A life insurance policy goes a long way in securing the financial requirements of one’s family following his/her unexpected death. Life insurance is still in the growth phase in India. Most professionals in their early age have started opting for life insurance since they are aware of the benefits available for their dependents. Life insurance can be taken for various purposes, and it provides coverage against various unexpected eventualities and risk faced by an individual. Some of the common forms of life insurance can provide adequate financial protection during these dire situations. Let’s take a look at how life insurance works against different eventualities that one may encounter.
A life insurance policy provides full coverage against the death of the insured during the policy term. Here, the sum assured amount chosen at the time of signing up for the policy will be paid to the nominee or legal heir. Almost all the top life insurance companies in India have additional riders for accidental death benefits. If the policyholder suffers an accidental death, the family of the insured will receive additional benefits as per the terms of the rider.
The type of benefit obtained from an accidental death cover may differ from one insurer to another. For instance, some insurers in the market provide double the sum insured amount (originally chosen) if this rider cover was bought alongside. Some of these riders even provide coverage against the disability of the insured person due to an accident. In case of partial disability caused by accidents, these covers have provisions to provide partial benefits to policyholders.
In case of murder, certain things are considered before providing the compensation amount to the nominee or legal heir. There have been instances of life insurance related murders where beneficiaries were found involved in murders. If there is a huge amount of insurance money associated with a homicide, the law enforcement agency will investigate the involvement of the beneficiary first. Only if the name of the beneficiary is cleared, the beneficiary can claim the insurance money from the company. During murder cases, the life insurance company has the right to withhold the money at least till the involvement of the beneficiary is ruled out.
The insurance company may also conduct its own investigation before releasing the money in case of a homicide. If the murder is caused by an unknown assailant or someone other than the beneficiary, there will not be any problem for the beneficiary in receiving the compensation amount. The point here is that the potential involvement of the beneficiary in the suspicious death of the insured will be investigated by law enforcement agencies as well as the insurance company. Hence, taking an insurance policy for someone just to profit out of their death will not work.
Suicide is a tricky subject when it comes to life insurance in India. IRDA has specific rules outlined for insurance companies in case of death due to suicide. For policies taken before 1st January 2014, a waiting period of 12 months is applicable even to get back the premium amount paid. This waiting period is waived in policies taken thereafter. In traditional term plans, most insurance companies in the market do not provide any coverage for suicide. However, up to 80% of the premium amount paid by the policyholder will be paid to the nominee or legal heir. In market-linked plans, the fund value available at the time of suicide will be paid to the nominee or legal heir. In either case, the policy will become void after the suicide of the insured.
Retirement planning is essential for everyone who wishes to enjoy the same lifestyle after their retirement. Once the regular income stops, most people will have a tough time managing their everyday expenses. Most of the top life insurance companies in the market have specific plans for retirement and pension. These retirement plans are designed in such a way that a policyholder will get regular monthly income even after retirement. In addition to being tax saving investment tools, these plans are also ideal for managing one’s post-retirement needs.
There are different variations of retirement and pension plans available in the market. Most plans allow policyholders to invest a certain amount over the course of one’s productive years. This will create a fund that can be withdrawn as a whole or in parts as per one’s requirements. Market-linked plans can be used to earn money from the market and generate additional profits over the course of years. Investing in retirement plans also brings the much-needed financial discipline required for maintaining a balanced lifestyle.
A life insurance policy can be taken for all the above-mentioned eventualities encountered by a policyholder. Life insurance protection is absolutely necessary for everyone irrespective of their age, gender, or profession. If you have dependents or financial liabilities in your life, life insurance protection can secure your interests and ensure a stress-free life. Specific benefits available under a life insurance policy may vary from one insurer to another. It is the duty of a policyholder to research on the policies available in the market before choosing a specific plan.