Life insurance is defined as the protection against any financial loss that could be caused due to the death of an insured individual. In essence, it is a financial cover which is provided to the beneficiaries of a life insured in the event of his/her untimely death.
It helps the dependents of an insured individual meet basic needs following his/her demise. In the current scenario, it is a contract between an insurance company/insurer and the individual who wishes to insure his/her life. Under the contract, the insurer would pay a certain amount to the beneficiary of the insured if he/she were to die while the policy is in place.
A typical life insurance typically consists of three main components:
The need for a life insurance arises given the unpredictability of life. Changing lifestyles have led to increased stress, especially in cases where an individual is the only breadwinner of the family. A life insurance protects the family of an insured, providing him/her peace of mind knowing that his/her family will be financially taken care of in the event of his/her death.
It acts as a safety net which enables the family of a deceased individual to continue with their normal life, despite losing their loved one. Not only does a life insurance policy help secure the future of their loved ones, it also provides certain additional benefits like saving tax.
Life insurance companies in India offer a host of options when it comes to life insurance, with the popular ones listed below:
As the name implies, these are plans which provide protection for a specific period of time (term). The nominee of an insured will receive a benefit only if death occurs during the period in which the policy is active. These are designed for those who have certain financial responsibilities in the near future, enabling them to meet them even in the event of an unfortunate event. One can avail the protection offered by these plans at a low premium, primarily on account of the fact that they provide cover only for a limited period of time.
These plans are not the best option for those looking for maturity benefits, as the amount paid as premium is not returned after the policy period expires. Premiums paid towards term insurance plans are eligible for tax benefits under Section 80C of the Income Tax Act.
This doubles as a savings cum protection plan, wherein the nominee(s) receives a death benefit in the event of demise of policyholder. The plan also provides a maturity benefit in case the policyholder survives the policy term. These plans are ideal for those looking for an investment plan, as they not only provide protection in the event of any unfortunate event, but also help save for the future. Typically, the premiums for these policies are costlier than the premiums associated with term plans. Policyholders can also choose to surrender the policy, in which case a surrender benefit is provided to them. The sum assured offered by these plans depends on the premiums, with individuals given the option to opt for a sum assured based on their lifestyle and income.
These are plans which provide the option of investing in multiple products, in addition to protecting the life insured. In essence, individuals who wish to avail the benefits of both, an insurance policy and an investment portfolio can purchase a ULIP.
ULIPs invest a portion of the money into either bonds, stocks, or mutual funds. They do have a certain risk factor associated with them and it is imperative that one choose an insurance company with a good track record. Policyholders have the option to switch between funds. One can opt for these plans if they are looking for long-term investment which provides added insurance cover. A good ULIP can offer returns linked to the market, thereby ensuring that inflation does not dampen the investment. One can choose the frequency of premium payment, with it possible to pay a single premium and avail the benefits offered by these plans.
This is a special type of endowment plan wherein the life insured is provided a survival benefit. While the nominee receives a death benefit in case of demise of insured, in the event of the insured surviving the term, he/she would be paid a certain percentage of the insured amount in instalments for a specified period of time.
These are ideal for those looking for protection, without having to lose out on their investment. The premiums for these plans are costlier than pure term plans. The money invested in these policies is repaid at certain regular intervals, helping one meet any financial requirement which could arise at a given stage. They also help in planning for the future. The distinguishing feature of these policies is the survival benefit, wherein a specific amount is paid to the policyholder until the time of maturity.
An individual who opts for a whole life policy is protected for the entire duration of his/her life. He/she makes regular premium payments, with the insurer paying a death benefit to the family on his/her death. Unlike term plans, it provides cover for the whole life, and not just a specific period of time.
Certain policies provide a payout when one reaches a particular age, which is 80 years in most cases. This has been done given an increase in longevity. Premiums can be expensive, depending on the cover one chooses. Policyholders are also eligible for tax benefits under various sections of the Income Tax Act.
An annuity/pension plan is ideal for someone looking to save for retirement. One is required to pay a lump sum premium in most cases under these plans. An insured individual receives a regular payout on his/her retirement, till the time of his/her demise, ensuring that they can lead a decent life even after retirement.
A number of insurance companies offer annuity plans in India, which are primarily designed to help individuals meet any financial contingency after retirement. One can choose to invest in plans which are either unit linked or go for traditional annuity plans, with each offering unique benefits.
India is home to 24* life insurance companies, with Life Insurance Corporation of India being the only public sector life insurance company in the country. The other 23 companies are in the private sector, with the Indian life insurance market seeing tremendous growth over the last 15 years, having grown to $27.5 billion in FY 2016 from $10.5 billion in FY 2002.
*As per data released by the Department of Financial Services, Ministry of Finance, Government of India.
|Name of Life Insurance Company||Claim Settlement Ratio (2015-2016) (%)||% of grievances solved**|
|Life Insurance Corporation of India||98.33||100|
|Bajaj Allianz Life Insurance||91.30||99.90|
|HDFC Standard Life Insurance||95.02||99.38|
|ICICI Prudential Life Insurance||96.20||99.87|
|ING Vysya Life Insurance (now Exide Life)||89.36||99.59|
|Max Life Insurance||96.95||100|
|Kotak Mahindra Old Mutual Life Insurance||89.09||93.11|
|SBI Life Insurance||93.39||99.97|
|TATA AIA Life Insurance||96.80||100|
|Reliance Life Insurance||93.82||98.84|
|Aviva Life Insurance||81.97||100|
|Sahara India Life Insurance||90.30||97.14|
|Shriram Life Insurance||60.24||96.70|
|Bharti AXA Life Insurance||80.02||100|
|Future Generali India Life Insurance||90.26||99.31|
|IDBI Federal Life Insurance||84.79||100|
|Canara HSBC Oriental Bank of Commerce Life Insurance||92.99||99.60|
|AEGON Religare Life Insurance||95.31||98.39|
|DHFL Pramerica Life Insurance||83.64||99.65|
|Star Union Dai-ichi Life Insurance||80.73||95.42|
|India First Life Insurance||71.87||98.82|
|Edelweiss Tokio Life Insurance||85.11||99.09|
**Based on number of grievances received and solved during 2015-2016.
Listed below are the top ten life insurance companies in India (based on the IRDA report for 2015-2016).
|Company||Premiums collected (Rs.)|
|ICICI Prudential Life||19,164.39 crore|
|HDFC Standard Life||16,312.98 crore|
|SBI Life||15,825.36 crore|
|Max Life||9,216.16 crore|
|Bajaj Allianz||5,897.31 crore|
|Birla SunLife||5,579.71 crore|
|Reliance Life||4,398.12 crore|
|Kotak Mahindra||3,971.68 crore|
|PNB MetLife||2,827.83 crore|
From these numbers, it is evident that a majority of the public prefers LIC over private insurers, given the government backing that LIC enjoys. Private insurers have seen an increase in their premiums, but continue to be behind LIC, which has premiums equivalent to more than double the amount collected by all private insurers in the country combined.
Postal Life Insurance is perhaps one of the first instances of organised life insurance in the country. First introduced in 1884, it currently insures over 6 million individuals, offering six different plans, namely:
A rider is an add-on which an insured can use to enhance the protection offered by a basic life insurance plan. Listed below are some of the popular life insurance riders in India.
Choosing the right life insurance policy can be hard, given the vast number of options available in the market. Failure to choose the right policy could impact the future of your loved ones in the event of your untimely death.
We provide unbiased reviews, helping you choose a policy which matches your expectations. In depth analysis ensures that you save time and effort, having the luxury of purchasing a life insurance policy from the comfort of your home/office.
Life Insurance is a simple concept to understand. Here are a few steps explaining how life insurance works:
Life Insurance policies can be purchased by paying different premiums, depending on the sum assured one expects. As such, it is hard to get an average estimate for a policy. Life insurance companies take a number of factors into account to determine the premium for a policy. Some of the most common factors used by them include:
A study conducted in the United States found the average cost of life insurance in the country to be $334.54 per year for a 30 year old non-smoker. A smoker of the same age would have to pay around $721.99 for the same policy.
India is home to over 20 life insurance companies, with each one offering multiple plans. Given the multitude of options available, it can be hard to choose a plan which suits your needs. Comparing them online not only gives you a clear perspective, it can also help save money.
The cost of a life insurance policy can vary from company to company, and it is not hard to end up paying an exorbitant amount for a policy which could be purchased for cheaper. One can also get information about the benefits offered, in addition to the features of each policy.
One can see the performance of a life insurance company, including their claim settlement ratio, their grievance redressal system, and the ease of purchasing a policy, thereby helping them make an informed decision. This not only simplifies the process of purchasing a policy, but also ensures the beneficiaries do not face any hassle while making a claim in the event of policyholder’s demise.
The difference between a good life insurance policy and a mediocre one can impact the future of a policyholder’s family. Here are 6 points which every individual looking to purchase a life insurance policy should consider:
Getting a life insurance policy doesn’t require one to submit a number of documents. Most insurers ask for a copy of the following:
There are two scenarios wherein an individual might be required to file a claim for life insurance.
There could be instances where a policyholder wishes to cancel his/her life insurance policy. The Insurance Regulatory and Development Authority (IRDA) provides for cancellation with return of premium within the Free-Look period. This is typically 15 or 30 days, with one having the option to cancel the policy within this period if he/she does not agree with the terms of the policy. He/she will have to provide a reason for cancelling the policy, with the insurer returning the premium after deducting any amount spent on stamp duty or medical examinations.
If one wishes to cancel the policy after this period, they will not be eligible for a refund of premiums paid.
Certain insurers provide the option of surrendering a policy, wherein a certain surrender benefit will be provided based on terms and conditions of the insurance company.
Computing the premium for a life insurance policy can be taxing, even for mathematically inclined individuals. Insurance companies provide online calculators which can be used to compute the premium. All one needs to do is enter their age, gender, plan type, expected cover, and income. The calculator takes all these factors into account and computes the premium they might be required to pay for a specific tenure.
The right time to buy a life insurance policy is NOW. One might think that they are too young or do not have the necessity for a policy. But this is untrue, for life is unpredictable and it can throw surprises. Being prepared for any eventuality can protect their loved ones from financial problems.
Individuals who feel that they need to buy a life insurance only after attaining a certain age should remember that the premium for a policy increases with age, with certain insurers providing a policy only after a medical examination.
Delaying the decision to purchase a life insurance policy can have an adverse impact on the finances of your family. Purchasing it at a younger age not only helps save on premiums, it also enables one to plan for the future. Ideally, one should purchase it when they have a steady source of income and have planned their future.
The cover one requires depends on the lifestyle and financial commitments he/she has. A policyholder who has to cater to the educational needs of his/her children might require a sum assured which meets their expectations. Similarly, an individual who has no direct dependents can opt for a cover which satisfies basic needs.
Life Insurance companies in the country offer policies with cover ranging from a few thousand rupees to crores of rupees, ensuring that one finds a policy which suits their lifestyle. It is also important to consider the premium one is paying, as policies with high cover can charge higher premiums.
An individual looking to purchase a life insurance policy should have a basic understanding of these terms:
A. The age requirement to purchase a life insurance policy varies based on the insurer. Certain insurers provide life insurance for children aged 1, whereas a few may have a minimum age requirement of 18 years.
A. Yes, most insurers do have a maximum age limit when it comes to purchasing a life insurance. This is typically 70 years, with it becoming extremely hard to purchase a life insurance policy once you cross this threshold.
A. Claim settlement ratio refers to the number of claims settled by an insurance company vis-à-vis the total number of claims received.
A. Most insurers provide a grace period within which one can pay any missed premium. Failure to pay this amount after the grace period could result in a lapse of the policy.
A. A rider can be attached only to a policy which has been purchased. One cannot purchase just a rider without any policy.
A. No, most insurance companies provide the option of purchasing a life insurance policy online. One can also choose to purchase a policy from our website.
A. Yes, most insurers provide an option of online payment of premiums. These can be paid without any hassle, with no extra charges associated with them.
A. No, most insurance companies do not provide an option of modifying the sum assured once the policy is purchased. One can, however, choose riders to enhance the cover.
A. Yes, an insurance company can reject a claim under certain circumstances. This can happen if one provides false information while purchasing the policy, if the premium hasn’t been paid, etc.
A. One can visit any branch of the insurance company and submit a form with the new address. Alternatively, one can also update this information online, if the insurance company provides a dedicated log-in access for the same.