What is life insurance?

Life insurance is protection against financial loss resulting from insured Individual�s death. In legal terms life insurance is a contract the policy owner and the insurer, where the latter agrees to reimburse the occurrence of the insured individual's death or other event such as terminal illness or critical illness. The insured agrees to pay the cost in terms of insurance premium for the service.

The elements of life insurance are risk coverage and savings for future. Life Insurance provides you and your family with protection against all the risks involved, moreover providing you an opportunity to grow your investments. It could be viewed as a long-term investment to provide for your child�s future expenses or your expenses, post retirement.

Types of Life Insurance:

There are various types of life insurance available to you to choose as per your life stage needs. The following are the various types of life insurance offered in the market today:

1. Term Life Insurance: In this type of life insurance, risk is covered only for a specified term. These policies can be used by people who cannot afford to pay a lump sum amount on endowment assurance policy or whole life policy.

2. Whole Life Insurance: This policy exists until the policyholder is alive. Risk is covered for the entire life of the policy holder thus this plan is named as whole life policy.

3. Endowment Policy: Risk is covered for a specific period, at the end of the period; the sum assured along with the accumulated bonus is paid back to the policyholder. Endowment policy pays back the face value of the amount on the insured person�s death, after a stipulated number of years after premium payment, or at a specified age of the policyholder.

4. Money Back Policy: This policy repays survival benefits from time to time in parts during the term of the policy.

5. Savings & Investment Plans: Help you save and invest to make your money grow.

6. Retirement Plans: This plan is a retirement solution plan and does not cover life insurance. A lump sum amount or money in installments is paid for a certain period. On completion of this period, a certain amount of money is received every month, every half-year, or every year..

7. Unit Linked Insurance Plans – Ulips: Help you make market linked investments and are designed for flexibility and safety of the investment.

8. Child Insurance Policy: Plans are designed by keeping child�s financial security in mind.

Term Life Insurance Protection Plan

Term Life Insurance protection plans give you coverage only for a specified term. The main advantages of term life insurance protection plans are that they are economical on your pocket, give you the highest amount of coverage, safeguard your family against financial liability and provide you with tax benefits.
Term Life Insurance protection plans have no face value and hence the premium on such policies is comparatively lower when compared to other policies. The drawback of the policies are, if one survives the period of the policy, the insured does not get any return at the end of the policy. The premium on such policies becomes expensive with age mainly because the risk of death of is higher with age. Once over 60 years, these policies become difficult to afford.

Life Insurance Investment Plan

These Life Insurance Investment Plans give you the dual advantage of not only investing your money but also give you life coverage. These Life Insurance Investment Plans range from low risk to high risk investment propositions and depending on the risk profile a customer can invest in the same.

Life Insurance Coverage

The life insurance coverage is defined as the sum assured that you buy under the policy. You have the discretion to decide your sum assured but certain factors that affect the coverage are your annual income, your evidence of insurability, your life stage and your risk group.

Life Insurance Contract Terms

The most common terms used in a life insurance contract are:

1. Indisputability Clause: Your insurance company is entitled, usually during the first two years of the policy, to challenge the validity of your policy on the basis that you held back material information. If you are found guilty of concealment, your insurer will void the policy and return the premiums.

2. Suicide Provision: The suicide clause in your policy specifies that the insurance company will not pay the money if the insured attempts or commits suicide within a specified period from the beginning of the coverage.

3. Reinstatement Clause: If your policy has lapsed due to non-payment of premium, you can revive it by paying all the past outstanding premiums along with interest. However, you need to prove to your insurer that you continue to enjoy good health to qualify for this provision.

4. Settlement options: You have the provision to collect the settlement proceeds as per the options offered by your company.

5. Excluded Risks: Depending on the policy, death under circumstances like war or an aviation accident may or may not be covered.

6. Grace Period: There are times when you cannot pay the premiums as a result of financial troubles. Your insurance company will provide a grace period within which you can make the necessary monetary arrangements and pay your premiums.

Life Insurance Claims

Life insurance claims can be classified into the following:

1. Death Claims: In case of a claim under your life insurance policy, your beneficiary will need to provide the insurer

• A fully filled claim form
• Original policy bond or contract
• An original, or certified copy of the policyholder‘s death certificate
• Proof of identity as the beneficiary

2. Maturity Claim: In case of maturity of your life insurance policy to avail the benefits of your policy you need to submit the following to your insurer

• Original Policy Bond
• Maturity Claim form

The claim process varies from one insurance company to other