Life Insurance

What is a Life Insurance Premium?

A life insurance premium is a payment made to enjoy the policy benefits. The premium can be paid on a monthly, half-yearly, or annual basis. This premium also helps to grow the cash value of the insurance.

The insurance company determines the premium payable by the policyholder against the chosen sum assured. Having said that, the buyer can also select the policy term and coverage amount.

To calculate the sum assured, the insurer takes various factors such as your lifestyle, occupation, number of dependents, and current financial situations into consideration.

Note- No premium calculator can determine the worth of human life.

Document Required for Buying Life Insurance Policy

While applying for a policy, the life insurer will ask for the below-mentioned KYC documents:

• Income Certificate

  This is necessary to estimate the sum assured or coverage amount that would be offered to the insured. In most cases, the life insurers offer a cover up to 20 times the proposer's annual income. The standard income proofs include:

  • Salary slips of last 3 to 6 months (depending on the insurer)
  • Income Tax Returns (ITR) of the last 2 to 3 years
  • Last 6 months bank statements with continuous entries of 3 months credited salary
  • A certificate issued by CA for self-employed person
  • Latest Form 16

• Address Proof

  Insurance companies also ask for address details of the applicant. The following documents can be used as address proof:

  • Voter ID card
  • Aadhaar Card
  • Saving account bank statement
  • Passbook with latest 6 months entries
  • Latest 3 months Credit Card Statement
  • Driving License
  • 3 months Utility Bills
  • Passport
  • Ration Card

• Identity Proof

  One can provide the following documents as ID proof:

  • Passport
  • PAN Card
  • Aadhaar Card
  • Voter Id card

• Age Proof

  Some of the aforementioned documents can also be considered as age proof. However, below is a comprehensive list of documents that can be used as age proof:

  • PAN Card
  • Aadhaar Card
  • Voter Id card
  • Driving License
  • Passport
  • Ration card
  • Marriage certificate
  • School/College leaving certificate
  • Birth certificate

• Additional Documents

  Here are some other documents that an applicant would have to submit at the time of buying the policy:

  • Insurance application or proposal form
  • Policy declaration - necessary if someone other than the insured has filled the policy proposal form
  • A final declaration stating that provided information is true and that if anything is found untrue, the insurer has the right to reject the application. Subsequently, the contract would be rendered null and void and the premium paid would be surrendered. Thus, once declared by the proposer, the entire process is completed with utmost faith.
  • In case the policy is required to be registered under the Married Women's Property Act, a separate form needs to be filled and submitted to the insurer, mentioning the nominee.
  • Policy proposal also includes a personal statement, which is attached to the declaration form. Any incorrect statement may lead to your application rejection.

How to Choose the Best Life Insurance Policy?

Different plans are offered by various life insurance companies in India. It sometimes becomes a task to select the best plan from multiple options and avail the same at best coverage and a pocket-friendly premium.

Listed below are some key pointers that will help you choose the best life insurance policy:

• Reputation of the Provider

  Today the market is flooded with insurance companies providing different life insurance plans. It means that the insurance sector also has providers that may not be up to the mark or are new in the business. Therefore, go with the renowned insurer who has earned goodwill in the market and most importantly fulfil your insurance requirements.

• Claim Settlement Ratio

  The intent to buy the life insurance policy is to obtain a claim at the time of need. But what if the filed claim goes nowhere? Before selecting the insurance company, make sure that you check the claims settlement ratio of the company. This essentially gives you a better idea of the number of claims received and settled by the company in a year. The company with the highest number claim ratio is the safest bet.

• Evaluation of Sum Assured

  Before you initiate knocking on the doors of the insurance companies it is advisable to calculate the expected sum assured. Besides, it will also get you an insight into the premium calculation that is done by the insurance companies. To know which company is suitable for you, combine both the factors and you will have the answer to make an informed decision.

• Customer Reviews

  Last and not least. Make it a habit of reading customer reviews online. Today you can easily buy a life insurance policy online. Moreover, for any question, dilemma or clarification required, simply get in touch with the customer support of the insurance company. This will also help you to better understand the efficiency of a certain company in dealing with its customers.

How to File a Life Insurance Claim?

Filing a claim and getting the assured amount can be a cakewalk if all the necessary steps are taken care of in advance. It is important to have the right approach to file a claim. 

Here's how nominees of the policyholder or policyholders themselves can file a claim in India under the following scenarios:

• Upon the demise of the policyholder
• Upon maturity of the policy

• How to File a Claim in Case of Death?

  1. Inform the Insurance Company

     Contact the insurer as soon as possible on their toll-free number or over email. It is always preferable to inform the insurer directly over a call to instantly initiate the process.

  2. Share Important Details

     The beneficiary or the claimant while lodging a claim with the life insurer needs to share all the important details like:

     • Policy Number
     • Name of the policyholder
     • Place of death
     • Name of the claimant

     If the policy has been purchased offline, then the insurer would have provided a claim intimation form at the time of the policy purchase.
     If it is an online policy, simply apply for the claim settlement through claim forms online.

  3. Claim Processing

     In case of accidental or natural death, the beneficiary or the nominee must submit all the supporting documents to the life insurer as a part of the claim process.
     The claim support team will verify the insurance documents and claim declaration. In some cases, the insurer might ask the beneficiary to submit a few other documents.

     Documents to be submitted:

     • Original copy of the policy
     • Duly filled claim form
     • Death certificate of the policyholder
     • Deeds of assignment, if any
     • Discharge form signed by the witnesses
     • Supplementary documents like post-mortem reports, hospital certificates, and doctor’s certificates (if required)
     • Investigation report in case of police inquiries

     Note- If someone other than the nominee files the claim, the insurance company can ask for the legal title of succession.

  4. Approval and Pay-out

     Once all the documents have been submitted and the life insurer has verified them, the claim will be settled by the insurer.

     The life insurer can ask for the beneficiary's bank details - a cancelled cheque or a copy of the bank account passbook, which must be attested by the bank authorities.

     For the nominee's identity proof, a copy of passport, voter identity card, PAN card, Aadhaar card etc. needs to be submitted.

     Generally, the claim settlement process takes 30 days. Once approved, the insurer immediately makes the payout.

     Some insurers make the payments through the Electronic Clearance Service or ECS, which is an alternative method to make bulk payments.

     Aforementioned are the basic set of documents that are required to process a claim.
     Here are a few other documents that the insurer can ask for (if need be):

     • Employer's certificate
     • Other forms or reports to support the verification

• How to File a Claim for Maturity?

  If the insured outlives the policy term, he/she will be eligible to avail of policy maturity benefits. However, the insured must make sure the policy is ongoing and all the premiums have been duly paid.

  Here is a simple process to file a maturity claim with minimal paperwork.
  When the policy is about to mature, the life insurer generally intimates the policyholder at least 1-2 months in advance. All the details regarding the maturity date, maturity amount, and discharge voucher are provided to the insured.

  The discharge voucher (similar to a receipt) has to be signed by the policyholder in the presence of the witnesses. The voucher is then sent back to the insurer along with the original policy bond, based on which the policy maturity benefits are provided.

  In case the policyholder has nominated another individual or entity for the policy, then the nominee must sign the discharge voucher to the insurer, to receive the claim amount.
  Points to Remember:

  • This process applies only to the life plans eligible for maturity benefits like additional bonuses and survival benefits.
  • In the event of the policyholder’s demise after the date of policy maturity but during the policy discharge procedures, it will be considered as a maturity claim. The claim amount will be paid out to the nominees of the deceased policyholder.
  • At the time of buying a new life plan, the applicant must mention the details of the previously purchased policy (if any). The insurance provider must be aware of the existing policy. Additionally, it can help the insurance buyer choose the right policy as per his/her needs. Otherwise, misrepresentation can become a reason for the rejection of a death claim.

Life Insurance Riders & Their Importance

• What are Riders?

  Riders provide add-on benefits offered by the insurers that help to enhance the base coverage. However, without knowing the types of riders available in the market, one shouldn't randomly opt for the same just for the sake of increasing the cover amount of the life plan.

  Choosing the right rider is as crucial as buying a life insurance plan. After all, no one wants to regret an insurance decision. That's why one must take time and expert advice before opting for a rider.

• Types of Riders

  Here are some of the rider options available for policyholders:

  1. Critical Illness Rider

     This rider benefit covers major critical ailments like cancer, heart attack, kidney failure, stroke, coma, and paralysis. As the coverage may differ from insurer to insurer, it is important to check the list of illnesses covered by the company.

     The life insurer offers the rider benefits upon the diagnosis of the covered critical illness. Though many of the above listed critical illnesses may not cause immediate death, the treatment could cost a bomb. 

     Under this rider, the insured can use the sum assured to pay for the treatment expenses. The only condition is that the policyholder will have to survive the waiting period.
     As no one can ensure a 100 percent guarantee against a critical illness, this rider can be opted by:

     • Top-level officers working under extreme work stress
     • Chain-smokers
     • Someone leading an unhealthy lifestyle

  2. Waiver of Premium Rider

     If the insured is unable to pay the premium due to any disability that leaves him/her with no income, the life insurance policy is terminated and the insured wouldn't be offered any compensation. In such a situation, how will their family manage their finances without a regular source of income?

     Waiver of premium rider acts as life saviour as all the future premiums of the policy will be waived off and the policy remains in force.
     In case the premiums are not paid due to the death or accidental disability of the policyholder, the premium for the base policy and riders will be waived off and the policy will continue.

     While this rider can be opted along with critical illness and accidental total and permanent disability rider, the insured can opt for it separately. As uncertainties can't be predicted, one should consider buying this rider if they are a daily commuter or work on on-site civil work that involves physical work.

  3. Accidental Death Benefit Rider

     With this rider, in case of the accidental death of the insured, the nominee will receive the basic sum assured amount along with the additional accidental death benefit. In many cases, the policyholder doesn’t pass away on the spot, so most of the insurance companies set a period after the incident to extend the offered coverage.

     Let’s say, if the policyholder passes away after 100 days of the accident, the nominee will still receive the sum assured. That's why it is imperative to check the life insurance policy clause carefully at the time of opting for a rider.

     As accidents can happen anywhere, anytime, everyone should ensure the financial future of their family. While anybody can opt for this rider, it is a must-buy for those who:

     • Commute and travel by car, bike, public or commercial vehicles, daily
     • Frequently take business trips or the job involves physical work in a factory or on-site civil work

  4. Accidental Total and Permanent Disability Rider

     If the insured is unable to earn a daily income due to total temporary or permanent disability arising due to an accident, this rider provides financial assistance to their family in the form of a monthly income. The rider benefit may vary from plan to plan and is offered for a pre-decided period.

     For instance, some companies offer rider benefits for 5 years to 10 years from the occurrence of the accident. In case of the death of the insured during the policy term, the beneficiary would receive the outstanding sum assured amount.

     This rider is important to buy for the individuals who:

     • Commute and travel daily by bike, car, public transport, train, or commercial vehicle
     • Do physical work in on-site civil work or factories or travel frequently for business
     • Term Rider: This rider offers a monthly income or lump sum to the beneficiary in the event of the premature death of the insured. The term rider offers extra coverage for death in addition to the base sum assured which is predetermined by the insurer.
     • Hospital Cash Rider: Under this rider, a fixed amount is paid in case of emergency/planned hospitalization. The benefit amount, terms and conditions, and sum assured may vary for different insurers. This rider benefit is offered by life insurers for those policyholders who want coverage for expenses related to emergency hospitalization.
     • Surgical Care Rider: Under this rider, a lump sum amount is paid if the insured undergoes an unavoidable surgery in India. However, the rider benefit may vary from plan to plan or severity of the surgery. Anyone who wants to cover the expenses for surgery in case of any eventualities can opt for this rider. This helps in avoiding any out-of-pocket expenses that may burn a hole in one's pocket.

Claim Settlement Ratio of Life Insurance Companies

The figures in the below table are as per the annual report of IRDAI 2019-2020:

Disclaimer: Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.

Important Life Insurance Terms You Should Know

To understand life insurance completely it is important to know the basic terminologies that are often used within the plan. Sometimes, you may not be aware of certain terms and refrain from buying the plan.

Let us help you to understand the given below key important life insurance terms with brief explanations of each:

• Policyholder

  Anyone who buys the life insurance plan and pays the premium is referred to as the policyholder. An individual might own the policy but may or may not be the life assured.

• Life Assured

  In simple words, the individual who is protected or insured is known as a life assured. In case of demise of the life assured, the beneficiary will receive the insurance sum. For example, when a husband buys the life insurance policy for his wife then he is the policyholder and the wife is the life assured.

• Nominee

  The person nominated by the policyholder is known as a nominee. The nominee will receive the life insurance payouts along with other benefits in case of any eventuality. The nominee is also referred to as the beneficiary. 

  A nominee is declared when the policy is being bought. Generally, the policyholders’ immediate family members such as the spouse, children and parents are declared as a nominee who is financially dependent upon them.

• Policy Tenure

  The duration for which the life insurance plan provides coverage is known as the policy tenure (also known as policy term). On the premise of the type of life insurance policy and the terms and conditions of the insurance provider, the life insurance policy tenure differs.

• Premium

  It is the amount you pay to keep the life insurance plan active. In case you are unable to pay the life insurance premium sum either before the due date or under the grace period, the policy lapses. The life insurance premium sum depends on factors such as the policy term, the age of the life assured, and lifestyle habits.

• Sum Assured

  It is the guaranteed sum the beneficiary or nominee will receive when the life assured has passed away. Most of the time, the choice to arrive at a sum assured is upon the premise of the financial loss that might incur due to the death of the life assured. 

  At the time of buying the life insurance plan, the policyholder chooses this sum, which is then paid to the nominee if the life assured passes away during the policy term.

• Death Benefit

  The death benefit is the sum paid to a nominee when the life assured has passed away during the policy tenure. It is to be noted that sum assured and death benefits are two different terms. This implies that the death benefit could be equivalent or higher than a sum assured as it could involve the rider benefit too.

• Maturity Benefit

  The sum paid to the policyholder when the policy tenure is completed is known as the maturity benefit.

• Lapsed Policy

  When the policy gets terminated because of non-payment of the premium amount even after the grace period is known as a lapsed policy. There are life insurance companies that offer the facility to revive a lapsed policy only when the outstanding premiums are duly paid by the policyholder.

• Grace Period

  It is essentially the extension given by the insurance provider to the policyholder after the due date of the premium payment. When the policyholder pays the premium sum then the cover of the plan continues.

• Revival Period

  When the premiums are not paid during the grace period the policy gets lapsed. 

  In case you wish to continue the plan, then you are provided with an option of re-activating the lapsed plan. However, it should be completed within a certain period after the end of the grace period. It is known as the revival period.

• Free-look Period

  In case you are not comfortable with the terms and conditions of the plan it can be returned within a certain timeframe mentioned in the policy documents. This is known as a free-look period. After deducting stamp duty charges, medical examination, proportionate risk premium, the premium sum will be refunded.

• Rider

  The riders are an additional benefit that enhances the overall coverage of the plan. These rider benefits are optional and enhance financial safety to secure the family against any unforeseen event by paying an additional premium sum.

• Claim Process

  When the life assured passes away during the policy term, the nominee will file a claim to receive the death benefit. This process is known as the claim process.

• Exclusions

  Certain situations remain uncovered within a life insurance plan. In case the claim is made on such exclusions then no benefit is provided by the insurance company.

Steps to Buy Life Insurance Plan Online from Policybazaar

To get insured from the comfort of home, an individual can buy life insurance online from Policybazaar Insurance Brokers Private Limited. 

Follow these simple steps to buy life insurance online:

Step 1- Choose your gender and enter details like your full name and date of birth

Step 2- Enter your active phone number and click on view plan

Step 3- Answer 4 simple questions to get accurate quotes

• Do you smoke or chew tobacco? Yes or No
• Select your annual income 
• Select the occupation type
• Choose the educational qualification 

Step 4- Select the best life insurance plan from the displayed options. For suggestions and help, the insurance buyers can choose ‘get free advice’. 

Step 5- Choose and compare different life insurance plans on Policybazaar Insurance Brokers Private Limited. You can choose the personalised plan option as well. 

Step6- After selecting the plan, you can pay the premium or speak to the customer care representative to make an informed choice. 

Step 8- Finally you will have to pay the premium. 

Once all the steps are completed, the policy documents will be emailed to you on the registered mail ID.