10 times your annual income. Going by this rule, you need to have coverage for at least Rs.60 lakhs. Since you are just starting your career, this coverage will take care of your education loan and other liabilities. You may take a higher or lower amount based on other factors such as affordability, liabilities, family dependency, etc. Your insurance requirements may increase as you age. In that case, you may subscribe to additional covers as per your requirements. In addition to term plans, you may also check out other types of insurance covers like endowment plans, retirement plans, child plans, ULIPs, etc.

    33. I travel abroad frequently for work-related purposes. I have a life insurance cover for Rs.5 crore. Will my life insurance policy provide coverage even when I am abroad?

    34. All life insurance covers taken in India have worldwide coverage except under some special circumstances. Even if the policyholder dies abroad, his/her dependents will get compensation from the policy. For all policies taken in India, the compensation amount will be provided only in Indian currency. The dependents of the insured must submit the appropriate documents while making the claim from the insurer for death in a foreign country.

    35. What is a convertible life insurance policy? My agent has given me the advice that a convertible policy will be suitable for me. I am a 28-year old person working for a private company. Can I opt for this?

    36. A convertible policy is basically a term insurance plan that can be converted to an endowment policy based on your future requirements. The insured does not have to go through any medical check-up at the time of conversion. This is a major advantage of this plan. There is no downside in opting for a convertible policy as long as the premium amount remains the same. Paying a higher amount just for the conversion facility is not recommended. Since endowment plans focus mainly on investment, a new cover can be bought at any age.

      Another key thing to be considered here is that the conversion is not mandatory. As long as it remains optional, you can make a decision accordingly. You may go ahead with your agent’s advice but read the policy document carefully and make sure that all the other factors are acceptable to you.

    37. I am a 38-year old software engineer working for a private company. My wife is also a working professional employed in another company. Our combined monthly earning is around Rs.1.20 lakh. We both have term insurance plans for Rs.1.5 crore and Rs.1 crore. We have recently taken a joint loan to buy a resale apartment for around Rs.50 lakh. We have decided not to opt for a loan protector insurance policy on this home loan. In this case, would you recommend buying an additional insurance cover for Rs.50 lakh?

    38. Liabilities are normally taken into consideration while buying term insurance policies. Since you both already have term plans, you may have to consider purchasing another insurance for the outstanding loan. Your term plans take care of your family’s requirements and financial needs in case of an unexpected death. This new loan is not taken into account while opting for that plan.

      In this case, you may opt for a credit life insurance for the outstanding loan amount. One of the features of the credit life insurance is that the insurance premium decreases proportionately as and when you pay off the outstanding loan. Here, you can purchase the policy for the number of years of your outstanding loan payment. When you pay the loan amount every year, the insurance premium decreases along your liability.

      If you are not sure about purchasing a credit life insurance, you may also opt for another term plan for Rs.50 lakh. Check the premium amount you have to pay in both cases and make the decision accordingly.

    39. I am a 40-year old government employee earning Rs.55,000 per month. I have adequate investments in mutual funds and pensions plans for my future needs. I own the home in which I live. I am thinking of taking a plan for my daughter’s higher education. I need to pay for it in another 15 years, and I would like to have around Rs.25 lakh for this. What type of investment will be suitable for me? Also, how much should I invest every year to achieve this goal?

    40. Child plans are specifically designed for this purpose. Almost all the top insurance companies in the market offer child plans focused on children’s education and marriage needs. You can check out these plans and choose the best one suitable for you. One of the unique features of child plans is that the insurer will take care of the premium payment if die unexpectedly during the policy term. Once the maturity period is over, the full sum assured amount will be paid to your daughter. Hence, your investment is protected under this plan.

      For your requirement, you may opt for Rs.25 lakh in sum assured and start paying premiums according to the plan. The investment may vary from one insurer to another. You can use the EMI calculators in the official websites of insurance companies to know the exact amount you have to invest in a child plan.

    41. How do life insurance companies determine the maximum insurance amount one can get? If I already have a life insurance plan, will it affect the application of another cover?

    42. Life insurance companies use various measures to determine the insurability of a person. The annual income of a person is one of the major factors taken into consideration. When you apply for a certain amount, the company will determine your human live value (HLV) before providing you with the coverage. This is a value calculated based on your existing income, expenses, assets, and liabilities. Other factors like age, health condition, occupational risk, smoking habits, etc., are also taken into consideration while determining the insurability of a person. The company’s decision to provide coverage will be based on a combination of these factors.

      If you already have an insurance policy, you are within your rights to apply for a second insurance policy. However, the company will consider your existing policy while determining your HLV. If your application exceeds your HLV, the company may provide you with a lower sum assured option. So, in a nutshell, the sum assured you ask for may not be the sum assured the company will be willing to provide you.

    43. I am a 43-year old software profession earning Rs.65,000 per month. I have invested in various saving plans and mutual funds. I am thinking of buying a term insurance plan for the next 15 years as I plan to retire at the age of around 60 years. The problem is I am a diabetic. Will I get life insurance coverage with this condition? If yes, will it be too costly to afford?

    44. Getting life insurance coverage with diabetes depends mostly on the extent and severity of the disease. For instance, if you are dependent on insulin every day, you may have to pay a significantly higher amount compared to others. If it is diagnosed at a very early stage, it is possible to get coverage with just a little premium. However, if it is severe, the cost of coverage could be a lot higher. Premium loading might be applied based on the present stage of the disease. Insurers typically apply premium loading based on the level of risk. Diabetes may not be a life-threatening condition anymore, but it comes with its own risks.

      You may opt for other options like lower sum assured amount or lower policy term to get coverage at a lower amount. If you are looking for life insurance coverage for 15 years, it is bound to get costly. While diabetes is one factor, other factors like income, age, policy term, sum assured amount chosen, occupational risk, smoking habit, etc., may also be considered while pricing a policy. Get quotes from multiple insurers in the market before choosing the one that you can afford.

    45. Is it possible for me to take life insurance coverage for myself, my spouse, and my child? Are there any joint life insurance options available for us?

    46. Life insurance companies provide coverage for a child immediately after birth. One thing to note here is that the income of a person is taken into consideration while determining the sum assured amount. Hence, you may not get the desired sum assured amount for your spouse and child. Check with the company regarding the coverage available. If your spouse is also an earning member, there will not be an issue in getting life insurance coverage. If protecting the future of your child is your main agenda, you may buy separate coverage for yourself and your spouse and nominate your child as the beneficiary.

      Joint life insurance policies are offered by some of the top insurance companies in the market. Here, you can get coverage for yourself and your spouse under one single policy. There might be some restrictions imposed by the company when you opt for joint life cover. Make sure that you read the policy’s terms and conditions carefully before you purchase a policy.

    47. I am a 22-year old guy who has just started my career. I have dependent parents who need my support. What is the best time for me to buy a life insurance policy?

    48. Life insurance is something that must be bought as early as possible. Since you have dependent parents, you may have to buy life insurance immediately to protect their future needs. When you have spouse and children in the future, your responsibilities are going to increase more. The main reason to buy early is to take advantage of the cost discount. The cost of life insurance is much lower when you buy at a young age, and it remains the same throughout the policy term.

      You can opt for a term insurance plan right away. It is not going to cost much for someone of your age. With this coverage, your parents will be financially secure and your liabilities can be taken care of if something untoward happens to you. If you need more insurance in the future, you may also opt for a second cover based on your higher income and higher responsibilities.

    What's Next?

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      • Term Life Insurance plans, a popular choice among policy buyers, provide a comprehensive risk cover with a high sum assured at low premium rates. What’s more, you can also customise the sum assured, select an optimum policy tenure, and avail tax benefits, with a term life plan.

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    Life Insurance Riders: Importance

    Life insurance is an agreement between the insurer and the insured to offer financial protection to the insured’s dependents. In case the insured person passes away, the sum assured as agreed upon by the insurer and insured is provided to the insured’s nominee or legal heir.

    Life insurance companies, along with the basic death benefit, offer many other benefits if the policyholder has chosen certain riders. A few of the riders offered by life insurance plans are:

    • Accidental death benefit rider
    • Accidental disability benefit rider
    • Critical illness rider
    • Waiver of premium rider
    • Income benefit rider

    Importance of life insurance riders

    Life insurance riders can be availed along with the base insurance plan by paying an additional premium. Here’s why life insurance riders are beneficial to the insured person:

    • A person need not purchase different insurance policies for different purposes such as accidental death benefit or critical illness benefit.
    • While adding riders to the plan might cost a few extra rupees, it is much better than buying separate insurance policies.
    • The addition of several riders will enhance the coverage provided by the life insurance plan.
    • Life insurance policyholders enjoy tax relief under section 80C of the Income Tax Act. An additional premium towards riders will only provide extra tax relief to the policyholder.

    Instead of buying a whole life insurance policy or an endowment policy, you could purchase a term plan and attach riders to get comprehensive life insurance coverage.

    Life Insurance for people with a medical condition

    Most financial advisors will recommend that you should purchase a life insurance policy when you are young since the premiums you will pay will be cheaper as compared to what you will have to pay when you are old. Also, when you are young, the chances are high that the insurance company will not ask you to undergo any medical test. The premium decided during the entry will also remain constant throughout the policy term. These are some of the reasons why you should purchase a life insurance policy when you are young.

    However, you may look to purchase a life insurance policy if you suffer from any form of terminal illness. Most insurance company thus refrain from providing insurance if you suffer from any critical illness. It is not much of a problem for you to get coverage if the illness is manageable or treatable. However, if the condition is serious or you suffer from a pre-existing disease, the insurance company may not be willing to provide you insurance or will charge you higher premiums since the risk of providing you coverage by the insurer is extremely high.

    There are certain conditions which are excluded by most of the insurance companies in India. They are:

    • Cancer: Cancer is considered to be one of the deadliest diseases and due to the high mortality rate among patients suffering from cancer, most of the insurance companies are not willing to provide coverage. In case your family has a history of suffering from cancer, it is recommended that you purchase a critical illness or a cancer-specific cover. Even if you are a survivor, the chances are still high that the insurance company may not be willing to provide you with a life insurance cover. Hence, it is advisable to purchase a life insurance policy when you are young.
    • HIV/AIDS: It is another deadly disease for which there is no cure yet. Hence, a majority of insurance companies in India do not provide cover to those who suffer from this disease. Despite the advancement in medical technology which has resulted in the patients seeing an increase in their life expectancy, they do not qualify to receive life insurance coverage.
    • Other conditions: It is difficult for you to get a life insurance cover if you suffer from conditions like stroke, liver failure, kidney failure, etc. Here also the risk of you meeting with death is extremely high and hence the chances of you getting a life insurance cover is extremely low.

    However, an insurance company cannot deny coverage to you if you are an existing policyholder. The insurance company thus expect you to declare your condition prior to signing up for the policy. If you are above the age of 45, you will be required to undergo medical tests, during which if it is revealed that you suffer from any of the excluded condition, the insurance company has the right to deny you life insurance.

    There are certain conditions for which you will be provided life insurance coverage but will also be required to pay higher premiums. Some of the conditions for which you will receive life insurance coverage are:

    • Diabetes: You will automatically fall into the high-risk category if you are a diabetic. A person suffering from this condition are categorised under the type 1 and the type 2 category. The chances are high that if you suffer from diabetes, you are likely to suffer from other conditions such as blood pressure, obesity, health conditions, etc. which will ultimately put an impact on the premiums you will pay. A person suffering from diabetes will have to pay higher premiums.
    • Heart disease: This is a very common disease among middle-aged and older people in India. The premium is decided on how severe the heart condition is. If you have survived a heart attack or undergone a bypass surgery, the chances are very low that you will be provided a life insurance coverage.
    • High blood pressure: The chances of you suffering from this type of condition may increase as you advance in age. Thus, when you are purchasing a life insurance scheme, you may have to undergo tests for blood pressure. Though this condition is not life-threatening in any manner, the premium you will have to pay will get impacted significantly if you suffer from this condition.
    • Obesity: Though this is not a health condition in general, if you are obese, the chances of you suffering from health conditions such as health ailment, blood pressure, kidney ailment, etc are extremely high. You will be able to get a life insurance coverage even if you are obese, but if your BMI is over a certain limit, the insurance company will ask you to undergo various medical tests in order to look for various health-related conditions.
    • High cholesterol: This is one of the most common health condition among the people today. It is a risky health condition as it may lead to you suffering from health ailments, high blood pressure, diabetes, kidney failure, etc. You will have to pay higher premiums if your cholesterol is over a certain limit.
    • Kidney ailment: It is considered to be a risky condition by the life insurance companies in India. You will have to pay higher premiums if you suffer from any form of kidney ailment despite the severity of the condition being low in nature.

    Hence, these are some of the conditions for which you may have to pay higher premiums. Though there is no standardisation when it comes to calculating premiums for a scheme, it is recommended that you get multiple quotes if you suffer from any of the medical condition mentioned above. You must properly compare and based on the price quoted you can then choose a suitable life insurance policy for yourself.

    Life Insurance for Armed Forces in India

    You may have often heard that how important it is to have a life insurance policy. However, life insurance companies may often refrain from providing insurance policies to certain individuals due to the risky nature of their jobs. People who are associated with jobs where the chances of meeting with death or getting critically injured are significantly high, face lot of problems when they wish to purchase a life insurance policy for themselves. This also includes police personnel or people who work for armed forces. Since it is difficult for them to avail a regular life insurance policy for themselves, they can purchase specially designed insurance policies for themselves.

    Army Group Insurance Fund (AGIF)

    The Army Group Insurance Fund (AGIF) was created by the Armed Forces so that the members could receive the benefits of having insurance. Funds very similar to AGIF is also available for those who are in Air Force and Navy. AGIF was formed without having any tie-ups with the Life Insurance Corporation (LIC) of India or any leading insurance company in India. The premium payable is deducted directly from the cadet’s salary, and the coverage provided depends on the rank of the person in the army. The premium payable also varies accordingly.

    An army official is currently eligible to receive a life insurance cover worth Rs.40 lakh, while an army jawan is eligible to receive a cover worth Rs.20 lakh. An army official in order to avail the benefits of the insurance cover has to pay a yearly premium of Rs.4,000, while an army jawan pays a yearly premium of Rs.2,000. In case of death of the army personnel or a jawan, the family of the bereaved receives the cover amount. During the time of superannuation, the insured can receive adequate compensation under this cover.

    Insurance coverage provided by some of the insurance company

    • DHFL Pramerica Prahri: This insurance policy is designed for a military personnel and the members of the Armed Forces in India. This policy provides coverage for war and warlike situation. This policy offers cover to a military personnel and his family members and ensures that they do not undergo any financial problems in case something happens to the insured.
    • HDFC Life Shaurya: This policy is designed for those who belong to the military as well as for the ex-servicemen in India. The HDFC staff which works to provide cover to the military personnel are well versed with their lifestyle and how they function. This policy offers not only cover to the personnel and his family members but also helps them take care of their financial requirements as well. Apart from providing insurance cover to a personnel belonging to the Indian Army, the policy also provides cover to those who are officers at Indian Air Force, Navy, Border Security Force, Paramilitary Organisation, Fire Services, employees of schools run by Armed Forces, etc.
    • Aviva Suraksha: This is an umbrella product which has different policies designed to benefit the members of the Armed Forces in India. This policy not only provides a protective cover but also provides cover for retirement, investment, child protection needs, etc. of a military personnel. The cover ensures that in case something happens to the military personnel, the family’s future is safe and secure and financially covered. The claim settlement process and other requirements are extremely simple in nature and ensure that the family of the bereaved is adequately covered.

    People who are a member of the Armed Forces in India play a huge role in the welfare of the country and ensures that our country remains protected from enemies both foreign and domestic. However, their job is risky in nature and the chances of them getting critically injured or dying are extremely high and hence the need for insurance is a must for them. However, a majority of insurance companies in India are not willing to provide insurance coverage to those who are a military personnel, or ex-servicemen in India. The options mentioned above, however, provides the best life insurance coverage to people who are associated with military and Armed Forces in India. However, another member of a military personnel family who is not actively associated with the service can avail a regular life insurance policy for themselves and will not face any problem when looking to purchase a regular policy for themselves. The plans mentioned above are some of the most brilliant plans designed for those who are military personnel and provides adequate coverage and ensures that the person and his family do not bear any kind of financial trauma.

    Life insurance for high-risk professions

    When it comes to life insurance policies, there are various factors that are looked at before a premium is quoted to an applicant. The cost of a life insurance policy is often determined based on your age, income, profession, smoking habits, health conditions, location, etc. Also, your risk associated with your job also determines the premium you will have to pay in order to avail a life insurance scheme. The classifications of these jobs and the premiums you will pay will differ from insurers to insurers in the market. However, the cost of the premium related to your life insurance policy will increase based on the risk associated with your job.

    A high-risk job can be a job where the possibility of meeting with an injury or death is significantly high. However, most people are unaware of whether their job is of high-risk or not. For example, a construction worker may not realise his/her job to be risky in nature, until and unless he purchases a life insurance policy. What constitutes to be a high-risk job differs from insurance companies to insurance companies. Jobs such as the one where you have to deal with hazardous chemicals or work under circumstances where the possibility of you getting injured or meeting with death is high are constituted as high-risk jobs.

    Some of the high-risk jobs that you can come across are:

    • Life insurance for pilots: The job of being a pilot was considered to be of extremely high-risk. Though it is safer as compared to earlier times, it is still considered to be a high-risk profession. Pilots can avail group insurance policies and can also avail it benefits after retirement. The premium that a pilot will way have to pay is considerably higher as compared to the premium you will pay for a normal life insurance policy.
    • Life insurance for athletes: The premium an athlete will have to pay is higher as compared to the premiums you will pay for a life insurance policy. The reason is that the chances of an athlete suffering from a major injury or concussion that can be life-threatening in nature are extremely high. Most of the adventure sports are considered to be extremely risky in nature and hence having life insurance is of utmost importance.
    • Life insurance for firefighters: It is extremely tough for a firefighter to have a life insurance policy since the chances of them losing their lives or getting critically injured are extremely high in nature. Since firefighters are employed mostly by the Government it is their responsibility to provide life insurance to those who are firemen. LIC currently has the provision of providing life insurance to these individuals.
    • Life insurance for military and police professionals: Professionals who are related to police, and military have to pay higher premiums since they run the risk of meeting with death or getting critically injured due to their propensity to terrorists and criminals. Currently, these types of professionals are provided life insurance through Army Group Insurance Fund (AGIF). Various private insurance companies have introduced life insurance policies for the professionals who are police or military professionals. However, the professionals who avail private life insurance policies have to pay their premiums at higher rates as compared to other normal life insurance policies.
    • Life insurance for medical professionals: There are life insurance policies for those associated with the medical field as they run the risk of being hit by a serious disease or health condition. Various insurance companies have introduced specific life insurance policies for medical professionals. However, the premium that these individuals will have to pay is higher as compared to a normal life insurance policy due to the risk associated with this field.
    • Life insurance for construction workers: Unfortunately, various insurance companies exclude construction and mining workers from the list of professionals they will provide coverage to. The reason being that these individuals work in extremely hazardous conditions and have high risks of losing their lives or getting seriously injured. Individuals who are construction or mining workers have to rely on state-based insurance scheme designed specifically for labourers in order to enjoy the benefits of having an insurance scheme. These individuals will have to pay higher premiums if they purchase a private health insurance policy due to the risk associated with the job.

    The professions mentioned above are considered to be of extremely high risk in nature. Various insurance companies have a list of professionals they exclude from their coverage list. Hence, it is important that if you are someone who is related to any of the professions mentioned above, you thoroughly read the documents and look for the exclusions under the policy before signing on the policy document. In case you purchase a private life insurance policy, it is advisable that you get quotes from multiple insurance companies in order to receive possible discounts on the premiums you will have to pay.

    Life insurance for smokers

    A life insurance product is designed to provide cover to you and ensure that in case something happens to you, the future of loved ones is safe and secure. However, there are certain requirements that you will have to fulfill before you sign up for the policy. People who do not smoke or drink do not face any problem, but those who do are required to declare it to the company in order to avoid problems related to claims in the future. The cost of the insurance cover will depend on whether you declare yourself to be a smoker or not.

    Regardless of any type of insurance product, you avail for yourself if you are someone who smokes and drinks, it is mandatory for you to let the insurance company know regarding the habit. If you fail to declare this habit of yours, and your death happens due to smoking or drinking, the insurance company has the right to deny the nominee appointed by you the claim.

    The financial security of your loved ones will heavily depend on whether you are declaring to be a smoker or not. If you conceal the fact that you have the habit of smoking or drinking from the insurance company, it can heavily affect the future of your loved ones from a financial point of view. Hence, it is important that you let the insurance company regarding your habit of smoking or drinking without fail in order to avoid any complications related to claims. It is understandable that the premium a smoker will pay will be higher than what a non-smoker will have to pay. In extreme cases, the insurance company may reject your claim, if you suffer from a severe pre-existing condition.

    Most people have this misconception that if you are an occasional smoker, the insurance company will levy different charges for those who smoke frequently. However, the insurer will impose the same rates for an occasional smoker which will be applicable for a frequent smoker. Apart from smoking cigarettes, consuming any form of tobacco product will have to be declared by you. You will have to pay additional charges if you are known to consume any form of tobacco products.

    It is understood that you will have to pay slightly higher premium rates if you are known to smoke or drink. The reason is that a smoker is prone to various health conditions including respiratory and health conditions. Apart from that, a smoker is also a higher risk to suffer from cancer and thus has a higher chance of dying prematurely. Hence, the coverage for a smoker is higher as compared to a non-smoker and thus the premiums are also higher.

    If you are someone who used to smoke earlier, it is important that you let the insurance company know as well. The insurance company will consider various factors before quoting the rates applicable to you. The time that has passed since you smoked a cigarette will also be considered while calculating the new premium rates for you. In short, the longer you wait, better the chances of you being quoted lower premium rates. However, various insurance companies will quote lower premium rates to those who have not touched a cigarette for a minimum of 6 months. If you are someone who hasn’t smoked for a year, you can expect some really good deals from the insurance company.

    If you are availing an insurance policy and paying the premium rates applicable to a smoker, and decide to quit midway, you can inform the insurance company about it. You can ask your insurer to consider the premium rates now that you are not smoking anymore. Though insurance companies may follow different rules when it comes to recalculating the premium rates, however, the chances are high that they will consider your request. Your new premium, however, will be calculated depending on the time for which you have quit smoking.

    In short, the premium you will pay is also directly proportional to your smoking habits. Regardless of which plan you avail for yourself, concealing the fact that you smoke will be considered as an act of fraud. The insurance company on learning that you withheld an important information has the right to deny your nominee the claim in future. Hence, make sure to declare your smoking habits even if it means paying higher premium rates.

    Life Insurance Free-Look Period

    The Insurance Regulatory and Development Authority of India (IRDAI) has created a regulation wherein every life insurance company is required to provide at least 15 days as the free-look period to every policyholder. However, if the policy was bought through distance marketing, the policyholder will get 30 days to review the policy.

    The free-look period essentially begins from the very first day when the policy was issued. During the free-look period, the policyholder can go through all the terms and conditions and evaluate the features and benefits offered to him/her. In case he/she is not satisfied with the policy, he/she can return it during this period and receive a refund of the premium paid.

    If a policyholder decides to return a policy during the free-look period, he/she will be required to inform the insurance company and state the reason for returning the policy, in writing. Details regarding the policyholder and the policy, as well as other basic information as requested by the insurer, are to be submitted to them.

    The insurance company, in most cases, will accept the request and refund the initial premium paid after deduction of stamp duty charges, the risk premium for the policy period covered until cancellation, and the cost of pre-medical examination of the insured.

    Usually, insurance companies return the premium amount within a period of 2 weeks.

    List of Tests To Be Conducted Before Purchasing a Life Insurance Policy

    Certain life insurance companies may request an applicant to undergo a medical examination before issuing the policy to him/her. In most cases, older individuals above a specific age bracket or those who choose a high sum insured will be requested to take certain medical tests and submit reports of the same to the insurer. Apart from that, individuals may also be asked to provide a medical report in case they have some medical issues.

    List of tests to be undergone for a life insurance policy

    Medical tests are basically conducted to check the health condition of the individual. It will help determine whether he/she is prone to health diseases or not.

    A few of the tests that are required to be tested for a life insurance policy to be issued are:

    • Height measurement
    • Weight measurement
    • Blood sample
    • Urine sample
    • Saliva sample
    • ECG
    • Answer a questionnaire regarding one’s health

    While the tests mentioned above are a standard set of tests requested by most insurance companies, an insurer can decide if it needs only some of these tests or all of the tests. Also, in most cases, the insurance company reimburses the amount spent on getting the tests done.

    Policy Lapsation – What does it mean?

    A life insurance policy is a long term contract between the insurance firm and the individual purchasing the insurance plan. In order to keep this contract running, it is necessary for the policy buyer to make regular premium payments to the insurance company. Usually, even if the due premium payment has not been received by the insurance firm within the premium payment date, the insurer will provide the policyholder a grace period of 15 to 30 days to pay the due premium amount. If you pay the premium within the grace period, the insurer will not levy any additional interest charger.

    If the due premium amount remains unpaid even during the grace period, your insurance policy will lapse or terminate. However, even a lapsed policy can be revived within a certain number of pre-specified years by paying the arrears with the applicable interest rate. To keep your insurance policy from lapsing, make sure to pay the due premium amount to your insurance provider without any delay.

    Top 5 Ways to Invest Your Money

    In order to increase your savings and create long-term wealth, it is necessary to invest your money in the right financial tools. Listed below are the top 5 ways that you should consider investing your money in.

    • Invest in a Systematic Investment Plan: Mutual funds are a smart investment avenue for individuals open to taking risk. A Systematic Investment Plan will help you invest money on a regular basis and earn good returns over a period of time.
    • Increase your EPF contribution: While 12% of the basic pay is what is usually deducted as the employee’s PF contribution, you can choose to increase this percentage at any time. Doing so will help you increase your savings and claim tax rebates.
    • Purchase Life Insurance: Given how unpredictable life can be, it is necessary to ensure that your dependents have the financial means to carry on with their lives in case of an unfortunate eventuality. Thus, make sure to purchase a comprehensive life insurance plan that meets your needs and the needs of your dependents.
    • Pre-Pay your Loans: EMI deductions can reduce your disposable income significantly. Thus, if you have extra funds, it is advisable to pre-pay your loans with the available sum of money.
    • Invest in Tax-Saving Tools: If your tax liabilities have risen over the past few years, it is necessary to invest in tax-saving financial instruments such as ELSS, PPF, NSC, etc.

    As an investor, you should make sure to research your options and invest wisely to ensure that your finances grow over time.

    Life Insurance Claims Rejection – What you need to know

    The main purpose of a life insurance policy is to provide financial security to one’s dependents, in case of an unfortunate eventuality. Thus, to ensure that your nominee does not face any hassles at the time of filing the claim, you need to ensure that you don’t provide the insurer any chances to reject or deny your nominee’s claim.

    In most cases insurance providers will only reject claims if you have suppressed key information at the time of purchasing your policy. Certain other reasons for claim rejection include misrepresentation of facts, non-payment of policy premiums, coverage limitations, geographical limitations, etc. Thus, when purchasing an insurance policy, make sure to provide all the required information about yourself without withholding any information and to familiarise yourself and your nominee with the policy terms and conditions, to ensure that your loved ones don’t face any financial hassles.

    Unhappy with your life insurance policy? Here’s what you should do

    A life insurance policy is a long-term contract between the policyholder and the insurance company. This essentially means that the policyholder will have to pay the due premiums to maintain the policy, throughout the policy tenure. However, in certain cases, the policyholder might want to discontinue the policy.

    Currently, within the life insurance industry in India, there is no option to switch from one policy to another. Thus, if you have a money-back policy and you are dissatisfied with it, you cannot switch to a term insurance policy. However, if your policy has acquired a surrender value, you can surrender the policy and then purchase another insurance plan.

    On the other hand, if you currently have a life insurance policy that has not acquired a surrender value, you can discontinue the policy by informing the insurer and then choose another policy. However, in this case, it is likely that you will have to forfeit all the premiums you paid till date.

    If you have just purchased your insurance plan, ensure to make the most use of the free-look period by carefully reviewing the terms and conditions of your policy. If you don’t agree with the terms and conditions mentioned in the policy, you can return it during the free-look period and receive the full premium paid, excluding a nominal charge.

    Life Insurance Claims Settlement – What you need to know

    The main purpose of a life insurance policy is to provide financial security to your dependents in case of an untimely eventuality. Thus, when purchasing a life insurance policy, it is vital that you familiarise yourself and your nominee with the insurer’s claim settlement process, in order to avoid any hassles at the time of raising a claim. Read on to know more about the claims settlement process for various life insurance claims:

    • Death Claim: A death claim will have to be raised by the nominee upon the policyholder’s death. Firstly, as a nominee, you will need to intimate the insurer in writing about the upcoming claim. Post this, you will need to submit the actual claim form with relevant supporting documents to the insurer. The insurer is required to pay the sum assured within a period of 30 days. In case any further investigation is required, the insurer will have to complete this and settle the claim within 6 months.  
    • Maturity Claim: If the policyholder survives until completion of the policy tenure, a maturity claim can be filed. In this case, the insurer will send the policyholder a policy discharge form. The policyholder will have to fill this form and submit it to the insurer with all required documents. The insurer will verify the claim and pay the maturity sum assured.
    • Rider Claim: The settlement for a rider claim will vary as per the terms and conditions of the rider. For example, for a critical illness rider, the benefit will be paid at diagnosis of the disease. Whereas, for certain other types of riders, the payout will be offered along with the death benefit.

    In order to make sure that you or your nominee doesn’t face any hassles, make sure to follow the exact steps mentioned by the insurer. Further, to expedite the claim settlement process, ensure that the necessary documents are submitted at once and that all information is filled out correctly in the claim form.

    Insurance Policy Premium Payment – What you need to know

    When you purchase a life insurance policy, it is vital that you keep paying your premiums as per the premium payment schedule in order to keep your policy active. If you do not pay your premium within the grace period, your policy can lapse. However, you should make sure to pay your premium amounts only through authorised channels, such as the insurer’s official website, customer portal, or authorised banks, agents, or merchants.

    In most cases, you will be able to view a list of authorised premium payment channels on the insurer’s official website and brochure. Thus, when you purchase an insurance policy, make sure to pay close attention to the premium payment channels specified in the insurer’s official website. It is vital that you do not just hand-over your premium to an agent, since not all insurance agents are authorised to collect premiums.

    Time to review your life insurance policy? Here’s what you should check

    A life insurance policy can be truly invaluable in providing financial security to your dependents in case of an unfortunate eventuality. While purchasing a life insurance policy is extremely important, it is equally important to review your life insurance policy from time-to-time.

    It is likely that your financial requirements, goals, and premium payment ability are quite different now from what they used to be when you first purchased the policy. Thus, it is essential to revisit your policy frequently to ensure that you and your family still have an adequate level of coverage. One of the best ways to determine whether your insurance policy is still working for you is by asking yourself the following questions:

    • Do I have the right type of life insurance product?

    Life insurance companies offer a number of insurance products to customers such as term insurance plans, whole life plans, ULIPs, endowment plans, child insurance plans, etc. Each life insurance plan offers certain unique benefits that are specially designed to meet certain coverage and financial needs of the policy buyer. Each type of life insurance product has its own benefits. Thus, you will have to make sure that your life insurance policy still meets your needs.

    • Is the sum assured sufficient for my family?

    The sum assured is a certain amount of money that will be paid to the nominee in case of the policyholder’s untimely death. If it’s been a while since you purchased your policy, it is advisable to check if the sum assured is still sufficient to meet the needs of your dependents.

    • Are the payouts offered by the plan still in-line with my financial needs and goals?

    The type of payouts offered to you will vary based on the type of life insurance product you choose. For example, a term plan only provides a death benefit. In comparison, an endowment policy can provide a death benefit or a maturity benefit based on the eventuality. Thus, it is essential that you check if the payouts offered to you are still in-line with your long-term financial goals.

    • Am I being charged a fair premium for the policy?

    The premium payable is linked to several factors including your age at entry, sum assured opted for, riders chosen, policy tenure, etc. Further, the premium charged will vary from insurer to insurer. Thus, it is essential that you check if the premium that you currently pay for your policy is a fair price or if you are being overcharged.

    A life insurance policy is a must-have at all times if you wish to ensure that your loved ones are financially secure, even in case of an unfortunate eventuality. Given how important a life insurance policy can be, it is highly recommended that you review your policy regularly to ensure that it still meets your needs.

    Mutual funds that offer life cover

    Certain asset management companies like ICICI  Prudential, Aditya Birla Sun Life, etc. offer a life insurance cover for free if customers opt for certain specific mutual fund/systematic investment plan (SIP) schemes. Listed below are certain key features of such life insurance covers:

      Insurance companies can decide if agents are eligible to receive hereditary/renewal commissions

      Insurance firms, even to this day, rely quite heavily on agents for business. If an agent sells you an insurance policy, the agent is eligible to receive a commission for the same. In addition to receiving a commission for selling the policy, agents, in the past, also received a cut when the customer renewed the policy and paid the renewal premium, regardless of whether they had a role to play in the customer’s decision to renew the policy. This type of a commission is called a renewal commission. If the insurance agent passed away, a similar commission, which is called the hereditary commission, would be paid to the agent’s nominee.

      This law was, however, amended after the Insurance Laws Amendment Act, 2015, was passed. Currently, insurance companies can decide whether or not to pay the renewal/hereditary commission to an agent/nominee based on the agent’s role in servicing the policyholder’s insurance plan. As of today, certain insurance companies pay a commission to insurance agents for making a sale, but choose not to pay hereditary or renewal commissions since the role of the agent is quite minimal after the initial sale is made. Similarly, there are also insurance firms that pay a hereditary commission, but don’t pay renewal commissions. Certain other insurance firms have continued to pay both the hereditary and renewal commissions.

    • These life covers usually come with a waiting period between 60 days and 90 days, during which time claims will be rejected.
    • Death due to pre-existing illnesses is not covered in most cases.
    • The amount of life cover that is offered will usually be a multiple of the SIP amount and will vary based on one’s investment tenure.
    • Asset management companies that provide such schemes are likely to have an eligibility criteria for these life insurance covers.
    Why is April a good time to purchase a Term life insurance?

    People generally make the mistake of buying term insurance plans towards the end of the financial year since one looks to save on taxes. But, April is generally the best time to buy an insurance plan for oneself due to many reasons.

    First of all, April is the time when the new fiscal year starts, new accounts are opened and everything starts from scratch and also when one can reassess their financial needs. For an employee, April is the month when they get their bonuses and appraisals due to which one can purchase an insurance policy for themselves.

    It is easier to buy a plan in April since its the lean period for insurers and hence they would be able to give you more attention regarding the queries you may have prior to buying one.

    Hence, April is the best time for an individual to reassess their needs, study the products they are interested in properly before deciding to go ahead and buy an insurance plan.

    LIC Online Payment

    LIC, a company that is well-known for their customer-centric offerings, provides policyholders the option to make premium payments through a range of online and offline channels. To learn how to pay your LIC policy premium through the insurer’s official website, via authorised franchisees and merchants, or through Corporation Bank and Axis Bank branches.

    News About Life Insurance

    • Life insurance sector performance for April – November 2018

      During the period between April 2018 and November 2018, the life insurance sector collected new premiums equal to Rs.1.23 lakh crore. Private life insurance companies recorded a 23.2% growth in new premium collection taking the amount up to Rs.40,197.86 crore. However, LIC experienced a 7.9% decline in new premium collection as compared to the year-ago period. While the new premium collection is equal to Rs.83,148.64 crore, the overall growth in premium collection has increased only by 0.33%.

      Both, the public sector as well as the private sector of the life insurance industry, witnessed a drop in regular premium collection for group policies – by 64.7% and 49.3% respectively. In case of individual regular premium collection, however, the private sector saw an increase in regular premium collection by 9.6% while the public sector saw a drop by 30.6%. Though the numbers in the third quarter were not great for the life insurance industry, they are hopeful that there will be an improvement in the last quarter. Since the fourth quarter is when people have to file their taxes, they purchase life insurance policies to save on taxes. It has been recorded that about 55% of the overall sales in the life insurance sector is witnessed in the fourth quarter of the fiscal year.

      14 December 2018

    • Indian life insurance industry prepares for a Rs.100 crore campaign to spread awareness about life insurance

      The Indian life insurance industry is currently preparing for a Rs.100 crore multimedia campaign that will be launched to spread awareness about life insurance and to remove any misconceptions that people might have about the product.

      A number of life insurance firms in India, including LIC, have committed finances for the campaign, which is likely to be unveiled in January 2019.The idea for the campaign has come from the Life Insurance Council’s Insurance Awareness Committee.

      Other members of the committee are Star Union Dai-Ichi, ICICI Prudential Life Insurance, and Tata AIA Life Insurance. The committee is currently evaluating a number of different agencies to help with the rollout of the programme.

      10 December 2018

    • Bajaj Allianz registers 72% growth in new business premiums in Punjab

      Bajaj Allianz has registered a 72% growth in new business premiums in Punjab during the first half of the current fiscal year. The company’s Chief Agency Officer, Manish Sangal, revealed this information to the media. In Punjab, the company reported new business premiums of Rs.25 crore for the first half of the current fiscal year as against Rs.15 crore during the same period of the previous year.

      The company also reported significant growth in Haryana with new business premium growth of 31% from Rs.11 crore to Rs.15 crore during the first half of the current fiscal year. Mr.Sangal attributed the growth to various initiatives taken by the company including the introduction of value-packed products and technological interventions.

      He also noted that Punjab and Haryana continue to be one of the key markets for the company. The company aims to expand its presence even further and establish a dominant position in these states.

      6 December 2018

    • New India Assurance appoints a new Chairman and Managing Director

      The Government of India just yesterday announced that Atul Sahai will be taking the reins of one of the largest insurers New India Assurance for a period of 5 years. Atul Sahai, who was the general manager of Oriental Insurance was recommended for the post of Chairman and Managing Director for New India Assurance by the department of financial services. Waiting to be filled, the post of Chairman and Managing Director of New India Assurance was left vacant when their previous CMD Srinivasan retired. Since his retirement and in Q2 of FY 2018-2019, New India Assurance posted a 56% net profit as compared to the same quarter the previous financial year. The net profit that was posted by one of India’s largest insurers in the country for Q2 of FY 2018-2019 was Rs.3.28 billion. However, the biggest challenge for Atul Sahai will to curb their losses that the insurer is facing. Due to underwriting losses, the company posted net losses of Rs.12.3 billion of Q2 of FY 2018-2019 as compared to Rs.6.3 billion of Q2 of FY 2017-2018.

      5 December 2018

    • Bajaj Allianz shakes hands with ESAF Small Finance Bank to offer life insurance products

      In order to extend their reach of their life insurance products, especially in the rural areas, Bajaj Allianz has joined hands with ESAF Small Finance Bank, who will offer their products at their branches which are prevalent even in rural areas. According to Bajaj Allianz, the grand alignment with ESAF Small Finance Bank was to ensure that their products even reach the masses apart from the metros in the country and since ESAF Small Finance Bank has that reach, partnering with them is the right step forward for their life insurance segment. For ESAF Small Finance Bank, the partnership with Bajaj Allianz is a step forward for them as it gives them the opportunity to learn more about insurance, particularly life insurance. The CEO of Bajaj Allianz said, the company is delighted to partner with ESAF SFB and offer our products to their expanding customer base. He added by saying that ESAF SFB’s expertise and insights on their customers will further help us fine tune our offerings to best suit their customers needs. ESAF SFB’s said Bajaj Allianz experience on the subject and the importance of the need to get life insurance will help them sell it to the rural masses.

      4 December 2018

    • Max Life to expand network, hire one lakh agent advisors

      One of India’s premier life insurance companies, Max Life, has decided to expand its distribution network. Currently, the life insurer has 289 offices throughout the country and plans to have a total of 350 agency offices by the next financial year. The company, in the statement, also said that it will hire close to one lakh agent advisors to the company within the next three years. The company, as it constantly strives to serve better and strengthen its agency channel in the country, has formed what they call a ‘knowledge partnership’ with former executives of New York Life. The executives will aid Max Life by sharing certain insights and practices that will best help in the overall agency distribution handled by the company. Expanding and improving the agency channel will ultimately push the company’s strategy to improve the share of the company’s business with the help of proprietary business channels.

      30 November 2018

    • Insurance industry believes proposed changes by IRDAI are consumer friendly

      The Insurance Regulatory and Development Authority of India (IRDAI) has proposed certain changes in insurance linked and insurance non-linked products in a draft guideline. The proposed changes came in last month and the insurance industry is positive about the suggested changes. The industry experts say that the changes will make the products more customer-friendly and give it more flexibility for insurance companies to offer better products. One of the proposed changes is to make the minimum death benefit of life insurance policies 7 times the regular premium and 1.25 times the single premium for all age groups of life assured. Currently, the limit for the death benefit when the life assured is less than 45 years is 10 times. The suggestion is to make the limit the same across all age bars. Apart from the death benefit, IRDAI has proposed to minimise the 5-year old guideline to 2 years for the non-linked policies to acquire a surrender value. Also, the extension of the revival period from 2 years to 5 years has been proposed. Further, the regulator has said that the customer should be given the option for commutation of the pension product up to 60%. Further, it was suggested that options be given for the settlement option period to extend it to 10 years or continue it up to the policy term, whichever is the shorter duration.

      28 November 2018

    • Bajaj Allianz Life sets new Guinness World Record through its Plankathon initiative

      Bajaj Allianz set a whole new Guinness World Record for the maximum number of people holding the abdominal plank position for 60 seconds all together. The event was conducted in AFMC Ground, Pune and was part of an initiative named Plankathon by the life insurance company. As many as 2,353 people held the abdominal plank position and were motivated by the actor and fitness enthusiast, Shilpa Shetty Kundra. Thousands of people participated in the event and the event was a finale to the plank challenge started by the company as part of promoting good health. The initial challenge was to hold the plank position for 36 seconds. The challenge saw participation from many sportspersons and corporates. The viral campaign finally led to the big-scale Plankathon challenge. The objective of the campaign conducted by Bajaj Allianz is to promote good health and get more and more people to join the healthy living drive through a fun manner. The company believes that one can achieve life’s goals only if one has good health. Through the world record, the initiative put the insurance company and the country’s zeal to maintain good health on the global map.

      27 November 2018

    • MobiKwik targets 1.5 million customers for the new digital insurance facility

      Digital payment service provider MobiKwik has introduced a new facility that provides digital insurance service to customers. Customers can choose from various life and general insurance policies priced as low as Rs.20 depending upon various factors. The company noted that it will be partnering with various insurance companies to provide this service. Under the first stage of implementation, the company is now rolling out personal accident covers for its customers.

      The company expects to provide coverage to 1.5 million users by the end of this fiscal year. Customers can choose from the different covers available to them. The company noted that there is a great potential in India for insurance covers with the exponential increase in the adoption of smartphones.

      MobiKwik’s co-founder and director, Upasana Taku, stated that digital insurance has been ignored by banks, distributors, and insurers for a long time in India and this presents a vast opportunity to the company.

      23 November 2018

    • Oriental Bank of Commerce to divest stake in life insurance joint venture

      Oriental Bank of Commerce is planning to divest its stake in Canara HSBC OBC Life Insurance in an effort to conserve capital. Oriental Bank of Commerce holds a 23% stake in the life insurance company, while HSBC and Canara Bank hold a 26% and 51% stake, respectively.

      In a statement which the bank made to the exchanges, it said that the decision to divest its stake in the life insurance company was due to the Government of India’s Public Sector Bank Reforms Agenda. The public sector lender also mentioned that it would divest its stake based on the prevailing market conditions and the available options.

      Canara HSBC OBC Life Insurance is the only insurance firm in India that sells solely through its bank branches. The insurer reported a net loss of Rs.3.98 crore in the second quarter of FY19, in comparison to a net profit of Rs.22.62 crore in the corresponding period in the previous financial year.

      23 November 2018

    Get More News on Life Insurance

    Life Insurance Reviews

    • LIC Life Insurance
      "Average"
      0.5 2.5/5 "Just OK"
      I have a endowment plan with LIC and I stopped taking the new plans in the year of 1994. As we came to know that benefits are not much good. The real rate of return will be 2 to 3% and 6 to 7% as tax free. LIC is also did not offer any term plan until the private company came. It gives very restricted option for the customer to choose at the older time. The customer service is always excellent. It has multiple option for the payment.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 14, 2018
    • HDFC Life Life Insurance
      "Good"
      0.5 4.0/5 "Great!"
      I have started the pension plan with HDFC LIFE for my children. The benefits are based on the market. ULIP charges are very high and some what am not satisfied. They are charging policy administration charges. I have started the policy in the year of 2008 and now the charges are come down and I don't know the current situation. The fund management is good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 14, 2018
    • LIC Life Insurance
      "Good policy"
      0.5 5.0/5 "Blown Away!"
      I have taken JEEVAN RAKSHA Policy through agent before 3 to 4 years. I can get a quick access from the agent and there is no requirement to go online. It is a health insurance. The medical coverage is 5L per person. I pay the payment through online and overall am satisfied with the policy.
      Was this review helpful? 0
      , chennai
      Reviewed on Dec 14, 2018
    • review Life Insurance
      "Need proper followup "
      0.5 4.0/5 "Great!"
      Shriram Life is good but I did not find proper follow up from the customer support. There is no reminder call for the policy renewal so I would suggest them to do followup. But whenever I approach them the response is good. I don't find appropriate benefits and it was taken for time being. I am paying yearly 20K for life insurance. The tenure period is 15 years.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 14, 2018
    • review Life Insurance
      "Best service"
      0.5 4.5/5 "Excellent!"
      I would say TATA AIA is giving better benefits after 6 years compared to LIC. The tenure period is 15 years, It is a life insurance policy. I need to pay the premium for first 5 years and they are giving dividend which am happy. The customer service is pretty good and the online portal is customer friendly. I pay quarterly approx 6000 rupees through online.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 14, 2018
    • LIC Life Insurance
      "They should improve the customer service"
      0.5 3.5/5 "Pretty good"
      I have a policy with LIC and it was taken through agent before 2 years. He has explained me about the policy accordingly I have chosen it. I don't find any other benefits and If I need to call the customer care its not easily approachable the response is not proper. It is very difficult to take the tax benefits paper from the online portal as well as customer support.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 14, 2018
    • Bankbazaarinsurance.com Life Insurance
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      I have taken a term insurance with the help of bankbazaarinsurance.com and it was recommended by friend. There is no delay in the service, they called me within 1 or 2 minute after placing the request. I have used both website and mobile app, I am comfortable with the website but mobile app is much better.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Dec 14, 2018
    • ICICI Prudential Life Insurance
      "Need to be quick and more responsible"
      0.5 2.0/5 "Expected more"
      I have not received the documents even I called the customer care thrice and they were informing I will get within a week or 2 weeks but it was not done. I am happy with the plan benefits and policy coverage so I took a term insurance for me with ICICI Prudential.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Dec 14, 2018
    • Max Life Insurance
      "Good"
      0.5 5.0/5 "Blown Away!"
      I never contacted the customer service, there is no requirement and they have done it on time. I have received the call at the time of processing the policy and explained about the policy to me. I took a term insurance for myself with Max Life. The premium is reasonable and they are offering good benefits.
      Was this review helpful? 0
      , ghaziabad
      Reviewed on Dec 14, 2018
    • Max Life Insurance
      "Better"
      0.5 4.0/5 "Great!"
      The tenure period is 5 years, I have taken a term plan with Max Life through online before 1.5 years. I don't know about the premium since it was paid by my wife. The Sum assured value is 8L. They have explained about the policies and the payment mode is convenient. I pay the premium yearly.
      Was this review helpful? 0
      , chennai
      Reviewed on Dec 13, 2018
    • Max Life Insurance
      "Average"
      0.5 4.0/5 "Great!"
      I pay 50K per year for the premium by cash. I have life insurance which was taken through agent before 9 years with Max Life. The tenure period is 10 years, the customer service is average. Even plan benefits is also average, it has taken for the purpose of future investment. The sum assured value is 12L.
      Was this review helpful? 0
      , varanasi
      Reviewed on Dec 13, 2018
    • LIC Life Insurance
      "Future investments"
      0.5 5.0/5 "Blown Away!"
      I have multiple policies with LIC and its a long term policies. The tenure period is like 15 years, 20 years and 10 years. I pay 12k per year through cash, it was taken through agent before 2 years. The customer service is average, they have explained about the policy. Am happy with benefits.
      Was this review helpful? 0
      , varanasi
      Reviewed on Dec 13, 2018
    • LIC Life Insurance
      "Better"
      0.5 4.0/5 "Great!"
      I have more than one life insurance with LIC before 3 years. It is a long term policies. The customer service is average. The tenure period is 20 years. They have not explained me about the policies. I am paying quarterly 6000 rupees through agent. The sum assured value is 5L for one policy.
      Was this review helpful? 0
      , nagpur
      Reviewed on Dec 13, 2018
    • Bankbazaarinsurance.com Life Insurance
      "One stop solution"
      0.5 5.0/5 "Blown Away!"
      I have been using bank bazaar for other purpose for last one year but this is the first time, I have taken my term plan from bankbazaarinsurance.com. I always use their website, usually I get immediate response. There are no issues and i would say its a hassle free service.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 13, 2018
    • HDFC Life Life Insurance
      "They need to improve the customer service"
      0.5 4.0/5 "Great!"
      I like the HDFC Life very much and also their products. The scheme is actually good but the service is not up to the mark. They don't respond for the calls or emails. The policy coverage and benefits are decent. The premium will be auto debited.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 13, 2018
    • HDFC Life Life Insurance
      "Excellent"
      0.5 4.0/5 "Great!"
      I have taken a term plan with HDFC Life by last year through online. They have provided attractive benefits, low premium and it covers critical illness. The customer service is good and the response was prompt. I am paying premium around 20K per year through online. Payment option is quite good.
      Was this review helpful? 0
      , delhi
      Reviewed on Dec 13, 2018
    • SBI Life Life Insurance
      "Better"
      0.5 5.0/5 "Blown Away!"
      I have a term plan with SBI LIFE and it was taken 3 years ago. The customer service is very good, they have explained me about the policy. Am paying Rs.1000 yearly through cheque. I need to pay for 20 years, sum assured is 10L. They have provided a good service whenever I enquire about the policy.
      Was this review helpful? 0
      , auraiya
      Reviewed on Dec 13, 2018
    • LIC Life Insurance
      "Average"
      0.5 5.0/5 "Blown Away!"
      I took Jeevan anand policy, LIC is better and am holding the policy more than 7 years. They have explained everything about the policy, the customer service is better. It is a Government enterprise, I find there is delay in the response. The benefits are okay and the tenure period is 15 years. Am paying yearly around 30K through online. After maturity will get good return.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 13, 2018
    • Max Life Insurance
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      Max Life is good and they are providing good customer service. The plan benefits and coverage is also good. I am paying yearly 30K through online. It was taken before 3 years through agent and tenure period is 15 years. The sum assured value is 5L. Am getting updates whenever I pay the premium.
      Was this review helpful? 0
      , bangalore
      Reviewed on Dec 13, 2018
    • HDFC Life Life Insurance
      "Average"
      0.5 5.0/5 "Blown Away!"
      I have taken a term insurance with HDFC Life through online portal. The customer service is better. The premium is reasonable compared to others. Am paying monthly Rs.1085 through ECS. I need to pay the premium till up to 30 to 40 years. The sum assured value is 50L.
      Was this review helpful? 0
      , cuttack
      Reviewed on Dec 11, 2018
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