Term insurance is a type of life insurance product that provides a large sum assured to the policy buyer at a relatively affordable premium. Term insurance plans can usually be purchased for a policy tenure ranging anywhere between 5 years and 40 years. The catch to this kind of life insurance is that usually it does not carry any survival or maturity benefits, unlike whole life policies or endowment/money-back policies.
Term insurance plans are much cheaper compared to whole life insurance plans because these plans carry no cash value. Term insurance plans provide pure financial protection benefits. This means that if the life insured dies during the policy term, the beneficiary will receive the death benefit, provided all premiums are paid and the policy is in force. If the person survives till the end of the policy term, no benefits are payable to anyone.In most cases, term insurance plans offer a level premium rate, wherein the policyholder is charged the same premium for the duration of the policy tenure. However, in such cases the premium payable will increase during renewal of the policy based on the concerned individual’s age at the time. While the coverage provided by a term insurance policy is more or less fixed, most life insurance providers offer a number of riders that policy buyers can choose to purchase along with a term policy.
For those who have dependents whom they look after, term plans are ideal as they provide a large payout for very cheap premiums. Individuals can choose a high sum assured while paying a low premium. This way, if the breadwinner/policyholder passes on from this life, the people who relied on them will receive a substantial amount that will help them get by financially. These plans have a set duration limit and the cover will be offered only for this period. Once the plan lapses, the holder can choose to renew it or give up all benefits. Listed below are a few reasons to purchase term insurance plans:
If you apply for a term insurance plan, you will be required to pay a premium. If the life insured dies during the coverage period, then the person nominated will receive the death benefits. There are a variety of term plans in the market ranging from 1-year coverage up to 40 years. Term plans are usually renewable once the policy term ends.
There are different types of term insurance plans. Some of the major plans are:
All insurance companies lay down certain requirements that individuals need to meet in order to be approved for a term plan. Some of the general requirements are listed below, however, this may vary between different insurers:
Term Plans are different in nature when compared to standard life insurance policies, wherein they are specifically designed to cater to the financial needs of the family in case of death or uncertainty.The respective family members/dependants are eligible for a lump sum amount in case of death, uncertainity or any critical illness, if applied for, of the life insured during the term of the policy.Such an insurance plan can help your family to have sound financial independence, even if you are not around.
Term plans have a number of benefits. The main benefit is that the premiums are cheap while the financial protection offered is much larger than regular plans.
Term insurance is the purest form of life insurance. These plans usually offer a pure risk cover on the life of the policyholder. If the policyholder succumbs to an untimely death during the policy term, a death benefit will be paid to the nominee. In terms of the death benefit payout, many insurers currently offer a number of payment options to policyholders, thus ensuring that the policy buyer is able to choose a payout option that is well-suited to the needs of his/her family.
Some of the popular term insurance payout options are:
A term insurance policy is a must-have if you want to ensure that your loved ones are always financially secure. Make sure to research various term insurance plans that are being offered, compare features and benefits of these plans, and opt for a policy that offers you coverage as per your needs.Refer to the Term Insurance Plans comparision chart provided below to choose from an extensive array of life term plans to suit your needs:
|Term Plan||Entry Age||Maturity Age||Policy Term||Premium Payment Option||Minimum sum Assured||Payout Type||Claim Settlement Ratio(FY 16-17)|
|ICICI Prudential iProtect Smart Plan||18 years to 65 years||23 years to 75 years||As per policy brochure||Single pay, duration of plan or 5-year limited pay. Payments can be made monthly, half-yearly or yearly||Subject to minimum premium of Rs.2,400 p.a. (excluding taxes)||Lump sum or monthly income for 10 years||96.68%|
|HDFC Life click2Protect Plus||18 years to 65 years||28 years to 75 years||10 years to 40 years||Single pay, duration of plan or 5-year limited pay. Payments can be made monthly, quarterly, half-yearly or yearly||Rs.25 lakh||Lump sum + optional monthly income over a period of either 10 or 15 years||97.62%|
|Max Life Online Term Plan Plus||18 years to 60 years||85 years||10 years to 50 years (applicable to base plan)||Equal to plan term||Rs.25 lakh||Lump sum + optional monthly income/increasing monthly income over a period of 10 years||97.81%|
|Aegon Life iTerm Plan||18 years to 65 years||100 years||5 years to 62 years (or up to the age of 100 years)||Equal to plan term. Payable monthly, half-yearly or yearly||Rs.25 lakh||Lump sum + optional monthly income for 100 months||97.11%|
|PNB MetLife Mera Term Plan||18 years to 65 years||99 years for all options except the Joint Life Cover option.Maximum maturity age is 75 years for the Joint Life Cover option||81 years for all options except the Joint Life Cover option.75 years for the Joint Life Cover option||Equal to plan term||Rs.10 lakh||Lump sum + choose to receive monthly income/increasing monthly income or monthly income till child turns 21 years||87.14%|
|Canara HSBC OBC iSelect Term Plan||18 years to 70 years||80 years||5 years to 40 years||Equal to plan term. Payable monthly or annually||Rs.25 lakhs||Lump sum + optional monthly income||94.95%|
|LIC e-term Plan||18 years to 60 years||75 years||10 years to 35 years||Annual||Rs.25 lakhs / Rs.50 lakhs for non-smoker||Lump sum||98.31%|
|SBI Life eShield Plan||18 years to 60/65 years (based on the type of cover)||75 years for Level Cover Benefit and 70 years for Increasing Cover Benefit||5 years to 30 years||Equal to policy term, payable annually||Rs.35 lakhs||Lump sum||96.69%|
The iProtect Smart Plan from ICICI Prudential is a term insurance policy that offers comprehensive protection to the life assured. This plan offers life cover payable as a lump sum death benefit, or customers can choose to get a monthly income for 10 years after the demise of the policyholder. Anyone between the age of 18 years to 65 years can apply for this plan with a minimum tenure of 5 years. Customers can choose to pay the premiums as monthly, half-yearly or yearly. The minimum premium required for this plan is Rs.2,400 p.a. (excluding taxes).
The minimum sum assured under this plan is subject to the minimum premium, with no limit on the maximum sum assured. This policy comes with four plan options, i.e., the Life option, Life Plus option, Life and Health option, and the All in One option. The policy provides varying benefits under different plan options, thus helping you opt for a plan option that is perfectly suited to your needs. This policy comes with the provision of providing life cover to policyholders up to the age of 75 years. Further, the policy also comes with the option of providing coverage for up to 34 critical illnesses.
The Click2Protect Plus Plan from HDFC Life is a non-participating, non-linked, term insurance policy that provides a comprehensive life cover to the policy buyer at an affordable cost. This policy comes with a choice of coverage options. In order to purchase this policy, policy buyers will need to be between the age of 18 years and 65 years. The maximum maturity age for this policy is 75 years.
This plan provides optimum coverage with options of either a lump sum benefit, or a lump sum benefit plus monthly income for the beneficiary after the demise of the policyholder. Customers can opt to pay premiums for the duration of the plan, for 5 years or in one single premium. The minimum sum assured under this plan is Rs.25 lakh.
The Max Life Online Term Plan Plus comes in three plan variants – the Basic Life Cover option, the Life Cover + Monthly Income option, and the Life Cover + Increasing Monthly Income option. This term plan is ideal for anyone between the age of 18 years and 60 years. With premium payments equal to the term of the plan, customers can opt for a minimum coverage of Rs.25 lakhs, and a maximum coverage of Rs.100 crore.
If the policyholder dies during the term, then the nominee will be entitled to a lump sum benefit and/or monthly income and/or monthly increasing income for 10 years. For the base plan, the policy buyer can opt for a policy term between 10 years and 50 years. The maximum maturity age for all three plan variants is 85 years. Policyholders can also choose to purchase riders offered by Max Life Insurance along with this policy.
Aegon Life offers its iTerm Plan to individuals who are between the age of 18 years and 65 years. This policy can be purchased online, and the minimum sum assured that one can opt for is Rs.25 lakh. The payout upon the demise of the policyholder can either be a lump sum benefit or a lump sum plus monthly income for a period of 100 years. The maximum maturity age for this plan is 100 years.
Premiums towards this policy can be paid as a one-time lump sum amount, or on an annual, bi-annual, or monthly basis. This plan also comes with an Inbuilt Terminal Illness Benefit, thus providing the policyholder a guaranteed benefit in case he/she is diagnosed with a terminal illness. The insurer also offers preferential premium rates to women and non-smokers. A policy buyer can also opt for additional riders along with this plan to enhance the coverage of the base policy.
The Mera Term Plan from PNB MetLife is a term insurance policy that provides the policyholder customisable protection. With PNB Metlife, customers have an array of payout options that include: Lump sum / Lump sum + monthly income / Lump sum + monthly increasing income / Lump sum + monthly income till the child attains the age of 21 years. This policy also comes with an optional Joint Life Benefit. Policyholders are also provided the choice to increase their coverage amount during certain key milestones in their lives.
In order to purchase this policy, the policy buyer needs to be between the age of 18 years and 65 years. The maximum maturity age for all options, except the Joint Life Cover option, is 99 years. If you choose the Joint Life Cover option, the maximum maturity age is 75 years. Customers can secure financial protection for their loved ones for a minimum sum assured of Rs.10 lakh.
The iSelect Term Plan from Canara HSBC OBC Life Insurance is a non-participating, non-linked, term insurance policy that is available to those between the ages of 18 years and 70 years. The maximum maturity age under this plan is 80 years. Customers can opt for terms of 5 years to 40 years with a premium payment term that is equal to policy term. Customers will benefit from a minimum sum assured of Rs.25 lakhs.
This plan offers the policyholder a cover against death and also against terminal illnesses. Further, a policy buyer can choose to enhance this policy by purchasing the Accidental Death and Accidental Total and Permanent Disability rider, which will provide an additional benefit in case the life assured meets with an accident. Lower premium rates are offered to women and non-tobacco users.
LIC offers its e-Term Plan to individuals between the age of 18 years and 60 years. Customers are required to pay the premium annually and in return will receive a minimum death benefit of Rs.25 lakhs if the policyholder dies during the policy term. Individuals who belong to the non-smoker category can opt for a minimum sum assured of Rs.50 lakh.
When purchasing this policy, the policy buyer can opt for a policy term between 10 and 35 years. The maximum maturity age for this plan is restricted to 75 years. The policyholder will have to pay the due premiums on a yearly basis, for the duration of the policy tenure. This policy is solely available through online channels. The insurer will only consider insurance applications/proposals made by policy buyers on their own lives. Further, preferential premium rates are offered to non-smokers.
SBI Life’s term plan, eShield, is an individual, non-participating, non-linked, pure term insurance plan that is available online on the insurer’s official website. This plan offers a minimum sum assured of Rs.35 lakhs as a lump sum benefit payable to the nominee upon the demise of the policyholder. In order to purchase this policy, the policy buyer will need to be over the age of 18 years.The maximum entry age is 65 years for the Level Cover and 60 years for the Increasing Cover.
Premiums can be paid on an annual, bi-annual, or monthly basis. The minimum policy tenure that should be opted for at the time of purchasing the policy is 5 years for the Level Cover and 10 years for the Increasing Cover. The maximum policy tenure that can be chosen is 30 years. The premium payment term will be the same as the policy term.
A term insurance policy is one of the most of affordable ways to provide financial security to one’s dependents. However, despite many life insurance firms offering a number of term insurance plans through both online and offline channels, many people hesitate to purchase these policies because of the many myths attached to them. Thus, in this article, we will be looking at some of the popular myths about term insurance policies and debunking the same.
Myth 1: Term insurance plans are not worth it since they don’t provide any returns.
While it is true that most term insurance plans do not provide maturity/survival benefits, they do, however, offer a high sum assured to the policy buyer at an affordable cost. Thus, a term insurance policy makes an excellent protection instrument. Also, certain term insurance plans come with a ‘Return of Premium’ feature, wherein the policyholder will receive all premiums paid during the policy tenure as returns if he/she survives till the end of the policy term.
Myth 2: Purchasing term insurance at a young age is a waste of money.
It is, in fact, highly advisable to purchase a term insurance plan at an early age since the premium payable is linked to your age at entry. Thus, the younger you are when you purchase a term insurance policy, the lesser you will have to pay as premium.
Myth 3: I have a term insurance policy that is provided by my company. I don’t need to purchase another term insurance policy.
While your company-sponsored term insurance policy might provide you coverage during your employment, it is important to remember that this cover can cease soon after you leave the organisation. Further, even if your employer provides a term insurance policy, the coverage might be far from adequate. Thus, it is advisable to purchase a term insurance policy with an adequate sum assured on your own, for a policy tenure that meets your protection needs.
Myth 4: There is a good chance that my claim won’t be honoured by the insurer.
A claim will only be denied by an insurance provider if the event falls under the policy’s exclusion criteria. Also, if you withhold important information about your health conditions, family history, etc. at the time of purchasing your policy, the insurer could reject your nominee’s claim. Thus, when you purchase an insurance policy, ensure that you don’t conceal any facts from the insurer. Further, make sure to check the insurer’s claim settlement ratio. A high claim settlement ratio is desirable since it indicates the insurer’s willingness to settle the claim.
Myth 5: Purchasing term insurance plans online is a complicated process.
On the contrary, purchasing a term insurance plans online is an extremely hassle-free and time-efficient process, especially since you can purchase the policy from the comfort of your home without the involvement of any agents or middlemen. However, if you would rather purchase your term insurance policy through traditional channels, you can walk into the nearest branch of an insurance firm, and talk to an insurance representative or agent about their term insurance offerings.
A term insurance policy is a smart choice for any individual who wishes to secure the well-being of his/her family, regardless of what might happen in the future. However, before you purchase a policy, make sure to do your research, read through the features and benefits of various policies, compare the prices that they are offered at, and pick a policy that best appeals to you.
In India, life insurance penetration continues to be quite low despite insurance firms offering a host of innovative products, services, and initiatives. In an effort to make insurance products more accessible and attractive to the general public and to increase the overall efficiency of the company, insurance firms in India are increasingly making use of data analytics. It is expected that data analytics will shape the Indian insurance industry in a significant manner in the near future. Listed below are a few ways in which data analytics can help the insurance industry:
The number of ways through which data analytics can help the insurance industry is endless. Data analytics can provide valuable insights to insurance companies, thereby helping them make informed decisions, increase profits, and mitigate risks.
The Insurance Regulatory and Development Authority of India (IRDAI) has made it compulsory for policyholders to link their insurance policy with their Aadhaar and PAN by 31 March 2018. The regulator has also said that since these directions have statutory force, all life, general, and standalone health insurance firms will have to implement these rules without any further instruction.
Thus, insurance companies have been sending reminders and notifications to policyholders to link their PAN and Aadhaar numbers with their policies. As a policyholder, you can choose to link your Aadhaar and PAN with your insurance policy through both online and offline channels.
Online Linking: If you are a registered user, you can log into the ‘Customer Portal’ on the insurer’s website and update your Aadhaar number and PAN. Certain insurance firms also make a provision for you to link your particulars without logging in by simply navigating to the website and keying-in certain details, such as your policy ID, Aadhaar number, PAN, date of birth, contact information, etc. After you have furnished your PAN and Aadhaar number to the insurer on the website, an OTP (one-time password) will be sent to your registered mobile number. You will have to enter this number on the insurer’s website to complete the linking process.
Offline Linking: You can also choose to link your Aadhaar and PAN with your insurance policy through offline channels. Thus, you will have to contact your insurance agent or visit the nearest office of your insurer with all relevant documents, including a self-attested copy of your Aadhaar. You can submit these documents to an insurance representative and get your policy linked.
Things to Note
Currently, all new policy buyers are required to submit their Aadhaar number at the time of purchasing the policy.
In case a policyholder does not have a PAN, he/she can furnish a copy of Form 60 to meet this requirement.
In order to successfully link your policy with your Aadhaar number, your mobile number will have to be registered in the Aadhaar database.
Linking your Aadhaar and PAN to your insurance policy will prevent malpractices. Further, it also makes the administration process simpler.
Key Features of ICICI Pru iCare II Term Insurance Plan:
Key Features of the HDFC Life Click2Protect 3D Plus Plan:
Key Features of the Aviva i-Life Plan:
Key Features of the Max Life Insurance Online Term Plan Plus - Basic Life Cover + Monthly Income:
Key Features of the SBI Life – eShield Plan:
|Plan Name||Sum Assured||Policy Tenure||Age at Entry|
|ICICI Pru iCare II Term Insurance Plan||
||18 – 60 years|
|HDFC Life Click2Protect 3D Plus Plan||
|Aviva i-Life Plan||
||10 – 35 years||18-55 years|
|Max Life Insurance Online Term Plan Plus||
||10-50 years||Minimum entry age is 18 years and above|
|SBI Life - eShield Plan||
The claim settlement ratio refers to the total number of death claims that the insurance provider has paid against the total number of death claims received by them in a given financial year. A high claim settlement ratio is desirable since it indicates the insurer’s willingness to settle claims, and will, thus, ensure that your nominee doesn’t have to face any undue hassles during the claim settlement process.
If you are looking to purchase a life insurance policy, it is highly advisable to check the claim settlement ratio of various companies, since it is a good indicator of the insurance firm’s ability to settle received claims. The Insurance Regulatory and Development Authority of India (IRDAI) publishes the claim settlement ratios of various life insurance companies in their annual report. We have listed the claim settlement ratios of various term insurance providers in the table below.
|Insurance Provider||Claims Settlement Ratio||Claims Received||Claims Paid|
|Birla Sun Life||94.69%||6048||5727|
|Star Union Dai-ichi||84.05%||1473||1238|
|Aviva Life Insurance||90.60%||1245||1128|
“The data listed above is as per the report released by IRDAI (2016-17).”
Insurance providers offer life insurance plans with a varied range of benefits in order to make these policies seem like an attractive investment option to policy buyers. While the primary purpose of a life insurance policy is to provide financial security to the policyholder’s dependents in case of an unfortunate eventuality, these plans can also sometimes serve as a savings/investment tool and can even provide funds if you are in need of emergency liquidity.
The key benefit of availing a loan against your life insurance policy is that the interest rates are typically not as high as the interest levied on personal loans and credit card loans. However, before you decide to avail a loan against your insurance policy, here a few points that you will have to keep in mind.
Firstly, it is essential to check if you are eligible to avail a loan against your insurance policy. Not all life insurance policies offer this benefit to policyholders. In most cases, if your life insurance plan doesn’t acquire a cash value, you will not be able to avail a loan against it. Thus, you cannot take a loan against a term insurance policy. On the other hand, other insurance policies such as money-back plans, endowment plans, whole life plans, etc. will allow policyholders to take a loan against the policy after the policy has acquired a surrender value. Life insurance policies only acquire a surrender value if the policyholder has paid all due premiums for a period of 2-3 years without missing any premium payments. Thus, before you even consider taking a loan against your policy, make sure to read through the brochure or log into your insurer’s Customer Portal to check if you are eligible to opt for a loan.
Loan Amount and Interest Rate
While insurance providers give you the option of taking a loan against your policy after it has acquired a surrender value, they will seldom provide you the full surrender value as the loan amount. In most cases, the amount that you will be eligible to avail will be a certain percentage of the policy’s surrender value – typically between 60% - 85%. One of the benefits of taking a loan against an insurance policy is that since you are borrowing from the policy’s surrender value, the loan amount you receive will not be considered as a source of income, thus you will not be taxed for this. Once you take a loan against your insurance policy, the rights of your plan will be effectively transferred to whoever the lender is. Since this is a loan, you will also have to pay an interest on the amount borrowed. The rate of interest that you will be charged will vary from lender to lender. However, in most cases, lenders or insurance companies charge an interest between 10% and 15%
Repayment of Loan
Just like a regular loan, you will need to repay your loan amount to the insurance company during the policy tenure. The terms and conditions for repayment of loans will vary slightly based on the insurance provider, and this will be communicated to you at the time of taking the loan. However, in most cases, lenders give policyholders the option to pay back the interest alone or the interest and principal amount as regular installments. If you choose to only pay the interest on your loan, you will have to remember that the principal loan amount will be deducted from the death/maturity benefit payout, whenever it happens. Thus, it is advisable to pay both the principal and interest and repay your loan in order to keep your policy’s cash value intact.
Things to consider before availing a loan against your policy
Most individuals remain unaware of the many benefits of taking a loan against their insurance policy. Since you are essentially borrowing from the payout that you are eligible to receive from the insurer, the interest rate that is levied is usually lesser than the interest that you will have to pay for a personal loan. Also, the documentation process for loans taken against life insurance policies is also simpler and more hassle-free.
That being said, it is vital that you keep in mind the actual purpose of purchasing the life insurance policy. Life insurance policies can safeguard your dependents financially and ensure that they have the financial means to carry on with their lives in case of an unfortunate and untimely eventuality. Thus, since you are borrowing from the policy when taking a loan, you are essentially putting the financial security of your loved ones at risk. If you take a loan and happen to pass away before repayment of the dues, your insurance provider will simply deduct the pending amount from the death benefit and pay only what is left of the death benefit to your nominee.
Thus, before you take a loan against your life insurance, make sure to carefully consider the pros and cons of your decision and talk to an insurance advisor to understand the terms and conditions of your loan.
The Central Government of India sponsors various social security schemes, including pension covers, health schemes, crop insurance schemes, etc., for the benefit of the economically underprivileged sections of society. These schemes were launched in order to provide financial security to the masses at a nominal cost.
The government also offers certain term life insurance schemes, by way of which policy buyers can safeguard their dependents financially. A term insurance plan, which is one of the most basic types of life insurance coverage, offers a significant sum assured to the policy buyer at an affordable price. Listed below are the various term/life insurance schemes offered by the Government of India, along with their key features and benefits.
Key features of the Pradhan Mantri Jeevan Jyoti Bima Yojana:
Key features of the Pradhan Mantri Jan-Dhan Yojana:
Key Features of the Aam Aadmi Bima Yojana:
Government-backed schemes offer a range of benefits at an affordable price to policy buyers. Make sure to walk into the nearest insurance office or research online for more details about the various term insurance schemes offered by the government.
Life insurance plans offer a risk cover against death on the life of the policyholder, and thereby provide financial security to the policyholder’s dependents in case of an unfortunate eventuality. While there is a range of life insurance solutions with varied benefits and features, these policies also provide tax benefits to the policy buyer. Read on to know more about how you can save on tax with a life insurance plan:
Backdating in Term Life Insurance – Should you consider it?
In life insurance, the premium that is charged for an insurance policy is linked to certain factors such as an individual’s age at entry, policy tenure, sum assured, etc. Thus, the older you are, the more you will have to pay for an insurance policy. That being said, you can also choose to backdate your life insurance policy if you wish to reduce the premium payable.
Essentially, when you backdate a life insurance policy, you are altering the policy’s date of issue. Backdating is a completely legal practice in the life insurance sector and insurance policies can be backdated by a few weeks or months, as per the policyholder’s requirement.
When should you backdate a life insurance policy?
While backdating is an extremely attractive option, you should keep in mind that not all life insurance policies can be backdated. Most insurers, for example, do not offer this option for ULIPs since the returns that you receive from a ULIP are market-linked. Further, backdating is also not free. When you backdate an insurance policy, you will need to pay the due premiums for the backdated period.
Certain insurance companies might also charge the policyholder an interest if the insurance policy is backdated by over a month. Thus, before you choose to backdate your life insurance policy, you will need to assess whether the benefits of doing so outweigh the possible expenses that you might have to incur. Listed below are a few instances when backdating a life insurance policy might prove to be useful:
Things to consider before backdating an insurance policy
It is a fairly common practice to backdate life insurance policies. However, there are certain things you should consider before you backdate your policy.
In conclusion, while backdating can be a useful way to save money on your life insurance policy, make sure to only choose this option if it is in line with your financial objectives and your current stage of life.
7 Mistakes you should avoid when buying a term life insurance policy
A term insurance policy is a type of life insurance product that offers financial protection to the policyholder’s dependents. Thus, in case the policyholder succumbs to an untimely death, the sum assured will be paid out to the nominee. Given how important these policies can be in providing financial security to your loved ones, it is vital that you pick the right policy and avoid making the mistakes mentioned below:
Purchasing an insurance policy is a significant financial decision that requires much thought. Thus, make sure to do your due research before you pick a particular policy. Further, once you receive your policy document, it is imperative that you go through the terms and conditions of your policy to ensure that it meets your needs. If you find that you unsatisfied with the policy, you can return it to the insurance provider during the free-look period and purchase another policy.
Top Tax Saving Options for NRIs for the Upcoming Financial Year 2018-19
NRI or Non-Resident Indians are those individuals who hold an Indian citizenship or are foreign nationals of Indian origin but reside outside the country. Individuals who are classified as NRIs are also liable to pay a tax for any income that they earn or accrue within the country, regardless of whether the individual has directly or indirectly received the income. Thus, it is extremely important for NRIs to be aware of various tax saving financial options in the country and to invest in them accordingly to avoid paying a hefty tax on their income. Read on to know about some of the most preferred tax saving options for NRIs.
The Bottom Line
There are a number of investment options available for NRIs. However, before you make any investment, make sure to research the various option, understand the features and benefits of these investment avenues, and familiarise yourself with the various tax laws in India, in order to make the most of your investments.
The primary objective of a life insurance policy is to provide financial aid to the deceased person’s family members. It is therefore important to ensure that the policyholder chooses a nominee to whom the life insurance amount will be provided to. The individual who purchases the policy has the right to nominate the person who will receive the benefit when a death claim is made.
All about nomination
Policyholders typically nominate their spouses, children, or close relatives as nominees. While unrelated individuals like friends can also be nominated, the insurable interest should be proved in such cases. The insurer may or may not approve the nomination because insurers believe that nominating an unrelated individual may increase the risk of the policy.
The policyholder can also nominate multiple individuals and decide the percentage of the sum assured that each individual would receive on his/her demise. If a nominee is a minor i.e. below the age of 18, an appointee would have to be named to handle the documentation and benefit amount until the nominee becomes a major.
To make a nomination, the policyholder will have to provide complete details of the individual including the name, age, address, and the relationship he/she shares with the policyholder.
The policyholder can change the nominee any number of times during the policy term. All he/she has to do is fill in a form with details of the new nominee and submit it to the insurer along with the form containing details of the previous nominee. The latest nomination will supersede all former nominations. Change of nominee is essential when the nominee dies before the policyholder.
In case the policyholder does not choose a nominee, the insurer will provide the death benefit to the legal heir - spouse, children, or mother.
What is a beneficial nominee?
A beneficial nominee is basically the individual who is authorised to use the benefit provided on death claim. The beneficial nominee mentioned in the policy will receive the benefit as directed by the policyholder. Parents, spouses, or children automatically becoming beneficial nominees of a policy.
Documents required by a nominee to make a claim
On the death of the policyholder, the nominee can claim the death benefit by submitting a few important forms and documents.
Currently, term insurance plans are one of the most sought-after life insurance products, in the country. The popularity of these plans stem from the fact that they offer the policyholder a high sum assured at a comparatively low premium rate, thereby being easy on the pockets while guaranteeing financial security to one’s dependents. Most financial experts recommend purchasing a term insurance policy at a young age, in order for you to make the most out of these plans. Read on to know a few reasons and benefits of purchasing a term insurance policy while you are still young.
Premiums are linked to age: When quoting the premium rate, insurers take several factors into account, such as the sum assured opted for, the policy buyer’s age at entry, policy tenure, etc. A young policy buyer poses less risk to the insurer, since the chances of them being diagnosed with a critical illness or a lifestyle disease is relatively lower. Thus, an insurer is likely to charge you less as premium if you purchase the policy in your 20s or 30s, as opposed to buying it when you are older.
Financial security of dependents: There is nothing that can replace the loss of a loved one. However, an insurance policy, at the very least, ensures that your dependents have the means to carry on with their lives, in the event of an unfortunate eventuality. While a term insurance plan does not acquire a cash value, it does offer a high sum assured to one’s nominee in case of the policyholder’s untimely death. The lump sum amount your family receives, by way of the policy, can help them pay for immediate financial needs, plan for future milestones, and pay off any debts or liabilities that you may have, in a hassle-free manner.
Level premium rate: Under certain types of general insurance policies, the premium payable is likely to increase on an annual basis or whenever the policy is renewed. Since most life insurance firms offer term insurance plans with policy tenures ranging between 5 and 30 years, you can opt for your desired coverage period and pay the same premium amount for the duration of the policy tenure. Thus, you are assured of a level premium, which does not increase with age or inflation, for as long as your policy is active.
Helps in tax savings: Although not directly linked to your age, a key benefit of a term insurance plan is that it also helps you avail tax benefits. Thus, in addition to the policy benefits, you can also save on tax by purchasing a term insurance policy. You can claim tax benefits, up to specified limits, for premiums paid towards a term insurance plan under Section 80C of the Income Tax Act, 1961. Also, if a death benefit is paid out, your nominee can claim tax benefits for this lump sum amount under Section 10(10D) of the Income Tax Act, 1961.
Given the popularity of term insurance plans, all leading life insurance firms offer term insurance policies as part of their product portfolio. However, it is advisable that you compare various plans that are available in the market, request for premium quotes, and opt for one that provides you a suitable level of coverage at an affordable cost, before you purchase an insurance policy.
How Do Insurance Providers put a value of your life?
Purchasing a life insurance policy with a suitable coverage is a must for every individual, especially if one has dependents or liabilities. Unlike in the case of general insurance policies where the insurance provider will ascertain the value of the asset before providing you insurance for the same, it is often difficult to put a price on a human life.
The main purpose of a life insurance policy is to provide the policyholder’s dependents a payout in the event of the life assured’s death. This payout will help the family pay for immediate expenses and also help them meet future financial goals. Further, this benefit payout can act as an income replacement. Thus, it is necessary that you compare various insurance plans that are offered by insurance providers and opt for a plan that offers suitable coverage and adequate benefits.
How much coverage should you opt for?
At the time of purchasing your life insurance policy, you will be asked to select a sum assured. In most cases, this is the amount that will be paid to the nominee in the event of the policyholder’s death. Thus, it is vital that you choose a sum assured that is neither too less nor too much. A sum assured that’s too less will do little to help your family, whereas opting for a sum assured that’s too high will increase the premium payable.
Thus, before you opt for the sum assured, it is advisable to calculate your Human Life Value or HLV. A Human Life Value Calculator will help you calculate the financial or monetary value of your life, after taking your income, liabilities, savings, and investments into account. While most life insurance providers in India offer online Human Life Value Calculators, on their websites, for prospective customers to use before they purchase an insurance plan, there is also a simple formula that you can use to calculate the HLV.
Formula to calculate HLV: 70% of the policy buyer’s annual income/current rate of annuity + liabilities, loans, and debts that the policy buyer may have.
Things to be considered
Regardless of the type of insurance policy you purchase, be it a basic protection-oriented term insurance plan or a savings-oriented endowment plan, it is essential that you calculate your HLV before opting for a policy. Also, when you purchase an insurance plan, make sure to consider your coverage needs and opt for a suitable policy tenure. Further, before selecting a particular plan, make sure to research policies offered by insurers, check the claim settlement and grievance solved ratio of the insurance provider, request for premium quotes, and compare the main features and benefits of various plans.
At the time of purchasing a life insurance policy, you are required to opt for a sum assured. The sum assured is the minimum amount of money that will be paid to one’s nominee in case of an unfortunate eventuality. While the sum assured is fixed for the duration of the policy for most term insurance plans, certain plans provide policy buyers the option to make enhancements to this sum during certain key milestones in their life. This type of a term insurance policy is called life stage event term insurance plan.
The milestones or events during which you can most commonly increase your sum assured include marriage, birth of the first child, and birth of the second child,legal adoption, etc.. You will have to keep in mind that when you make an enhancement to your sum assured, your insurance provider will also charge you a higher premium.
Thus, in case you purchase a term insurance plan with a certain sum assured and find that the coverage amount is not sufficient for you, you can choose to increase the coverage if you have a life stage event term insurance plan. However, not all term insurance plans come with this option. Thus, if you would like to have the option to increase the sum assured of your insurance plan, make sure to opt for a life stage event term insurance plan.
With a variety of term plans available in the market, it’s difficult to make a choice knowing that you made the right decision. When opting for a term plan, you need to ask yourself the following questions:
Ideally, your term insurance cover should be 10 times your annual income. Anything below this might not be sufficient to take care of your nominee in your absence. Any amount above this is a good option, however, it’s not advisable to take a higher sum, as the extra premium paid towards the plan can be diverted to better investment avenues that are profitable. Listed below are certain factors that you need to check before selecting a sum assured amount:
You will be required to provide a valid ID to the insurance company. Some of the accepted ID proofs are:
Proof of Residence
The main purpose of purchasing a term life insurance policy is to ensure that one’s dependents are taken care of in case of an unfortunate eventuality. Thus, to make sure that your dependents don’t face any hassles at the time of making a claim, make sure to keep the points mentioned below in mind:
While traditionally insurance policies were always sold by agents, prospective policy buyers, today, have the option of purchasing term insurance plans through both online and offline channels. Purchasing insurance plans online is a hassle-free and convenient process. The key benefit of purchasing an insurance plan online is that you can view various policies that are offered, compare the key features and premium rates of these policies, and opt for one that is best suited to your needs. Further, you will also find that insurers offer online term insurance plans at a lower premium rate, when compared to offline term insurance policies. Thus, if you are looking to purchase an online term insurance policy, here is how you should go about it.
*Note: This is a general procedure to purchase an online term insurance plan. The actual procedure might vary from insurer to insurer and plan to plan.
Purchasing a life insurance policy is a smart way to ensure that your dependents have the financial means to meet the key milestones in their lives in the event of your untimely demise. However, for a life insurance policy to be of help to your dependents, it is vital that you opt for a sufficient sum assured or life cover when purchasing the policy.
When you buy a policy, you will be required to opt for a sum assured. Insurance providers will usually specify the minimum and maximum sum assured that you can opt for when purchasing a policy. A policy buyer will, thus, have to opt for a suitable sum assured within the limits specified by the insurer.
In case the policyholder succumbs to an untimely death during the policy tenure, a death benefit, usually amounting to the sum assured amount, will be paid to the nominee. Thus, it is necessary to opt for an adequate sum assured to ensure that you are not underinsured and that your dependents won’t have to face any financial troubles in the future.
Factors to consider to determine how much sum assured you need
Ideally, the sum assured that you opt for should be representative of the total value of your liabilities and debts, your family’s annual expenses, and the expenses that will have to be borne by your family members during significant events or milestones in their lives. While the importance of purchasing a life insurance policy cannot be understated, it is important to remember that choosing the right sum assured is just as important.
We all know that it is extremely important to have an insurance especially during the time when you have various responsibilities to fulfill and many financial goals to achieve. Having an insurance in place ensures that your family is safe and secured monetarily even if you are not around. Life post-retirement means that you are not working anymore. You are also free of your responsibilities and you may have achieved all your goals. Your children are probably independent by now and capable of taking care of themselves. So, do you need an insurance post your retirement? In some cases you do. It is generally recommended that you purchase a term insurance for yourself since it covers you for a specific period of time. But why do you have to be covered at all after you have retired? We discuss the reasons.
It is generally difficult to purchase a term insurance policy post-retirement as insurance companies are not willing enough to provide one. The premiums that you might have to pay might be expensive and become difficult for you in terms of affordability. Hence, it is important that you have planned well in advance regarding your life. For example, it is rare to have children still being dependant on you after you have retired, but if you are aware that a case like this can arise in the future, it is recommended that you purchase a term insurance well in advance.
The reasons mentioned above are strong enough for you to contemplate whether you need a term insurance post-retirement. If you still have responsibilities to take care of post your retirement then it is advisable that you act and buy a suitable term insurance plan for yourself.
Key Features of LIC’s e-Term Plan:
Key Features of Max Life Online Term Plan:
Key Features of ICICI Prudential iProtect Smart Plan:
Key Features of the SBI LIfe - eShield Plan:
Key Features of Bajaj Allianz iSecure Plan:
|Plan Name||Age at Entry||Maximum Maturity Age||Policy Tenure||Minimum Sum Assured|
|LIC's e-Term Plan||18-60 years||75 years||10-35 years||
|Max Life Online Term Plan||18-60 years (will vary based on premium payment term chosen)||85 years||
|ICICI Prudential iProtect Smart Plan||18 – 65 years||75 years||Minimum policy term is 5 years||Subject to the minimum premium|
|SBI Life - eShield Plan||
|Bajaj Allianz iSecure Plan||18 – 60 years||70 years||10, 15, 20, 25, or 30 years||Rs.2,50,000 (for general category)|
Key Features of SBI Life - Smart Shield Plan:
Key Features of LIC’s Anmol Jeevan II Plan:
Key Features of Max Life Super Term Plan:
Key Features of LIC’s Amulya Jeevan II Plan:
Key Features of HDFC Life CSC Suraksha Plan:
|Plan Name||Age at Entry||Maximum Maturity Age||Policy Tenure||Minimum Sum Assured|
|SBI Life – Smart Shield Plan||18 – 60 years||65 years||5 – 30 years||Rs.25 lakh|
|LIC’s Anmol Jeevan II Plan||18 – 55 years||65 years||5 – 25 years||Rs.6 lakh|
|Max Life Super Term Plan||18 – 65 years||75 years||10 – 35 years||Rs.25 lakh|
|LIC’s Amulya Jeevan II Plan||18 – 60 years||70 years||5 – 35 years||Rs.25 lakh|
|HDFC Life CSC Suraksha Plan||18 – 55 years||60 years||5 – 15 years||Rs.30,000|
A term insurance policy is a type of life insurance product that provides a risk cover against death to the policy buyer. Thus, in case the policyholder passes away while the policy is still in-force, a death benefit, will be paid to the nominee. Traditionally, the death benefit is paid to the nominee as a lump sum amount.
While the purpose of a lump sum death benefit is to help the policyholder’s dependents pay for immediate financial needs and to save some money for their long-term needs, the fact remains that many people do not know how to best invest this payout for maximum returns, and, as a result, might have to face financial problems a few years down the line.
Keeping this mind, life insurance firms have started to offer income replacement term insurance plans as a part of their product suite. In the case of an income replacement term insurance plan, which is a variant of a regular term life policy, the death benefit or payout will usually be split into two parts – a lump sum payout that is paid to the nominee upon the policyholder’s death and a fixed monthly income which the nominee is eligible to receive for a certain number of years, usually between 10 years and 15 years. Thus, income replacement term insurance plans are ideal if you want to ensure that your dependents are provided a regular and fixed source of income in case of an unfortunate eventuality.
Variants of Income Replacement Term Insurance Plans
Income replacement term insurance plans usually come with a few payout options, from which a policy buyer can choose an option as per the needs of his/her dependents.
Benefits of Income Replacement Term Insurance Plans
When should you purchase an Income Replacement Term Insurance Plan?
The key benefit of a purchasing an income replacement term insurance policy is that you can ensure that your loved ones have the means to pay for financial expenses that they might incur in your absence. With this mind, you should ideally purchase an income replacement term insurance plan if:
An income replacement term insurance plan is a smart choice for any individual who wishes to provide financial security to his/her loved ones for a significant duration of time. However, the decision of which life insurance product to purchase should be based on your needs, liabilities, and future requirements. For example, if you have a number of debts, opting for an income replacement term insurance plan might not be the best choice since the lump sum benefit provided by a regular term insurance policy can help your dependents clear off all the debts at once.
On the other hand, if you are looking for a financial product that will provide guaranteed monthly returns for a number of years, an income replacement term insurance policy is your best bet. Also, before you purchase an insurance plan, make sure to compare at least a few different policies offered by different insurance companies, check the pricing, and read through the policy benefits and features to make an informed decision.
Buying a Term life insurance cover is a must for everyone since it can provide your dependents financial security in case of an unfortunate eventuality. However, purchasing insurance can sometimes be a tricky business, given the number of choices that are available and the various jargons that are used by insurers to describe their products. Thus, we’ve listed down five moves that you should make, especially if you a first-time insurance buyer.
Term Life insurance plans can provide you something truly priceless – a sense of security and peace of mind. Thus, make sure to follow the tips mentioned above and invest in a plan that will give you sufficient coverage.
Purchasing an insurance policy is a significant financial decision, one that requires both thought and time. While finding the right policy and purchasing it at a competitive rate is a task in itself, there are a few things that you should look at after buying the policy to ensure that you and your nominee are able to get the most out of the policy when the need arises. Thus, we’ve compiled a five-point checklist of things you need to do after purchasing your policy.
A life insurance policy is a must-have at all times, and purchasing it will give you a sense of security and peace of mind. However, to ensure that you can avail the maximum benefits from your policy, make sure to keep the points mentioned above in mind.
Riders or add-ons are offered by life insurance companies to policy buyers at the time of purchasing their base policy. While the coverage offered by the base policy is more or less fixed, riders give policy buyers the option to customise their policy as per their needs. Thus, riders offer the policyholder coverage over and above the life cover offered by the base policy. The key benefit of purchasing an insurance rider is that you can avail an increased protection by paying a nominal premium. Also, since the insurance rider is linked to your main insurance policy, you don’t have to go through the hassles of maintaining two policies.
There are a number of riders available with term insurance plans depending on your choice of the insurance provider. Some of the main riders available with these plans are:
A few popular riders that are offered by life insurance companies include the Waiver of Premium Rider, Accidental Disability Benefit Rider, Accidental Death Benefit Rider, Critical Illness Rider, etc. Each of these riders serve a unique purpose and offer varied benefits and features. In this article, we will look at the benefits and importance of a critical illness rider.
What is a Critical Illness Rider?
A critical illness rider is attached to a term insurance policy to protect the life assured from financial expenses that he/she might have to incur in the event of being diagnosed with a critical illness. Thus, a critical illness rider covers a number of pre-specified critical illnesses, and if the life assured were to be diagnosed with any one of those illnesses, a lump sum benefit would be paid out to him/her. Thus, given the increasing number of critical illness cases and rising medical/healthcare costs, it is smart to purchase a critical illness rider along with your base insurance policy.
Reasons why you need to purchase a Critical Illness Rider
Things to consider before purchasing a Critical Illness Rider
Purchasing a critical illness rider along with your term insurance policy will provide you an extensive and comprehensive coverage. Given just how expensive it can be to treat critical illnesses, purchasing a critical illness rider as a precautionary measure is a smart move. Also, even if the rider ceases to exist after the benefit is paid out, your base policy will still continue to remain in force. Thus, you can continue enjoying the life cover provided by your term insurance policy even after the rider coverage ceases.
Term insurance plans are one of the most popular insurance plans in India. A term insurance plan provides the policyholder a risk cover against death, thereby offering financial security to his/her nominee. If the policyholder meets with an untimely death during the policy tenure, a death benefit will be paid to the nominee. That being said, there are certain limitations with regards to the kinds of death that are covered by a term life insurance plans.
Types of deaths that are not covered by a Term Insurance Plan
Group term insurance schemes or plans are specially designed to provide a risk cover against death to the members of a group. These plans are usually purchased by affinity groups or by employee-employer groups to provide additional benefits to enrolled members. Group term insurance plans are intended to provide financial security to the dependents of the enrolled members in the event of a member’s death.
Eligibility Criteria for Group Term Insurance Plans
Features of Group Term Insurance Schemes
Listed below are the general features of group term insurance plans. Please note that the exact features will vary from plan to plan and insurer to insurer.
Benefits of Group Term Insurance Plans for Employees
Benefits of Group Term Insurance Plans for Employers
Term insurance plans offer the most basic type of insurance coverage to policy buyers. These plans are purely protection-oriented and provide a risk cover against death on the life of the policyholder. If the policyholder passes away during the policy tenure, the insurer offers a death benefit payout to the nominee. However, since these plans do not acquire a cash value, they don’t provide survival or maturity benefits.
The growing popularity of term insurance plans can be credited to the fact that they offer the policy buyer a high sum assured for a low premium rate. Traditionally, term insurance plans were purchased on an individual basis. Thus, one policy could only cover one individual. However, with changing times, life insurance providers have started offer joint term life policies. As the name suggests, a joint term insurance plan provides life cover to two individuals under a single insurance policy or contract.
Features of Joint Term Life Insurance Plans
A joint term insurance plan offers policy buyers a number of advantages over regular term insurance plans. Further, several leading insurance companies are now also offering these policies to business partners and parents who want to assign the child as the co-owner of the policy. Thus, if you are looking to purchase a joint term insurance policy, make sure to compare the various plans available and opt for one that provides you adequate benefits, at a competitive price.
A convertible term insurance policy is one that allows policyholders to convert their plan into a different life insurance product type during the tenure of the policy. Convertible term insurance policies are ideal for those individuals who are unable to pay a high premium for an endowment or whole life policy at present but wish to increase their coverage in the future. Convertible term insurance policies can be offered as standalone insurance policies or riders by life insurance providers.
Features of Convertible Term Insurance Policies:
Difference between Convertible Term Insurance Plans and Renewable Term Insurance Plans:
There is a key difference between term plans that are labelled “renewable” and the ones that are labelled “convertible”. In the case of renewable term insurance policies, the policyholder can renew or extend the coverage period at maturity of the policy. During renewal, the policyholder might have to pay an increased premium due to his/her age. On the other hand, in the case of convertible term insurance policies, these policies come with an inbuilt option to convert the term insurance plan into another life insurance product, such as a whole life plan or an endowment plan.
The primary purpose of purchasing a life insurance policy is to ensure that your dependents are financially protected in case something unfortunate happens to you. The payout provided by a life insurance policy can act as an income replacement and can go a long way in helping your family maintain their standard of living.
However, purchasing a life insurance policy and nominating a dependent alone does not guarantee the financial security of your loved ones. If you have taken loans or have other liabilities, it is likely that the death benefit payout will be first used to pay off creditors. In this case, your nominee will only receive whatever is left of the benefit amount, if anything. Thus, it is a must to purchase life insurance policies under the Married Women’s Property Act (MWPA), especially if you have dependents.
What is the Married Women’s Property Act?
The Married Women’s Property Act was originally created to protect the financial interests of married women across India. As per Section 6 of the MWPA, if a life insurance policy is purchased under the MWPA by a married man, the sum assured that is payable under the policy upon the policyholder’s death will be the property of his wife/children alone. No creditor or lender will be able to claim any part of this payout.
Further, the MWPA also states that married women can purchase a life insurance policy under the MWPA with her children as the beneficiaries. In this case, the husband will not be able to claim any part of the payout provided by the life insurance firm.
Who can purchase a policy under the Married Women’s Property Act?
Any individual who is a married man and is a resident of India can purchase a life insurance policy under the Married Women’s Property Act. Further, policies under the MWPA can also be purchased by divorcees and widowers. If the policy is being purchased by an individual who is a widower or a divorcee, his children will have to be named as beneficiaries of the policy.
Married women may also purchase life insurance plans under the MWPA and nominate her children as beneficiaries. However, one thing to keep in mind is that this benefit can only be opted for by the policy buyer at the time of purchasing the policy, and only if you purchase the policy for yourself. Any type of life insurance policy can be purchased under the MWPA, regardless of the premium amount, policy tenure, etc.
Whom can you name as a beneficiary when purchasing a policy under the MWPA?
If you purchase a life insurance policy under the MWPA, you can either name only your wife as the beneficiary, only your child/children, or you can name both your wife and children as beneficiaries. Further, you also have the option of dividing the sum assured among your beneficiaries, either equally or in varying percentages.
One thing that you should remember when naming your beneficiaries is that once the beneficiary has been assigned and the policy has been issued, you cannot change the beneficiary at any time during the policy tenure.
How to go about purchasing a policy under the Married Women’s Property Act?
The process of purchasing a life insurance policy under the MWP Act is extremely simple. As a prospective policy buyer, you will need to fill-up an MWPA addendum form along with your life insurance policy application form at the time of purchasing the policy. This addendum will be available with insurance agents and can also be downloaded through the insurer’s official website. You will need to remember that a policy can only be brought under the coverage of the MWPA at the time of purchasing it.
Purchasing an insurance plan under the MWPA is a great way to ensure that your dependents are financially protected under any eventuality. Availing the benefits of the MWPA is all the more important for individuals who have taken loans or don’t have a steady source of income. Given how beneficial it can be to purchase a life insurance policy under the MWPA, it is a must that you don’t overlook this option at the time of buying your policy.
In conclusion, you will have to keep in mind that the inclusions and exclusions mentioned above are a general list, and may vary from plan to plan. Different life insurance companies may have varied clauses with regard to the exclusion, thus make sure to read through the policy brochure before purchasing a term life insurance policy. Also, make sure to inform your nominee about the coverage offered by your plan in order to avoid any hassles, at the time of filing a claim.
If you have purchased a term life insurance policy, you will be expected to make the due premium payments to your insurance provider, as per the premium payment schedule. Typically, insurance companies provide a 15-day or 30-day grace period to policy buyers, during which time they can pay their premium amount without paying an additional interest charge. However, in case you haven’t paid the due premium amount before the completion of your grace period, your policy will lapse.
You will have to remember that not all insurance plans lapse due to non-payment of premiums. For example, in most cases, term insurance plans lapse if the policyholder doesn’t pay the due premium amount within the grace period. On the other hand, if you have a traditional insurance plan that has already acquired a surrender value, your insurance policy will not lapse if you stop paying the premium. In this case, your insurance policy will simply continue as a paid-up policy with a reduced sum assured.
Reviving a Lapsed Policy
In the case of insurance plans that have lapsed, insurance providers usually offer policyholders the option to revive the insurance plan within a certain number of years - usually ranging between 2 years to 5 years. Post this revival window that is provided to you, insurance firms usually do not entertain policy revival requests.
In order to revive a lapsed policy, you will need to pay all due premiums from the date of the first unpaid premium with the applicable interest rate. In addition, if your policy has been lapsed for a while, you might also have to undergo a medical test to prove your insurability to your insurer.
Throughout our lives, we do everything we can to protect our loved ones. We ensure that our homes are safe and that the schools our children go to are well-protected. Along with such measures, we also need to ensure that our family is protected against our death. This is when we should realise the importance of life insurance policies. A life insurance policy offers financial protection to our family members in case the unfortunate were to pass. Various types of life insurance policies are available in the market - ones that offer savings, ones that offer a channel to make investments, etc.
A term insurance policy is one such life insurance policy type that carries out the basic function of providing life cover. It does not offer savings or returns of any kind. Hence, term plans are one of the most popular life insurance policies. They are simple and affordable. A few insurance companies also provide certain riders to enhance the plans.
As much as it is important to purchase a life insurance policy, it is equally important to renew the policy you hold. If you possess a term plan, you should ensure that you renew the plan so that the life cover is extended.
While purchasing a term insurance policy, it is a good idea to pick one that has the renewability option. Renewability allows you to enjoy life cover after completion of the policy term chosen by you, initially, without having to purchase a new policy or undergo a medical examination.
Here’s why renewing your term life insurance is important:
Points to note about term insurance renewal
A term insurance policy is an assurance to you that your family will manage their expenses even in your absence. Renewing a policy is no rocket science and it can be done online through the websites of the insurance companies. So, don’t think twice to renew your term insurance policy which will secure the future of your loved ones.
|Criteria||Term Plan||Endowment Plan||Unit Linked Insurance Plan (ULIP)|
|Purpose||Pure protection||Protection plus investment||Protection plus more investment opportunities in equity and debt|
|Benefits||Death benefits||Death and maturity benefits||Death, maturity and withdrawal benefits|
|Returns on Premium||No||Yes||Yes|
|Premium costs||High sum assured at low premiums||Premiums are higher for same sum assured||Premiums are higher for same sum assured|
|Loans||Loans are usually not available||Loans against policy is available||Partial withdrawals can be made after 3 years|
Life insurance offers the much needed financial security to the dependents of a person following his/her unexpected demise. There are different types of life insurance policies including term insurance, permanent life insurance, ULIPs, etc. Term life and permanent life are the two most common forms of life insurance available for customers. When it comes to choosing between these two, the decision must be made based on your personal needs, affordability, financial goals, dependents’ needs, etc. Let’s discuss the pros and cons of these two plans in detail to help you narrow down the choices.Pros and cons of Term insurance
Term life insurance is simplest form of life insurance. It is also the cheapest type of life insurance you can buy. Term plans can be bought for a specific period, say 5 years or 10 years or even 30 years, depending upon your requirement. The cost of insurance gets higher with your entry age. For instance, a term plan for a 30-year old person is much cheaper than a term plan for a 50-year old person. Once entered, the premium amount for term insurance remains the same as long as the policy is renewed. Hence, it is better to enter a term insurance plan at a very young age.
There are a few limitations associated with term insurance plans. One of the major limitations of term insurance is that it does not offer any maturity benefits at the end of the policy term. If a policyholders outlives the policy term, the plan will come to an end and no payout of any sort will be paid to the insured person. If you need protection for a longer time, you must take a separate over after one expires or you need to convert your term plan into a whole life plan (a form of permanent life insurance plan). Lack of maturity benefit is one of the reasons why term plans are much cheaper than other varieties of life insurance.Pros and cons of Permanent Life Insurance
Permanent life insurance is a kind of life insurance cover that remains active throughout a person’s life. This comes with an insurance as well as investment component to provide maximum benefit to policyholders. One of the major advantages here is that the death benefit is guaranteed to the dependents as long as the policy remains active. The cash value associated with the investment part grows steadily and matures at a guaranteed rate. Also, the premium amount remains the same throughout the life of the policyholder.
Among the downsides of permanent life insurance, it has been often stated that these plans are a little more complicated than term life insurance plans. Since there is an assured return, permanent life insurance is way more expensive than term plans. The cash value growth in this type of insurance is extremely slow, and it takes more than 10 to 15 years to accumulate a decent amount.Choosing between Term or Permanent Life Insurance
When it comes to choosing between term or permanent life insurance, various factors such as age, health condition, financial requirements, family needs, retirement plans, debts and liabilities, etc. must be taken into consideration. Also, the cost of insurance determines the choice in many cases. Term plans are ideal for replacing your income and paying for your liabilities. Permanent life plans are most suitable for estate planning. Also, permanent life is ideal if you have to provide for lifelong dependents.Conclusion
Both term life insurance and permanent life insurance policies come with their own set of advantages. Choosing between these policies must be done after understanding of your financial situation and determining the type of protection you need for your dependents. There are various life insurance companies in the market that offer both plans to their customers. Make sure that you do a thorough research on the available policies before choosing a life insurance plan that meets your expectations.
A level term insurance policy is a type of term insurance plan that is most commonly offered by Indian life insurance providers. Under a level term insurance plan, the premium payable will be determined before the risk cover commences, and this premium rate will remain constant for the duration of the policy tenure. Policy tenures for level term insurance plans can range between 5 years and 30 or 40 years, in India.
Under this type of policy, the premium rate does not rise with the policyholder’s increasing age since the premium payable for each policy year is averaged by the insurance provider. Thus, if you choose a longer policy tenure, you premium payable will be higher, and vice versa. Most level term insurance policies can be renewed by policyholders, at the completion of the policy tenure. However, at renewal, the insurer may charge you a high premium rate due to your increased age. Also, if the policyholder’s health has deteriorated significantly or if the policyholder has developed certain life-threatening diseases or ailments, the insurer may not allow the policyholder to renew the policy.
Certain insurers also provide policyholders the option to convert their term insurance plan into a whole life policy or an endowment assurance policy. However, this option varies from insurer to insurer, and customers might not always be offered this benefit. Thus, when purchasing a term insurance policy, it is advisable to start young and opt for a long policy tenure, which can provide you adequate coverage during your employment years.
The most unique feature about term insurance plans is that there is no return on premiums in the event that the policyholder survives till the end of the term. Many people do not opt for a term plan because if they survive the term, then the money is gone. There is no return on investment with a term plan. However, there are a few insurance companies in the market that offer returns on premiums with their term plans. There are not too many of these plans available, but with research one can find a term plan that provides this benefit. Under these plans, if the life insured is still alive at the end of the plan term, then they will receive the premiums paid minus any fees, administrative charges, and so on. Some of the top Return of Premium Term Plans in India are:
The Jeevan Mangal Plan from Life Insurance Corporation of India is a micro insurance product that returns all premiums paid during the policy tenure, on the date of maturity.
Key Features of LIC’s Jeevan Mangal Plan:
The Premium Return Protection Plan from Max Life Insurance is a policy that guarantees the return of all premiums paid should the policyholder survive till the completion of the plan tenure.
Key Features of the Max Life Premium Return Protection Plan:
The ICICI Prudential LifeGuard Plan comes with three plan options – Level Term Assurance, Level Term Assurance with Return of Premium, and Single Premium. Policy buyers can opt for any plan option as per their requirements.
Key Features of ICICI Prudential LifeGuard Plan:
The iRaksha TROP from Tata AIA Life Insurance is an online term insurance plan with a ‘Return of Premium’ feature. Thus, this plan provides a death benefit in the event of the policyholder’s untimely demise or a survival benefit if the policyholder survives till the end of the policy tenure.
Key Features of Tata AIA Life Insurance iRaksha TROP:
This plan is a non-participating term insurance plan which is offered at a nominal cost by the insurer. Under this plan, upon maturity of the plan, the policyholder will receive the sum of all premiums paid and the Guaranteed Additions.
Key Features of MetLife Suraksha TROP:
In the event that you need to make a claim from the insurance company for the benefits of a term plan, the steps listed below is the general process to be followed:
Term Insurance Premium Calculators are handy tools that are specially designed to help potential term plan customers to calculate their premiums for the cover they wish to opt for. The calculators are easily available online and are very simple to use. Customers can adjust the sum assured to see different premium rates. To use these calculators, you need to follow the steps given below:
The most important step while taking a term plan is to determine how much coverage would be sufficient. Ensure you choose a sum that will help fulfill the needs of your loved one in your absence.
Why do agents not sell you a term insurance plan?
It is extremely necessary to have insurance for you never know what can happen to you in the future and thus you would not want your family to suffer from a financial point of view. Term insurance is one of the most economical insurance plans that you can purchase. However, your agent may not be so keen on selling you a term insurance plan and there are various reasons behind this.
What should you do in such cases?
Purchasing not only a term insurance plan but any type of plan is an important process and hence it is always advisable that you have good knowledge regarding the type of insurance products available in the market.
If you at all take the help of an agent, ask them to tell you about term insurance plans. If your agent avoids your query and tries hard to sell you other insurance plans, it is better that you move away from him/her and look for another person to help you buy an adequate term insurance plan for yourself.
You may not need an agent to help you purchase a term insurance plan either as most of the information is given online. You can purchase them online instantly as it not only helps you but also the insurance company since they do not have to pay anything to the agent, and your premiums are utilised for the managing of your policy only. There are various websites which help you compare the best plans available for you based on your financial needs and thus, it is always advisable that you analyse the plans in which you are interested in before purchasing the most suitable one for you.
How Blockchain Technology will save the Insurance Industry billions of dollars
There are several uses for blockchain technology in the insurance industry, including fraud detection, capturing data in real-time, risk protection, data standardisation, etc. Since the data is distributed in a blockchain, chances of false billing occurring and tampered documents are less likely to happen. Thus, by way of this, insurance companies will be able to reduce their loss-adjustment expenses and also lower identity theft and cyber liability losses.
As of now, most claims teams from various insurance companies share key data on a case-to-case basis via email, making the whole process inefficient and time-consuming. With the implementation of the blockchain, insurance companies will be able to check on the blockchain if another company has already conducted an investigation of a claim. Thus, if a certain individual has been identified as a fraudster by the system, insurance companies will pay special attention to claims raised by such a person.
In order to implement a blockchain, a common ledger or platform will need to be built by an IT service provider. Post this, each insurer can set-up a node at specific locations. After this, each insurance company will be able to upload date of fraudulent records, medical records, and KYC data. By way of doing this, blockchain can eliminate about 15% - 25% of the expenses that companies might incur, thus helping the industry, as a whole, save about $5 - $10 billion.
Currently, insurance firms in India are actively engaged with the insurance regulator for approval of the blockchain project.
Life Insurance Payouts and TDS
A common misconception about life insurance policies is that the policyholder doesn’t have to pay any tax on the payout received, at maturity of the policy. However, the fact remains that maturity payouts are eligible for TDS deductions. Thus, if the policyholder’s PAN is available, TDS will be deducted at the rate of 1% of the total maturity payout. In case the policyholder’s PAN is not updated or unavailable, there will be a 20% tax deduction on the maturity claim amount, under Section 194DA of the Income Tax Act, 1961.
However, you will have to keep in mind that payouts received under certain life insurance plans will be totally exempt from tax deductions, under Section 10 (10D) of the Income Tax Act, 1961. These policies are:
Things to note
Returns from Life Insurance Policies
Life insurance prepares an individual for unforeseen circumstances. Individuals who have dependents should ideally buy a life insurance policy in order to financially support his/her family when they are not around to help them out.
Though this is the primary reason why life insurance policies were created in the first place, most people tend to look for policies that help them get returns. Insurance agents try to lure their clients into buying policies that apparently give high returns. This leads the individual to make the wrong decision while buying a policy. While in actuality, the returns received on life insurance policies are very low. Traditional life insurance policies that promise returns in the form of savings only offer about 3-5% returns. This is regarded extremely low in comparison with other savings instruments.
Hence, purchasing a term plan for life cover and a different savings instrument for long-term returns would be a better idea compared to buying a life insurance policy hoping it would serve both purposes. One can buy a simple and affordable plan for life cover and use the amount he/she wishes to use to enhance the term plan to purchase a good savings product that would provide more profitable returns. Plus, policyholders can always enjoy tax benefits under section 80C of the Income Tax Act.
The Effect of GST on Insurance Premiums
The Goods and Services Tax, more commonly known as the GST, came into effect on 1 July 2017, after being passed by the Lok Sabha in 2016. The GST, which is a value-added tax (VAT), will be levied by the Government of India on the supply of most goods and services. Thus, after its implementation, the GST has replaced a number of indirect taxes that were previously levied by central and state governments.
Impact of GST on Insurance
Before the introduction of the GST, a standard service tax of 15%, which comprised of the Basic Service Tax (14%), Swachh Bharat Cess (5%), and the Krishi Kalyan Cess (50%), was levied on various goods and services. Currently, the tax levied on insurance under the GST regime amounts to 18%, which is a 3% increase on what was charged earlier. Thus, after the GST came into effect, the premium payable for various insurance products have risen. GST has had an effect on both life insurance and general insurance businesses in the country.
|Insurance||Before GST||After GST|
|Life Insurance Plans||15%||18%|
|Health Insurance Plans||15%||18%|
|Riders and Add-Ons||15%||18%|
What should you do as a policy buyer?
Regardless of the type of insurance policy you are planning to purchase, be it a life insurance plan, a health insurance plan, or a motor insurance policy, the premium payable should not be the only thing that you consider. The main purpose of a life insurance plan is to provide your beneficiaries financial security. Similarly, the purpose of general insurance policies is to provide you a cover against expenses that you may incur in case of an untimely eventuality.
That being said, make sure to research various policies that are offered by insurance providers, request for premium quotes, compare the features and benefits of each policy, and purchase a plan that will provide your adequate coverage for a competitive rate.
Since term insurance plans do not acquire a cash value, you will not be paid a surrender benefit if you surrender the policy. If you cancel your policy during the free-look period, you will receive a full refund of your premium paid, excluding a nominal deduction. However, no term insurance plan will pay a surrender benefit to policyholders.
Before you select an insurance provider, make sure to consider the following things:
Term insurance plans do cover accidental deaths. In case the policyholder meets with an untimely death due to an accident, the insurance provider will pay the base sum assured to the nominee. However, in case you purchase an Accident Death Benefit Rider along with your term insurance plan, your nominee will be paid an additional rider benefit or rider sum assured. Thus, you can increase the benefit payable to your nominee by purchasing an additional rider.
Yes, you can purchase a term insurance plan for your spouse and pay the due premiums, as well. In this case, you will be the policyholder and your spouse will be the life assured.
Most term insurance plans do not cover suicide, death as a result of self-inflicted injuries, alcohol abuse, drug abuse, participation in illegal activities, HIV/AIDS, etc. The exclusion criteria are likely to vary from plan to plan, and hence it is recommended that you read through your policy brochure and the policy terms and conditions in detail before purchasing any insurance plan.
No, premiums paid during the grace period will not attract a penalty. However, if you pay the due premium amount after completion of the grace period, you will have to pay a revival fee to your insurance provider.
Most term insurance plans do not return premiums paid during the policy tenure, at the completion of the policy term. However, certain insurance provider offers term insurance plans with a ‘return of premium on maturity’ option. In this case, if you survive till the date of maturity, all premiums paid by you will be returned by the insurance provider.
Yes, you can cancel your term insurance plan at any time. If you cancel your policy during the free-look period, you will be provided a refund of your premium amount paid. You will have to notify the insurer within the free-look period of 15 or 30 days.
Most life insurance providers who sell term insurance plans will require you to be between 18 years and 65 years to be eligible to purchase the policy. That being said, make sure to read through your policy brochure or talk to an insurance advisor for policy-specific information.
While the documentation process will usually vary from insurer to insurer, a few basic documents that you will have to submit at the time of purchasing a term insurance plan are:
The ideal cover you should take is determined by the formula below:
Minimum sum assured = Annual income x 10 (+ loans and liabilities, if any)
Yes. You can declare yourself as a non-smoker only if you have not smoked in the last 12 months. Not declaring that you smoke can lead to your claim being rejected later for non-disclosure of important information.
Smoking is the cause of a number of health issues and cancers. The risk borne by insurers for smokers is much higher. Therefore, the premiums are higher for smokers.
Once you submit the request along with all the documentation, the insurer will usually take about 8-15 days. A claim settlement should not exceed 180 days for whatever reason.
Yes, buying a term plan online is cheaper. If you buy a plan through an agent or a branch, the insurer incurs a higher cost to deliver the plan to you. Online, the plan is sold directly to the customer making it cheaper for the insurer. Therefore, premiums are lower on online term plans.
The Insurance Regulatory Development Authority of India (IRDAI) publishes a report annually which details the claims status of every insurance company in the country. The public can view how many claims were made to a company and how many they settled.
Insurance providers offer term insurance plans with varying policy tenures, starting from a period of 5 years. Any policy that you purchase should be sufficient to meet your coverage needs. That being said, it is always advisable to opt for a long-term insurance policy since the premium rates will only keep increasing each time you renew your policy due to your advancing age.
No, insurance providers do not offer the same riders under different policies, thus making it all the more important that you consider this factor when purchasing a policy.
Yes, you can purchase more than one term insurance plan. Provided you have disclosed all facts to the insurer and have made your due premium payments, your nominee should be able to claim the payout from both policies.
Yes, term insurance plans come with a free-look period. For most term life plans, the free-look period is usually either 15 days or 30 days. You can review the terms and conditions of your policy during the free-look period and return it if it doesn’t meet your expectations.
Most life insurance plans come with a suicide clause. Thus, if the policyholder, whether sane or insane, commits suicide within a year of purchasing the policy, the insurer will not be held liable to pay a death benefit. In this case, a percentage of the overall premiums paid will be returned to the nominee. Further reasons for claim repudiation are non-disclosure of key information at the time of purchasing the policy, misrepresentation, fraud, etc.
This will vary based on the insurer’s terms and conditions. Certain insurance providers will offer term insurance plans to NRIs, while other insurers might require you to be a resident of India in order to purchase the policy. Make sure to read through the eligibility criteria of the policy or reach out to an insurance advisor before purchasing a policy if you are an NRI.
Pure term insurance plans do not provide a maturity benefit at the completion of the policy tenure. However, there are a few term insurance plans that have a ‘Return of Premium’ feature, wherein you receive the sum of all premiums paid during the policy tenure at maturity of the policy.
For most term insurance policies, your premium amount will remain constant for the duration of the policy tenure. However, in most cases, you will have to renew the policy for a slightly higher premium rate. This premium will be decided primarily on the basis of your age at the time of renewing the policy and the sum assured.
No, since term insurance plans do not have a cash value attached to them, you will receive no surrender benefit if you surrender this type of a policy. Since it is always good to have an active life insurance plan, ensure that you continue to pay the due premiums during the policy tenure.
The exact claims settlement procedure varies from insurer to insurer. However, most insurers settle claims within a period of 7 – 30 days based on the timely submission of supporting documents and the prevailing conditions of the said claim.
Yes, you can change your nominee any time during the policy tenure. You will, however, have to submit a request to the insurer for the same.
Riders are offered by insurance providers in an effort to help policy buyers customise their policy. However, you only have to purchase a rider if you are in need of it. Purchasing a rider can help you or your nominee receive an additional benefit, and thus increase the level of protection offered by the base plan.
Yes, it is completely safe to purchase a term insurance plan online since policy payments are done via secure, authorised channels. However, when buying insurance, make sure to only purchase a policy from a reputed insurance firm or from a trusted third-party website.
No, since term insurance plans do not have a cash value attached to them, you cannot avail a loan against a term life insurance policy.
Yes, policyholders and nominees are eligible to avail tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, 1961, for premiums paid and the death benefit, post the policyholder’s death.
Purchasing an insurance plan online, as opposed to offline channels, has several benefits. Firstly, since there are no agents involved, the process is likely to be more hassle-free as you can purchase the plan right from the comfort of your house. Also, when you purchase the insurance plan online, you can compare various plans offered by different insurance providers, and opt for a policy that is best suited to your requirements. Insurance providers selling online plans are also likely to have a simpler documentation process.
Insurance providers will mention the eligibility criteria for each plan in the policy brochure. Thus, if your age at entry falls within the insurer’s age limits, you will be eligible to purchase the policy.
Both types of insurance products serve different purposes. A term insurance plan offers only protection. Thus, if the policyholder passes away during the policy tenure, a payout is offered to the nominee. However, if the policyholder does survive the policy term, no benefit is paid. A ULIP or Unit Linked Insurance Plan, on the other hand, offers customers the dual benefit of a savings cum investment option. Thus, in addition to the risk cover, you are also provided the option of investing in funds that match your appetite for risk. Before opting for a certain type of policy, make sure to consider our stage of life, needs of your dependents, financial goals, and liabilities to find the right insurance policy.
A term insurance plan is a pure protection policy. Thus, they offer a risk cover with a large sum assured for a relatively low premium. Considering this, they do not serve as a savings/wealth creation option.
No, life insurance premiums are decided by the insurer. Insurance companies consider various factors to measure the premium. A few factors that could affect premium rates include the policyholder’s age at entry, the gender, previous medical conditions, smoking/tobacco use, nature and type of occupation, the type of policy, etc. Since the premium rates offered various insurers will differ, it is recommended that you compare premium quotes on a third-party website and opt for a policy that will provide you optimum coverage for a competitive premium.
Discounts and offers provided by insurers will vary from company to company and time to time. Thus, you will have to check on the insurance website or consult an agent to know if any discounts are being offered.
The minimum age at entry for most term insurance plans in the market is 18 years. Thus, if your child is under the age of 18 years, you will not be able to purchase a term insurance plan for him/her.
The decision of what insurance plan to buy will vary based on several factors, such as your liabilities, premium payment capacity, needs of your dependents, etc. The advantage of term insurance plans is that the policy buyer can opt for a high sum assured by paying a low premium. However, with increasing age, the cost of term insurance plans also rise slightly. On the other hand, a retirement/annuity/pension policy is best suited for those looking to secure their post-retirement years, by way of a steady source of income. Thus, make sure to consider these factors before purchasing any policy.
Yes, most insurance providers offer services like online premium payment, via the insurer’s official website.
A few reasons why claims get rejected are mentioned below:
Yes, you can nominate a minor at the time of purchasing your insurance policy. However, since the nominee is a minor, you will also have to nominate an appointee. Thus, in case a claim is to be made, it will have to be raised by the appointee. If you do not nominate any appointee, the death benefit will be paid to your legal guardian.
Term insurance plans are offered at a lower rate by insurance providers since they don’t acquire a cash value. Term insurance plans are protection-oriented and thus provide a risk cover against death to the policyholder. If the life assured passes away during the policy tenure, a death benefit will be paid to the nominee. However, no benefit can be claimed at maturity of the policy.
The riders that you can purchase along with your term insurance plan will vary from insurer to insurer and plan to plan. Certain popular riders that are offered with term insurance plans include:
If a policy has lapsed due to non-payment of premiums, you will be able to revive the lapsed policy by paying all due premiums with the applicable interest charge, within a period of 2 to 5 years, in most cases. In certain cases, you might also have to submit a declaration of good health. The revival period will vary from insurer to insurer. Thus, you will have to read through your policy brochure or contact your insurer at the earliest for more information.
No, as a policyholder, you are offered this feature at no additional charge. In most cases, you will simply need to navigate to the insurer’s website, click on the relevant tab, enter your policy details, select your preferred payment mode, and enter your payment details, in order to pay your premium online.
A few ways through which you can reduce your payable premium are listed below:
Most insurance providers will not require policy buyers to undergo medical tests for term insurance plans. However, this might vary based on your insurer’s terms and conditions. Thus, if you have reported being diagnosed with medical conditions in the past or are opting for a high sum assured, you might be required to undergo a pre-policy medical screening.
You can choose to pay your due premiums through online or offline channels. Most insurance providers will allow you to pay the due premium through their official website in a hassle-free manner. If you wish to pay it through offline means, you can directly walk into the nearest office of your insurance provider and pay it at the cash counter. Other premium payment methods will vary from insurer to insurer. Make sure to contact your insurer’s Customer Service Team for more information.
Premium rates for term insurance plans are linked to the policy buyer’s age at entry. Thus, an individual in his/her 20s will be offered a lower premium rate than somebody in their 40s or 50s. The reason why insurance premiums increase with age is that the insurance provider has to undertake a higher degree of risk with an older person than with a young policy buyer.
Most life insurance providers will give you an option of making enhancements to the sum assured at the time of renewing your policy or upon attaining certain key milestones in your life. However, this benefit/feature might vary as per the terms and conditions mentioned in your policy brochure.
In such a case, the death benefit will be paid to one’s legal heir.
As a prospective policy buyer, it is necessary to research various term insurance plans and compare the premium quotes offered by insurance companies. Most insurance providers offer online premium calculator tools on their website, through which policyholders can calculate the premium payable in a hassle-free manner by simply keying-in a few details. You can also visit a trusted third-party insurance website and compare the premiums and features of various insurance plans side-by-side.
For term insurance plans, the premium payable is fixed during the policy tenure, unless otherwise mentioned in the policy brochure. However, you might have to pay a higher premium at the time of renewing your policy.
Most group term insurance policies are annually renewable. However, since this might vary from plan to plan, make sure to read through the policy brochure carefully for more information.
Since term insurance policies are purely protection-oriented, they do not offer maturity benefits or survival benefits.
The riders that can be purchased will vary from plan to plan and insurer to insurer. However, some of the popular riders that are offered include the Accidental Death Benefit Rider, Accidental Disability Benefit Rider, Critical Illness Rider, etc.
Yes, most group term insurance plans come with a free-look period of 15 days.
The minimum age at entry will vary based on the insurer’s terms and conditions. However, for most policies, members will be required to be over the age of 16 – 18 years.
Life insurance is nothing but a signed document where the insurer provides cover to the insured for a specific period of time. The insurance companies provide a protective cover in the event of the person’s death. The insured, in order to continue availing the policy pays a certain sum of money called premiums.
Also called ULIP, this kind of plan not only provides you a protective cover but also invests a part of your savings in different investment tools in order to see your money maximise over a period of time.
This type of plan not only provides you cover but keeps a part of your money aside as a savings amount. If you avail this plan, you can be assured of a lump sum even after your plan attaining maturity.
This type of plan offers you protection for the rest of your life. Though the premium payable is slightly higher as compared to a term insurance plan, you can be eligible for various benefits including the tax benefit. Certain plans also offers a lump sum called the maturity benefit which you get as and when your policy attains maturity.
Pension Plans helps in ensuring that you continue to live a standard life post your retirement. These type of plans are single term in nature where you decide the payout you want to receive including the frequency.
Moneyback plans ensure that you receive a continuous flow of income getting credited to your bank account. Apart from receiving a death benefit incase of your death, you are also eligible to receive a survival benefit in case you survive the policy term. This plan is perfect for those who do not wish to invest their money in various market tools but still want a regular sum of money to secure their family financially.
Insurance companies may only offer insurance policies through digital channels in the near future. Currently, while the insurance regulator has made it mandatory for insurance companies to issue policies electronically for certain insurance products, several insurers have chosen to make this optional.
The Insurance Regulatory and Development Authority of India (IRDAI) is expected to issue certain clarifications with regard to insurance repositories in the near future. The clarifications that will be issued by the IRDAI will deal with policies that will need to be digitised, penalties for non-compliance, etc.
25 May 2018
Warburg Pincus Llc, a private equity giant, is currently in the lead to purchase Legal and General’s 26% stake in IndiaFirst Life Insurance. The estimated transaction value is $150 million, but the final value might change since talks are still in-progress between the companies. The stake sale is being managed by Ambit Corporate Finance. Warburg Pincus and Prem Watsa’s Fairfax Financial Holdings Ltd. were shortlisted for the stake sale.
IndiaFirst Life Insurance is a joint venture between Bank of Baroda, Andhra Bank, and Legal and General. The insurer offers a range of life insurance products, such as term insurance plans, savings-oriented plans, education plans, and retirement/annuity policies. The insurer’s net profit rose to 46% to touch Rs.51 crore in FY18.
22 May 2018
Max Life Insurance has recently purchased a pre-leased commercial building in Pune. The building is spread over 1.79 lakh sq. ft. It is rumoured that this deal is valued at around Rs.175 crore or $26 million. The office space is located at Magarpatta City in the Hadapsar area of Pune.
Max Life Insurance, which is the life insurance arm of Max Financial Services Ltd., also announced that this investment was in line with their long-term strategy to diversify the risk that they undertake by way of investing in various asset classes.
Max Life Insurance is a joint venture between Max Financial Services and Japan-based Mitsui Sumitomo Insurance Company. Between the partners, Max Financial Services holds a 70.75% stake in the insurance firm.
17 May 2018
In an effort to provide insurance coverage to farmers in Telangana, Mr. K Chandrasekhar Rao, the Chief Minister of Telangana, has directed the concerned officials to finalise the modalities of the insurance scheme and decide on a premium rate after holding discussions with LIC officers.
The Telangana Chief Minister had recently announced that an insurance scheme would be implemented for the benefit of farmers starting from 2 June 2018. Under this scheme, if a farmer were to succumb to an untimely death, a payout, amounting to a maximum of Rs.5 lakh, would be provided to the deceased individual’s family. LIC has been entrusted with the implementation of this scheme due to their pan-India reach and high customer satisfaction.
16 May 2018
Aegon Life Insurance, a leading private-sector life insurance firm in India, is currently offering a term insurance policy called the iTerm Insurance Plan, which is an online term plan that provides comprehensive protection to the life assured for up to 100 years. This policy is offered at an affordable price, with the insurer offering discounted premium rates to women and non-smokers.
In order to purchase this policy, prospective policy buyers will need to be between 18 years and 65 years. The minimum sum assured that a policy buyer is required to opt for is Rs.25 lakh. At the time of purchasing the policy, individuals can opt for a policy term between 5 years and 62 years, or opt to receive coverage up to the age of 100 years. Policy buyers are also given the option to purchase additional riders along with this policy.
14 May 2018
Due to the shortage of actuaries, the IRDAI (Insurance Regulatory and Development Authority of India) has recently relaxed the norms for empanelled actuaries, thus allowing them to take on valuations of more than once insurance company every quarter. However, actuaries for general and life insurance companies will continue to work independently and separately.
The insurance regulator has permitted each actuary for general insurance companies to work with up to 3 companies in each quarter. This can include one general insurance company, one standalone health insurance firm, and one general insurance business of a reinsurance firm. Likewise, actuaries for life insurance companies are now permitted to undertake valuations of up to one life insurance company and one life insurance business of a reinsurance firm in each quarter.
10 May 2018
International private equity firms Warburg Pincus Llc and Blackstone Group LP are currently holding talks with Max Financial Services Ltd to purchase a minority stake in the India-based company. Max Financial Services, which is led by Analjit Singh, is raising funds to finance a possible acquisition by Max Life Insurance, its life insurance arm.
On 10 April 2018, Max Financial Services announced that its board had approved mobilisation of finances from TPG Global Llc, KKR Capital Markets, and Standard Chartered Bank to fund an acquisition opportunity by Max Life Insurance.
9 May 2018
Subhash Chandra Khuntia, a 1981-batch IAS officer, who was a former Karnataka Chief Secretary has recently been appointed as the Chairman of the IRDAI (Insurance Regulatory and Development Authority of India). The Appointments Committee of the Cabinet (ACC) has approved Subhash Chandra Khuntia’s term for a 3-year period. The post of Chairman of the IRDAI was vacant for over 2 months after TS Vijayan’s tenure came to an end in February. It is expected that the new chairman will bring about several positive changes to the life insurance and general insurance sectors in India.
3 May 2018
India’s insurance industry has witnessed robust growth in the past few financial years, with the premium-to-GDP ratio rising to 3.5% in 2016 from 2.7% in 2001. Government-sponsored insurance schemes saw high subscription rates, with around 5.3 crore individuals enrolling under the Pradhan Mantri Jeevan Jyoti Bima Yojana and 13.47 crore individuals subscribing to the Pradhan Mantri Suraksha Bima Yojana.
During FY17-18, the first-year premiums of life insurance companies rose by 16.3% over 20.9% in FY17 and 12.3% in FY16. A key factor that can be accredited to the growth of the life insurance sector is the increase in sales of ULIP products. In the case of SBI Life Insurance, the share of ULIPs in the total business increased from 44% in 2012 to 69% in Q3 of FY17-18. Similarly, the ULIP business increased from 12% to 65% for Bajaj Allianz Life Insurance, 56% to 86% for ICICI Prudential Life Insurance, and from 12% to 14% for Max Life Insurance.
30 April 2018
ICICI Prudential Life Insurance, one of the leading private-sector insurance companies in India, reported strong earnings in FY17-18, as a result of their growth in the VNB (Value of New Business) and significant margin improvement. The insurer also witnessed an 18% YoY (year-on-year) growth in the annualised premium equivalent (APE). This was primarily due to the strong growth of the insurer’s ULIP (unit linked insurance plans) business.
All though a high share of the business came from ULIPs, VNB margins also rose to 16.5% in FY18, as compared to 10.1% YoY. This growth can be accredited to the launch of high margin savings products, which were introduced by ICICI Prudential Life in June last year, and also a reduction of operating expenses incurred by the insurer. ICICI Prudential’s persistency ratio also improved at the shorter end with the firm’s 13-month ratio touching 86.9% in FY18.
26 April 2018