Life Insurance

Comparison of Different Types of Life Insurance Plans

Top 10 Life Insurance Companies in India

There has been tremendous growth in the performance of the life insurance segment in India. In this regard, the claim settlement ratio of a company plays a significant role as it indicates the reputation of the life insurance company. It shows how many death or maturity claims have been settled in a particular financial year by an insurance company.

Below is the data on IRDA claim settlement ratio for the year 2018-19 for the life coverage providers in India.

Top 10 Companies Having the Highest Claim Settlement Ratio in India

Disclaimer- This list is in no particular order.

When it comes to claim settlement, the life insurance sector has seen a growth of 8% in the last 3 years. In 2016, 5 Lakh life insurance claims were settled with a settlement amount of ₹12,600 crores. The business, in general, has grown by 8% and the operational ratio of the life insurance business is considered stable now.

Why it is Important to Buy Life Insurance Policy?

A life insurance policy acts as a financial net in case of eventuality linked with human life, such as disability, accident, death, etc.

In case of sudden demise of the primary breadwinner of a family, apart from the emotional trauma, his/her family will be at the risk of a financial crunch due to loss of income.

In order to make sure that one's family doesn't have to make any compromises due to financial crunch, one should buy a suitable life coverage plan. It will help his/her family to sail through the tough times with dignity.

Here is why it is important to buy a life insurance policy:

• Hedge against Unpredictability- Life is unpredictable; one can't predict when his/her life will come to an end. If it were up to people, nobody would want to leave without ensuring the financial security of his/her family. Sadly, it's not up to them. In order to take care of their family’s financial future, one must buy a life policy and be a step ahead. Doing so will ensure that the financial goals set for his/her family can be accomplished even when he/she isn't around.
• Financial Cushion- It provides much-needed financial support to the insured's family by compensating for the loss of income.
• Debt-Proof Future- The sudden demise of a breadwinner is nothing short of a catastrophe for their family. While it is an emotional crisis initially, it can get converted into a financial crisis in no time. With the help of life coverage, any outstanding debt such as a motor loan, personal loan, home loan, etc. can be taken care of.
• Accomplishment of Retirement Goals- A life policy is a perfect option to accomplish long-term goals including retirement goals. Some life insurance plans offer diverse investment opportunities and some life insurance plans offer performance-based dividends.
• Mental Peace- Life policy offers much-needed peace of mind to the policyholder by assuring the financial future of their family. Even a basic life coverage plan helps to generate corpus to take care of the future financial needs of the insured's family.
• Savings Tool-In case a policyholder opts for a unit-linked plan, they will have to pay an enhanced life insurance premium. This extra amount of money is invested in the insured's preferred fund and consequently acts as a savings tool.
• Children's Future Expenses- A life policy takes care of all the future expenses of a policyholder's children such as education and wedding expenses. These days, the cost of raising a child is sky-high. Not just that, even getting admission in a reputed college costs a bomb. The life insurance policy ensures that the policyholder's children don't have to make any compromises for their education and personal needs.
• Business Security- While some life insurance plans fulfill the financial needs of the insured and his/her family, there are some life insurance plans available in the market that offer support to the insured's business. Such plans also enable a business partner to buy the share of the deceased business partner.

Once the insurance buyer knows what they want, the next step is to shop around and compare life insurance plans that fulfill their insurance requirement. The best life insurance policy is the one that fulfills the needs of the insurance buyer.

Document Required for Buying Life Insurance Policy

Documentation stands for a compilation of documents that are used as evidence of the information.

Just like every other sector, insurance companies also need proofs before issuing a life insurance policy. The policy seeker is required to submit all the relevant documents in order to avail the policy. It goes without saying that the documents should be submitted before the policy is issued. The applicant can either upload it directly by visiting the official website of the insurer or e-mail it to the insurer's customer service id. He/she can courier it to the official address as well. These documents also need to be self-attested by the insured.

At the time of 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 cover that would be offered to the insured. In most of the 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
  • If the person is self-employed then a certificate issued by CA.
  • Latest Form 16

• Address Proof

  Insurance companies would 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 would be considered as age proof as well. 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

• Other Documents

  Apart from the KYC documents, here are some other documents that an applicant would have to submit at the time of buying life insurance coverage:

  • Insurance application or proposal form.
  • Policy declaration, which is necessary if someone other than the insured has filled the policy proposal form.
  • A final declaration stating that all the 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 as 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 rejection of the application.

  Please Note:

  • As per the IRDA of India’s rules, after verifying everything, a copy of the proposal would be sent to the insured within 30 days of the completion of the formalities.
  • IRDA also states that the insurer must make a decision on the proposal within 15 days.
  • First Premium Receipt is proof of the contract. However, as per the IRDA regulations, the insured can withdraw his/her policy within 15 days of the policy issue date, if not satisfied. This period is called or Cooling-off Period in insurance terms.

  At the time of paying the annual premium upon policy renewal, the insured is provided with a premium receipt which is an important document for further reference.

Inclusions and Exclusions of a Life Insurance Plan

• What is covered under Life Insurance Plans

  Generally, the inclusions are mentioned in the policy copy. The life insurance experts recommend the insurance buyers to carefully go through the fine print of the policy copy.

• What is Not Covered under Life Insurance Plans

  Though a life insurance policy offers financial cover against multiple eventualities, there are certain situations in which the insurance company doesn’t provide the life insurance coverage.

  Here's a quick rundown of the some of the common exclusions of life plans:

• Death as a Result of Lifestyle Diseases

  Do not conceal any health-related information while filling out your application form. Lifestyle-related habits like smoking, drinking and other health risks associated with them are some of the crucial factors that decide your premium.

  People with coronary heart disease, blood pressure, diabetes, obesity etc. are more vulnerable to health complications. Also, smokers are exposed to the risk of developing various diseases. And, this is the reason why smokers need to pay a higher premium amount for a life insurance policy as compared to non-smokers as they impose a higher risk on the insurer. In addition to that, even your driving habits are accounted for.

  The insurance company will decide whether to accept or reject your application based on your lifestyle habits.

  Please Note- Make sure that you accurately declare your medical history to your insurer.

• Self-Inflicted Injuries

  Accidental deaths resulting from deliberate self-harm, self-abuse, or psychological disorders are usually not covered under life insurance coverage. The beneficiary of the policy cannot file a claim if the death of the policyholder takes place due to any such reason.

• Participating in Extreme Sports Activities

  Death due to participating in adventure sports like paragliding, scuba diving, trekking, water-sports activities, rock-climbing, sky-diving etc. are not covered under a life insurance policy.

  However, there are some life insurers in India that have tried to fill the gap amid the increasing popularity of adventure sports/activities and offered life insurance coverage in our country. However, this extended coverage comes at a higher premium cost.

• Man-Made Disasters

  The claims arising due to riots or war come under man-made disasters. For any damages caused due to negligence on the part of human beings, no coverage is provided.

• Loss of life due to HIV and STDs

  In case of the untimely death of the policyholder due to sexually transmitted diseases like HIV/AIDS, no life insurance coverage will be provided.

• Intoxication and Overdose of Drugs

  Consumption of drugs and overdose of alcohol and medicines can impose serious health risks and even result in death. If the death of a policyholder occurs due to drug overdose, it will lead to rejection of the life insurance coverage claim.

  Therefore, you should be responsible. Else the dependent members of your family will not be provided with any death benefit by the company, and the purpose of buying a life insurance policy will not be served.

• Criminal Intent/Illegitimate Activities

  Risk arising due to involvement in any unlawful activity or intentional violation of the law is beyond the scope of coverage.

How to Calculate Life Insurance Plan Premium?

The premium of life insurance differs according to the credentials of the applicant and the plan chosen. Generally, a younger and healthier individual is likely to pay a lower premium as compared to a person who is nearing his/her 50s. Similarly, the premium for a non-smoker will generally be lower, whereas a smoker is likely to be charged a higher premium. Apart from these factors, there are several other factors that determine the premium amount of a life insurance policy.

One can use an online premium calculator in order to find and select the most beneficial life coverage plan at affordable premium rates. A premium calculator is a tool designed to calculate the premium the insured is required to pay for the chosen sum assured amount. Also, the premium calculator estimates the premium amount on the basis of the policy chosen by the applicant and other factors like age, tenure, premium frequency, etc. While making use of the premium calculator, the applicant will have to provide the following information:

• Age of Applicant
• Name of Applicant
• Plan Name
• Premium Frequency
• Sum assured
• Tenure
• Opted Rider (If any)
• Gender
• Date of Birth

Once the insurance buyers enter all the required information, an estimate premium amount will be calculated.

Factors that Affect Life Insurance Policy Premium

Before zeroing in on a life insurance policy, it is important to understand how the annual premium is computed. Irrespective of the type of policy, its annual premium depends upon various factors.

Listed below are some of the important factors that affect the premium of a life insurance plan:

• Personal Factors

  • Age- The age of the insurance buyer is directly proportional to the premium of the life insurance policy. So, it is best to get a policy as early as possible. Younger individuals are considered to be healthier as compared to older individuals and tend to pose a lower risk to the insurer. Thus, the premium of policy bought at a younger age lesser.
  • Gender- According to studies, it has been found that women generally outlive men. Moreover, women generally go to the doctor more often than men. Thus, this marks women as low-risk individuals. As a result, they are charged a lower premium.
  • Medical History (Self & Family)- The medical history of an individual and his/her family is a significant factor that determines the premium amount of a life insurance policy. The premium amount of a policy depends on the severity of any past or current illnesses. For example, if an insurance buyer has recovered from a critical illness and is taking good care of his/her health then the insurer may charge a lower premium. However, the reduction of the premium rate depends on the insurer and type of life insurance policyan individual opts for. In certain cases, like cancer recovery, most of the companies do not offer a cover until the policy buyer proves that he/she has been in remission for a minimum of 5 years.
  • Marital Status- Marital status of an individual plays a vital role while deciding the premium amount and processing the insurance application. If a couple buys a joint life insurance policy, then the premium of the policy will be higher as compared to the regular policy. It is important to keep in mind that in a joint plan the payout is provided on the basis of who passes away first and there is no payout in case of death of the second partner.
  • Weight and Height- While determining the premium rate, the insurer considers the individual's BMI (Body Mass Index). As obese people are more prone to developing weight-related medical problems, they will have to pay a higher premium on their life insurance policy.
  • Occupation- The occupation of an individual plays a significant role in determining the premium of the policy. For instance, pilots, soldiers, individuals working in the mining industry, oil and gas plants, etc. are considered as a high-risk profession. As a result, they will have to pay a higher premium.
  • Debts- Any unpaid debts including mortgages, loans, credit card bills, etc. are one of the major factors that determine the amount of offered insurance protection.
  • Drinking and Smoking- An insurance company will charge a heavy premium from smokers regardless he/she is a light smoker or a heavy smoker. Thus, this results in a higher premium amount. Similarly, those who regularly consume alcohol will be charged a higher premium. It is because the consumption of alcohol exposes them to the risk of developing alcohol-related diseases.
  • International Travel- If the life insurance buyer is a regular traveler and visits places that pose potential health risks, or have a high crime rate, acts of terror, s/he may be charged a higher premium.

• Insurer Related Factors

  • Operating Cost- The total operational cost that the insurer incurs like rent, maintenance, legal fees, salaries, agents' commission, etc. affects the premium calculation of life policies.
  • Interest- For certain policies, the company invests the premium in real estate, bonds, stocks, etc. under the assumption that the insured will earn a particular rate of interest on these investments. This interest-earning is another important factor considered while calculating the premium rate of a life insurance plan.

• Policy Related Factors

  • Whole Life Vs. Term- As whole life insurance policies provide comprehensive coverage until death; they generally attracts higher premiums as compared to basic term plan that provides coverage only for a fixed duration.
  • Decreasing Pay-outs- The life insurance policy premium calculation also depends upon whether an individual wants to have coverage decreased year after year or have a fixed cover for the entire tenure of the policy.
  • Coverage- In case an individual opts for joint life coverage, the premium amount of the policy tends to be higher. It is because the plan is more likely to receive a claim request at some point. Moreover, a policy that provides critical illness cover like heart disease, diabetes, hypertension, etc. will also charge high premium rates. The premium rates are on the higher side for individuals above 60 years of age or those suffering from any pre-existing diseases because they are more likely to file claims.

Life Insurance Calculator

• Sum Assured- The life insurance premium calculator helps insurance seekers to decide the exact amount of sum assured they require in order to safeguard their families.
• User-Friendly- Premium calculators are simple and easy to use financial tools. All one needs to do is to enter the required details and the information will be displayed.
• Simplifies Calculation - Most life insurance seekers find premium calculation very confusing. The premium calculator provides the data instantly and without any hassles.

Steps to Use Life Insurance Premium Calculator

Filling the information in the life insurance premium calculator and getting the premium quotes is a simple and hassle-free process. One just needs to follow these simple steps in order to calculate the premium of the policy with the help of a premium calculator:

Step 1- Enter personal information like date of birth, marital status, gender, annual income, life cover, number of dependents, etc. The applicant may also be required to mention their smoking habits.

Steps 2- Once the applicant has entered their personal information, he/she will have to enter the amount of sum assured they want and for how many years. Also, they will have to mention how they would like their family to receive the benefits i.e. in a lump-sum or as a monthly income.

Step 3- In the final step, the premium calculator will display some relevant plans as per the details filled by the applicant. They can compare the plans and choose the most beneficial plan according to their suitability.

The Right Age to Buy Life Insurance?

Life insurance is the simplest form of insurance that helps a policyholder to secure the financial future their family following his/her unfortunate demise. It can be purchased anytime, but the premium of a life insurance plan is formulated on the basis of age, lifestyle, and financial goals of the insurance buyer. It is best to buy life insurance as early as possible. The reason is one can avail the plan at an economical price as low risks are associated with younger age.

If the advice of financial experts is to be considered, the starting month of the financial year (April) is the best time to reassess one's financial plans. On the other hand, if one considers the age factor, the below pointers should be kept in mind:

• At the age of 20

  The 20s is the most crucial, yet sensitive phase of one's life. People start their professional career and start making their financial decisions on their own. Though one may have less financial responsibilities, they are bound to increase with passing time.

  In this regard, a life coverage plan helps a person mitigate financial risks in case of their untimely demise. One big benefit of purchasing life insurance at this age is that one can opt for a comprehensive plan at a low premium since the risk to the policyholder's life is on the lower side. In other words, the younger the policyholder, the lesser the premiums will be.

  In line with this, one can avail life insurance with a sum assured of Rs. 50 lakh for a yearly premium starting from Rs. 377

• At the Age of the 30s

  This is the time when most people get married and start a family. With this, the financial responsibilities also increase manifold. Not only people start thinking about securing the future of their child(ren) but also worry about financial liabilities like a car loan, home loan or other long-term commitments that require their utmost attention. However, their income usually increases with age and the standard of living also improves. In turn, making the expenses to spiral up.

  This is the time that one thinks of buying life insurance to protect the financial future of the family. One can go for a term plan with a monthly income option. This plan allows availing a monthly/ lump sum amount to pay-off (pay off) the debts (if any). This could be a great financial backing for the family and can help to bear day-to-day expenses in the absence of the sole earning member due to their demise.

• At the age of 40

  At the age of 40s, usually, people have to take care of long-term debts like home loan, car loan, etc. Moreover, responsibilities like a child's higher education, retirement planning, healthcare expenditure for elderly parents' etc., need a considerable amount of money. Thus, one within the age group of 40 requires a comprehensive cover that secures the future of his/her family. Buying a plan with a larger sum assured is recommended at this age.

  A 40-year male non-smoker can purchase a policy with sum assured of Rs.50 lakh, the premium will cost around Rs.7198/year. The same sum assured at the age of 50, will be available approximately at Rs.12,626/year. So, one shouldn't delay buying a life insurance.

• At the age of 50

  When someone is or more than 50 years old, the premium of life or term insurance generally doubles as compared to the premium charged from 30 years old. While the premium is at this age, it is recommended that one should buy life insurance, especially if he/she is the breadwinner of the family or has huge financial liabilities to pay off.

• At the Age 65

  Many may think that over 65 years of age, they won't be able to avail term or life policy. But, it's not true. The only thing he/she has to compromise on is the policy term. At this age, opting for a 30-year plan doesn't make any sense nor would one get the approval. At the age of 65 or more, one can go for a term or whole life plan that offers complete financial protection when there is no or less inflow of money.

When to File Claims for Life insurance Plans?

Filing a claim and getting the assured amount can be a cakewalk if all the necessary steps are taken care of. It is important to have the right approach to file a claim. Here's how nominees of the policyholder or policyholder 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?

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

  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 life insurance 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 insurance policy, it is simple to apply for the claim settlement through claim form online.

  Claim Processing: In case of accidental or natural death, the beneficiary or the nominee needs to 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, they might ask the beneficiary to submit a few other documents.

  Documents to be submitted

  • Original copy of the insurance 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 certificate, and doctor’s certificate (if required).
  • The 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.

  Approval and Pay-out

  • Once all the documents have been submitted, and the life insurer has verified it, the claim will be settled by the insurer.
  • The life insurer can ask for the beneficiary's bank details - a canceled cheque or a copy of the bank account passbook, which must be attested by the bank authorities.
  • For 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 may immediately make 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
  • Some other forms or reports to support the verification

• How to file a Claim for the Maturity of the Life Insurance Policy?

  If the insured outlives the policy term, he/she will be eligible to avail policy maturity benefits. However, the insured must make sure the policy is ongoing and that 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, on the basis of which the policy maturity benefits are provided.

  In case the policyholder has nominated another individual or entity for the life insurance policy, then the nominee must sign the discharge voucher to the insurer, in order to receive the claim amount.

  Points to Remember

  • This process is applicable only to the life plans eligible for maturity benefits like additional bonus, survival benefits, etc.
  • In the event of the demise of the policyholder after the date of policy maturity, but during the policy discharge procedures, it will be considered as a maturity claim. And 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 previously purchased policy (if any). The insurance provider must be aware of the existing policy. Additionally, it can help the insurance seeker choose the right policy as per his/her needs. Otherwise, misrepresentation can be a reason for the rejection of death claim.

Life Insurance Riders & Their Importance

What are Life Insurance Riders?

These riders offer add-on benefits offered by the life insurers that help to enhance the base insurance 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 life insurance rider is as crucial as buying life insurance plan. After all, no one wants to regret an insurance decision. That's why one must take time and expert's advice before opting for a life insurance rider.

Types of Life Insurance Riders

Here are some of the rider options available for policyholders:

• Critical Illness Rider

  This rider benefit offered by life insurance plans covers major critical ailments like cancer, heart attack, kidney failure, stroke, coma, paralysis, etc. 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 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
• 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 will be terminated. In such cases, 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?

  In such a situation, waiver of premium rider acts as life a savior, as all the future premiums of the life insurance policy will be waived off and the policy will remain 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 life insurance rider if they are a daily commuter or work on on-site civil work that involves physical work.

• 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 time 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 accident 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, on a daily basis.
  • Frequently go on business trips or if the job involves physical work in a factory or on-site civil work.
• Accidental Total and Permanent Disability Rider

  Due to total temporary or permanent disability in case of an accident, if the insured is unable to earn a daily income, this rider provides financial assistance to their family in the form of a monthly income. The rider benefit may vary plan to plan and it is offered for a pre-decided time 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 on a daily basis 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 pre-determined 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 from insurer to insurer. This rider benefit 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 plan to plan or severity of the surgery. This rider benefit can be opted by anyone who wants to cover the expenses for surgery in case of any eventualities. This helps in avoiding any out-of-pocket expenses that may burn a hole in one's pocket.

What is Claim Settlement Ratio in Life Insurance?

A Claim Settlement Ratio (CSR) is the ratio of the total number of claims that an insurance provider settles to the total number of claims receives in a year. CSR for life insurers is issued by the Insurance Regulatory and Development Authority (IRDA) of India, every year.

The formula to calculate the Claim Settlement Ratio is as follows:

Claim Settlement Ratio = Total number of claims paid by the insurer /Total number of claims received by the insurer * 100

For example, if the number of death claims received by the insurance provider is 1000, out of which it settles 980, the Claim Settlement Ration of that provider will be:

Claim Settlement Ratio = (980÷1000) x 100 = 98%

The higher the CSR of the insurer, the better it is for its customers.

Claim Settlement Ratios of Life Insurance Companies in India

As per IRDA, here is the Claim Settlement Ratio of various life insurance providers in India:

Disclaimer: The ranking of insurance companies is not in any particular order. This data is taken from IRDAI claim settlement ratio in 2018-19.

• The claim settlement ratio for the sector, on the whole, stands at 96.8% for FY 2018-19. There has been a decline from the CSR of 97.4% for 2018-19. The claim rejection ratio decreased to 10% as compared to 1.73% in FY 2018-19.
• The report by IRDA also implies that the CSR of LIC was 90.4% at March-end in 2019 This was 93.31 on March 31, 2019 The claim rejection ratio for LIC has gone down marginally and is at 0.67% currently. This ratio was 0.97% at the end of the fiscal year 2018-19.
• For all the private insurance companies in India, the Claim Settlement Ratio has noticed a definitive growth of 1.52%. The ratio for the fiscal year 2018-19 was 94.2%, while in the previous financial year it was 97.2%. The claim repudiation ratio also came down to 3.97% for 2018-19 from 4.85% for the fiscal year 2018-19.

Guidelines to Select the Best Life Insurance Policy

Here's a quick rundown of certain facts that one must consider to make the right purchase:

• Claim Settlement Ratio

  It is one of the primary factors to consider while choosing the best life insurance policy. By checking the claim settlement ratio of the insurance company, the insurance buyers can get the clear idea of the claim settled ratio of the insurance company in a financial year. The company with a higher claim settlement ratio is considered more reliable and a better investment choice for individuals.

  Claim settlement ratio= (No.of Claim settled/ No.of claim received)* 100.

• Time Period

  It is one of the most important factors when it comes to selecting the best life insurance policy. If an individual wants a lifelong insurance coverage to take care of his/her family's well-being after his/her demise, then a whole life plan is the right choice.

  If one needs a protection plan for a certain time period, he/she can go for term insurance. If one wants to save some funds for his/her children's education, then he/she can buy a child insurance plan.

  To pay off his/her debts, one can buy a plan for that specific period. One can check out various types of plans like ULIPS, pension plans, money back plans, endowment plans etc., based on the time-period and individual needs.

  It is recommended that one buys life insurance at a younger age. This way, one will be able to get a high sum assured.

• Premium

  If one wants to buy life insurance for investment or tax-saving purposes, then the premium is a crucial deciding factor. For example, the premium amount for endowment plans, Unit Linked Insurance Policies, and Whole life policies is on a higher side as compared to Term Insurance, Money Back Plans and Pension Plans.

  It is important for one to know that if he/she is not able to pay the premium on time, then the opted life insurance policy will lapse.

• Dependents

  If one is the only breadwinner of the family, buying life insurance should be his/her priority. The reason is, in such a case, one's family is dependent solely on his/her income, and nobody wants their loved ones to suffer due to loss of income in case of their untimely demise. Search for a plan that provides maximum coverage as per the number of dependents.

• Evaluate the Sum Assured of Insurance

  One is recommended to have a fair estimate of their expected assured amount and then search for various life policy offered by different companies.

  Note- One can check out various life insurance companies on our website then make the right decision.

• Compare Life Insurance Quotations

  Shortlist insurance plans after comparing them on our website, check the plan details and then finalize a life insurance.

• Purchase Policy Online

  Once an individual has selected a plan/company, he/she can buy the plan online. There might be certain formalities that one will need to fulfill which may vary from one insurer to another.

  Some companies may require an insurance seeker to undergo pre-medical tests. It is so convenient to purchase a policy online as it is easy to search, compare, and get quotations online.

• Keep it Safe

  The policy document is an important document that one possesses. Therefore, it is suggested to always keep them in a safe place and make sure that the beneficiaries and the family members of the insured know about its whereabouts.

• Life Insurance Online Payment

  Presently, one can make payments for the premiums for his/her life insurance policy online, conveniently. There are many modes of online payment available such as internet banking, mobile banking, credit card, debit card, etc.

  Additionally, one can opt for an option for automatic payment where the premium amount gets deducted from his/her linked bank account directly on a monthly, quarterly, semi-annually, or annually basis.

  The options for payment include NEFT, eCMS, Standing Instructions (SI) mandate, Electronic Clearing Service (ECS), Auto Debit facility by the Reserve Bank of India (RBI), etc.

  Criteria Plan	Life Insurance	Life Annuity Plan
  Type	Life insurance plans are mainly divided into two categories i.e. term life insurance and whole life insurance.	Life annuity plans are categorized into two categories i.e. deferred annuity and immediate annuity.
  Coverage	Provides life coverage to the family of the life insured.	Life annuity plan is specifically designed to provide retirement income to the insured post-retirement.
  Tax Benefit	The premium paid towards the policy and maturity proceeds is applicable for tax deduction under Section 80C and 10(10D) of Income Tax Act 1961	The premiums paid towards immediate annuity plan are tax exempted under Section 80CCC of Income Tax Act 1961
  Payout	Life insurance plans pay out the death benefit to the policy beneficiary if the life insured passes away.	Life annuity plans pay out the insured after their retirement as a regular monthly income or as a lump-sum payment.

Step by Step Process to Buy Life Insurance Plans Online

Buying insurance online, be it life or general, is the most convenient and cost-effective way of buying insurance. There are two ways to buy an insurance policy online: either by visiting the official website of the insurer or comparing plans through an online insurance aggregator website. Most people prefer the second option because it enables insurance buyers to compare policies on various parameters such as premium, benefits, claim settlement ratio, etc. This way, one can weigh the pros and cons of a policy and get to know a plan that meets his/her insurance needs.

Keeping the convenience of insurance buyers in mind, most of the insurance companies have made the entire range of their products available online. To avail this, one just needs to follow a simple process that will enable him/her to purchase life insurance online.

• Duly Fill-in the Application Form

  The applicant has to provide his/her basic details in the application form such as name, date of birth, contact number, smoking habit (if any), income and expected life cover. Once this information is submitted, various life insurance plans with benefits and features will be displayed on-screen.

  The applicant can go through various plans and select the right policy that meets his/her requirements.

• Furnish Relevant Documents

  Next, the applicant needs to attach the relevant documents, such as identity proof, address proof, income proof, and health certificates.

• Pay the Premium

  The next step is to pay the life insurance premium online. One can pay the premium using the available payment modes. Once the payment is successful, a confirmation message will be sent to the registered contact number or e-mail id provided by the customer.

• Policy Issuance

  Once the application is approved, the policy document will be e-mailed to the insurance buyer.

  Note- Some insurers have made it mandatory for life insurance applicants to undergo preliminary medical tests. Based on the test results, the application will either be rejected or accepted.

Life Insurance for Senior Citizens in India

To help to avoid the financial stress during their golden days, insurance companies in India have introduced various coverage policies for senior citizens, such as Whole Life Insurance, Term Insurance and Guaranteed Life Insurance. Senior citizen life insurance plans allow insurance holders to save systematically and generate the much-needed corpus to make the autumn days more contented.

Below are the 4 senior citizen life insurance plans offered by various insurers:

Disclaimer: As updated on 30-08-2019, this list is in no particular order.

Life Insurance for Women in India

For working women, financial planning is essential. It makes sure that they can chase and fulfill their financial goals. Having life insurance can help them secure their family against financial uncertainties after their demise. It helps self-dependent women to systematically plan important financial goals of their lives.

With the changing scenario of the financial market, insurance companies have come up with different life insurance plans to cater to the needs of every walk of life. The life plans designed for women offer life coverage + saving options for the future.

Listed below are the four life insurance policies for women:

Life Insurance for Smokers in India

Every smoker should have life insurance, as the life expectancy of a smoker is lesser than that of a non-smoker. While smoking is not just injurious to an individual's health, it also affects one's pocket when it comes to purchasing a plan. As it may lead to premature death, insurance companies are more cautious while accepting the life insurance application of smokers.

Here are some life insurance plans specifically-designed for smokers:

Disclaimer: As updated on 30-08-2019, this list is in no particular order.

Life Insurance Policy for NRIs

Thanks to the increased insurance awareness, proactive financial planning has earned its due importance. The good thing is that the premium for online term plans has decreased. This has grabbed the attention of Non-Resident Indians. They are looking forward to buying life insurance plans in India. As a result, the best insurance companies have re-strategized their business model to leverage this huge potential market.

Term Plans offers pure life coverage and financial security. In India, most term plans can also be purchased by a Non-Resident Indian.

Purpose of an NRI Life Insurance Plan

For a Non-Resident Indian whose spouse, children and parents live in India, a perfect NRI plan must offer the following features:

• Guaranteed Income- It must offer guaranteed income at regular intervals for the dependents.
• Wealth Maximization- It must offer wealth maximization for the policyholder and his/her spouse. It will help them accomplish their financial goals.
• Children's Education- It must offer a benefit that can be used to meet the children's educational expenses.

Generally, few of the best life insurance plans are clubbed with a child plan to take care of the educational expenses of the insured's children. In case the policyholder passes away, his/her children get a lump sum benefit and the future insurance premium is taken care of by the insurer.

Payment Mode

All individuals of Indian origin, regardless of their citizenship status, are eligible to buy a life coverage plan in India. While an applicant can purchase life insurance in India from another country without any issues, additional expenses can be applicable to him/her. For NRIs, the cost of conducting medical screening and sending the reports to the insured is not covered. The premium can be paid through the following modes:

• Remittal- Remittal of foreign currency.
• NRO Bank Account- For INR denominated plans issued to NRIs, NRO bank account can be used.
• NRE/ FCNR Bank Account- NRE/ FCNR bank account can be used for foreign currency-denominated plans issued to NRIs.

Disclaimer- As updated on 30-08-2019, the payment modes mentioned-above are in no particular rank.

When to Buy NRI Life Insurance?

Before an NRI opts for life insurance, he/she must have a fixed income source. Buying life insurance at a young age is easy and hassle-free. If an NRI doesn't act as an early bird and develops a pre-existing illness, he/she will have to pay an enhanced premium for NRI plan.

From Where to buy NRI Insurance?

A question that comes in the mind of every NRI is- from where should I get insurance from, my country of residence or my country of origin?

Before an NRI opts for a plan, he/she should keep the following factors in mind:

• Cost Variation-The life insurance premium might vary from one country to the other. How economical it is to buy life insurance in India or the country of residence, depends upon the insurance company.
• Tax Benefit Variation-Taxation policies vary from one country to the other. For instance, in India, the total income from life policies is tax-free, regardless of whether it is a death benefit or maturity benefit. In the USA, the principal amount is tax-free but the earned interest taxable.

What are the Eligibility Criteria for Buying NRI Plans?

Let's take a look at the eligibility criteria for NRIs purchasing a life insurance plan in India:

• Person of Indian Origin- The insurance buyer/ his/her parents or grandparents must have been a citizen of India.
• Spouse- The insurance buyer must be a spouse of an Indian citizen.

Valid Passport-The insurance applicant must hold a valid passport issued by the Indian government

Online Life Insurance vs. Offline Life Insurance

Amid a growing number of online shoppers, many people are still apprehensive about purchasing a life insurance policy online. Those who are in a fix, the information mentioned below will help them out:

• The Cost Factor
  • Online Life Insurance-Buying life insurance online is 40 to 60% economical because the commission charged by agents is eliminated.
  • Offline Life Insurance- Since the commission charged by agents is paid from policyholder’s pocket, the premium charged for insurance plans is on the higher side.
• Comparison
  • Online Life Insurance- When purchasing life insurance online, one can compare various plans offered by different insurance companies. One can check and carefully analyze which company charges a lesser premium, which plan offers greater coverage, and then select the one that serves the purpose right. When buying insurance online, even customization is possible.
  • Offline Life Insurance- When buying life insurance offline, i.e. from an agent, one does not have the option to compare various plans.
• Transparency
  • Online Life Insurance- When searching online, one can log on to the company's website and download the policy document. It is easier to understand the policy benefits and limitations online. One can even save such documents on their system for future references, thus reducing the chances of being misled.
  • Offline Life Insurance- Quite the reverse, when purchasing offline, there is always a chance for an individual to be misled by the agent. Usually, higher expectations are set to close the deal, which only leads to disappointment later on.
• Informed Insurance Decision
  • Online Life Insurance- One can check the claim settlement ratio of the insurer from which he/she is planning to purchase a life insurance policy. It will help one to analyze whether the insurance company will be able to settle the claim or not. Once assured, an individual can enjoy the peace of mind.
  • Offline Life Insurance- When buying insurance offline, one is dependent on the particular insurance agent to furnish statistics about the claim settlement record of the company, and the authenticity of the insurance agent is always questionable.

  Note- Try to select the life insurer with the highest claim settlement ratio, if it meets your key requirements.

• Ease of Access
  • Online Life Insurance-Insurance companies functioning online are accessible to their customers 24* One can always reach out to the customer care team to get his/her concerns addressed.
  • Offline Life Insurance- When it comes to insurance agents, their availability is limited; they won’t be available around the clock.
• Flexibility
  • Online Life Insurance-There is more flexibility when one purchases a life insurance plan online, as he/she can choose from a range of options. It is recommended to compare life insurance plans online.
  • Offline Life Insurance- An insurance agent tries selling the plan that provides a higher commission.
• Policy Reviews
  • Online Life Insurance-Online customer reviews can help one to understand the market presence of the insurance company and the services offered by them.

Best Plan for Different Phases of Life

• Best Plan for Youngsters and First-time Policy Buyers

  If an individual is in his/her 20's and unmarried, s/he can conveniently pick a term life coverage plan. A term plan should be the first scheme that one chooses, as the premium charged is on the lower side. This is the benefit of buying a term life insurance policy early on in your life.

• Best Plan for Married Individuals having Children

  The financial goals of an individual may change once s/he is married. After having kids, it will change drastically. An individual ought to plan their finances accordingly. Whole life coverage schemes offer the best savings along with financial safety for their future. The insured can continue with his/her existing term plan if s/he already has one, and opt for a new whole life insurance plan.

  If one does not have life insurance and wishes to opt for one, s/he can opt for a combination of both the plans and divide his/her finances after consulting an insurance agent. It is good to buy a term policy and secure one's family. Also, s/he has to pay lower premiums in comparison to other life policies. This will be a better way to ensure significant financial assistance for one's future needs.

• Best Plan For late Beginners in their 40's

  If an individual has not bought any life insurance policy yet, one should choose a small term plan. They will have to pay a higher amount of premium for the same sum assured as compared to those policy buyers who are younger and have opted for a life policy in their early 20's.

Group Life Insurance Policy

A group life insurance policy is provided by employers, business groups, banks, and housing societies to help their employees, clients, and members.

In organizations, the employer retains the group life insurance policy contract and the insured employees receive a certificate of insurance coverage.

Features and Benefits

Here are the features and benefits of group life insurance:

• Low Price- Employees have to pay a very low premium, sometimes no premium at all, to avail a group life insurance policy. Usually, the employer pays the premium for its employees.
• No Pre-Medical Tests Required- In most cases, a pre-medical check-up is not required for availing group life cover It can be a big advantage if a person is not able to avail a personal cover due to certain lifestyle habits and pre-existing health conditions.
• Easy Claim Process- For a group life insurance policy, the claim process is quite simple. The employee only needs to accept the life insurance policy from the employer and get the certificate of insurance to file the claim in future.
• Tax Saving- Both individual and group life insurance policies provide tax exemption benefits. Since the employer purchases the group policy for its employees, the tax benefits will be provided to the employer.

How does a Group Life Insurance Policy work?

• Usually, a group life insurance policy is more like a term life insurance policy. It implies that a fixed amount of sum assured or a life coveris provided in case the insured passes away during the policy term. Upon the maturity of the policy, no maturity benefits are provided.
• A beneficiary can be nominated from the family who will get the death benefit in case of policyholder's demise.

Note- The sum assured is based on the individual's salary package and varies from one company to another.

What is the Validity of a Group Life Insurance Policy?

The coverage is provided as long as the employee is a part of the organization. When they resign or retire from the organization, they will have the option to convert the group life coverage plan into an individual plan.

To do so, the certificate of coverage given by the employer must be presented to the insurance provider.

Individual Life Insurance Policy vs. Group Life Insurance Policy

Here are the differences between an individual life insurance policy and group life insurance policy:

Please Note- A group life insurance is not an alternative to an individual life insurance policy, especially, if a person keeps on switching between private jobs.

How Does Age Affect Life Insurance Premium Rates?

While purchasing a policy, it is very important to compare life insurance plans online and understand the process of premium calculation. As we have earlier mentioned, there are various factors that determine the premium rate of a life insurance policy. Age is one of the most important factors that play a vital role in determining the premium amount.

The premium amount rises by 8%-10% every year due to the increase in the insured's age. So, it is always beneficial to purchase a life insurance policy while one's young. If the insurance buyer is young, the premium rates of the policy will be lower as compared to the premium rates for someone older. This is because young individuals tend to be less prone to develop/ contract life-threatening diseases. For the insurance provider, they are less of a liability. Moreover, purchasing a life insurance policy at a young age can help the insured save a lot of money in the long run.

As a person grows older, their life expectancy decreases. Thus, they become riskier to the insurer. Rather than increasing the policy premium every year, the insurance company spreads the premiums one would pay over 10, 20 or 30 years depending on the entry age of the insured and averages them into one amount. So, the premium amount paid by the insured remains the same every year. However, the rate increases every year by 5-8% if an individual is in his/her 40s and 9-12% if an individual is above 50 years of age.

If a person waits to buy life insurance at a later stage in life, then he/she will end up paying a higher premium. Besides, purchasing a life insurance plan at an older age can also lead to more hassles during the application process. The insurer might ask the insurance buyer to undergo extra tests like ECG and cognitive testing for dementia before issuing the policy.

It just means that the insured will have to pay a little extra premium. Having said that, paying a little extra in order to safeguard the future of the loved ones is wiser than not having a protection plan at all.

Moreover, there are many life cover policies that are designed to fulfill the requirements of the individuals in their golden years. As per applicable terms and conditions, these types of life plans may cover accidental death as well.

In case of guaranteed whole life insurance, the insured does not have to undergo any medical tests and may be covered for a higher sum assured. This type of life insurance is designed to protect the family of the insured from the financial burden that may arise after the insured passes away.

For life plans that provide accidental death coverage, age is not a factor that decides policy premium. Plus the insured does not have to undergo any medical tests. However, life cover against accidental death can only be provided to the policyholder if they have opted for accidental rider benefit along with the basic policy.

• How Much Insurance Cover Does One Need?

  If one has dependents to take care of and insufficient funds to fulfill their needs in one's absence, one needs a comprehensive life insurance policy.

  The major question is- how can one calculate the income replacement that would be required for their family post their demise? Although it's the kind of question that nobody wants to ask, when it comes to buying life insurance, one should certainly have a clear answer.

  There is no denying the fact that the primary purpose of a life coverage policy is to provide financial aid to the policyholder's dependents in case of his/her untimely demise. Hence, the cover amount should be adequate to clear up all dues and provide a regular income source for the family of the insured.

  The amount of life insurance that one will need actually depends upon the individual's insurance expectations and the type of plan s/he is looking for. For example, one can opt for a life insurance to secure their mortgage, cover debts, or provide a lump sum amount to his/her loved ones to help them maintain their standard of living.

  The following factors can help an insurance buyer decide how much insurance coverage they need:

• How Much Does one Owe?

  The amount of debt one has to pay should be an important factor while finalizing the sum assured for a life insurance policy. This is because one would not want his/her family to deal with debt collectors or struggle to repay the debt.

  For instance, Mr Kumar has a debt of Rs.20 Lakhs and he opted for a life insurance with a sum assured of least Rs.50 lakhs. This way his family will be able to repay the loan and have a substantial amount of money to live their lives comfortably. In order to ensure that the policy will cover the debt, Mr Kumar regularly pays the interest on his debt to safeguard it from snowballing into a large sum.

• How Much Regular Income does one's Dependents Need to Maintain their Standard of Living?

  The current lifestyle plays a vital role in determining the cover amount one is going to need for his/her life insurance.

  Let's say Mr Rohit earns Rs. 10 lakh a year (after tax and other deductions from his salary). In case he is not around, the money he used to spend on himself can be deducted. Hence the required income can be an estimated 80 percent of Rs. 10 lakh, i.e. Rs. 8 lakh. In this case, he will need a life insurance policy that will provide his family members with a minimum income replacement of Rs. 8 lakh per annum.

  The next crucial step is deciding for how long his family members are going to need this income. Keeping inflation in mind, the sum assured of Rs.1 crore should be sufficient for 15 years, and Rs 5 crores for the next 25 years.

  Furthermore, to determine the time period for which would need income replacement for, he will need to estimate the age at which his investments and savings will make him financially independent. He can either use the traditional retirement age of 60 years or contact a financial advisor to do the calculations for him.

  If Mr Rohit's wife Ms Shikha is also working and he is partially dependent upon her income for his expenses, he can still follow the same principle for the income replacement. All he has to do is to keep an account for his wife's financial contribution to the family while calculating the cover amount of life insurance policy.

• Are there any Future Financial Liabilities to Take Care of?

  There may be certain future needs to keep in the account for (such as one's kids' higher education, wedding, etc.), while calculating the cover amount of life insurance. One has to estimate the cost involved in these future expenditures and add them to the insurance cover.

  It is advised to re-evaluate financial plans periodically to ensure that they have an adequate cover, especially on the occurrence of major life events such as buying a new house against a loan, child's birth, etc. One cannot follow the ‘one size fits all' approach to decide the coverage amount of life insurance policy. Besides one's personal finances, one also needs to have a fair idea of how much s/he can afford to pay as monthly premiums.

  There is a range of affordable indemnity policies available and the market is offering various flexible options to the customers in the form of regular income pay-out or a lump sum amount. By making the right decision, one can easily get an affordable life insurance policy.

Illustration of Calculation of Life Insurance Policy Premium

Life insurance premium can be calculated in a matter of a few seconds by using a premium calculator. The example mentioned below will help you understand how:

The premium calculator computes premium on the basis of various factors. Using the example of the New Endowment Plan, let’s understand what the required factors are:

• Type of Plan: New Endowment Plan
• Age of Policy Buyer: 38 years
• Term of Plan: 20 years
• Sum Assured: 10 lakhs
• Accident Rider/Benefit: Yes/ Selected*

*The Accident Rider offers an additional cover for death caused due to an accident (above the base insurance plan) by charging a nominal premium on the base premium.

Please Note- Other insurance companies may or may not offer the accident benefit rider.

Here is the calculated premium as per the data mentioned above:

• Annual Premium: 49,940
• Semi-annual Premium: 25,235
• Quarterly Premium: 12,750
• Monthly Premium: 4,250

Disclaimer- The figures mentioned above are for illustration purpose only.

The aforementioned premiums are for four different types for premium intervals. Generally, annual premiums are lesser as compared to monthly, quarterly, and semi-annual options.

Comparison of Various Life Insurance Plans

• Term Life Insurance vs. Whole Life Insurance

  Term life insurance differs from whole life insurance in many ways. The insurance applicant must understand these plans carefully before opting for one. While both of these plans offer life cover, the offered benefits are different.

  An individual's life and finances can be affected if s/he chooses the wrong plan. To avoid any kind of inconvenience in the future, one can consult a reputed insurance advisor to get a clear idea of which will plan suits his/her insurance needs.

  Criteria	Term Life Insurance	Whole Life Insurance
  Premium	Term policies charge premiums for a specified period of time.	Whole life insurance plans attract premiums for the insured's lifetime.
  Maturity Age	Most term plans provide coverage until the age of 65 years to 75 years.	Whole life insurance plans offer life cover for the entire life of the policyholder.
  Cash Value	Term plans don't build cash value.	Whole life insurance plans build cash value. They offer guaranteed and non-guaranteed cash value that is referred to as dividend value.
  Policy Term	Term plans have a policy tenure (usually) varying from 5 years to 30 years.	Whole life insurance plans are for insured's lifetime.
  Paid-up Value	Term plans do not offer a paid-up value or any other feature if the policyholder wants to surrender the policy.	Whole life insurance plans can be paid-up after a specified number of years.
  Lapse	After 31 days of the missed premium payment, the term policy lapses.	Whole life insurance plans allow the cash value to be used to balance the premiums for some time in case the insured fails to make a payment.

  Which one is Ideal?

  After carefully comparing various aspects of both the aforementioned plans, one must understand that each of these plans has its own benefits. The applicant can choose a combination of both the plans to avail the best protection for his/her life.

  Remember, the applicant can buy both these plans depending on his/her financial status and future goals. In this manner, they can get the best of both the plans and avail proper protection for his/her immediate and long-term goals.

• Life Insurance Plan Vs. Life Annuity Plan

  There is a thin line difference between a life coverage plan and a life annuity plan. In the case of policyholder's unfortunate demise, life coverage insurance provides financial protection to the policyholder's family. Whereas, the annuity plans are specifically designed to provide retirement income to the insured post-retirement.

  Let's take a look at the difference between a life coverage plan and a life annuity plan:

  Criteria Life Insurance Plan		Life Annuity Plan
  Type	Life insurance plans are mainly divided into two categories i.e. term life insurance and whole life insurance.	Life annuity plans are categorized into two categories i.e. deferred annuity and immediate annuity.
  Coverage	Provides life coverage to the family of the policyholder.	Life annuity plan is specifically designed to provide retirement income to the insured post-retirement.
  Tax Benefit	The premium paid towards the policy and maturity proceeds is applicable for tax deduction under Section 80C and 10(10D) of Income Tax Act 1961	The premiums paid towards immediate annuity plan are tax exempted under Section 80CCC of Income Tax Act 1961
  Payout	Life insurance plans pay out the death benefit to the policy beneficiary if the policyholder passes away.	Life annuity plans pay out the insured after their retirement as a regular monthly income or as a lump-sum payment.

  Which one is Ideal?

  The best way to shortlist the right plan is by determining the purpose of the insurance purchase. If the main purpose of an individual is to provide financial protection to their dependents even in their absence, then they should consider opting for a life coverage plan. However, if they want to accumulate wealth so that they can secure their future after retirement, then they should consider opting for a life annuity plan.

  So, according to their investment goals and requirements, the insurance buyers can opt for both the plans.

Different Factors Taken into Consideration While Underwriting a Life Insurance Policy

There are a lot of factors that are considered while underwriting a life insurance policy. Naturally, the first and foremost factor is the life expectancy of an applicant. If an applicant leads a healthy lifestyle, they are less susceptible to contracting/ developing diseases. Also, chances are high that they have no pre-existing illness. As they are less risky for an insurer to insure, the insurer is more likely to approve his/her application. This is because such an applicant will give the insurer a chance to balance the sum assured offered with the total premiums paid by him/her during the tenure of the life insurance policy. Below we've enlisted factors that affect life insurance policy underwriting:

• Age of the Applicant: Applicant’s age shares a direct relationship with life coverage insurance premium. It means younger the applicant is, lesser the insurance premium will be. Individuals in their thirties are considered low-risk applicants. Hence, may qualify for affordable life policies with low premium rates.
• Gender of the Applicant: As per scientific research, it has been found that women have a longer life expectancy as compared to men. Since most women outlive men and pay premiums for a longer duration as compared to men, they are more likely to get an affordable life policy.
• Health History: If someone in the applicant’s family is suffering (or has suffered) from critical ailments such as cancer or heart problems, then the applicant will also be considered as a high-risk applicant. Additionally, if they have undergone some serious surgeries in the past or if they regularly fall ill, their application might be rejected by underwriters on the ground of higher risk involvement.
• Smoking Habits: If the applicant is a smoker, the premium rates for her or him can increase by 100%.
• Nature of Job: In case the applicant's job requires him/her to regularly be in a hazardous environment or situation, such as fire-fighting, mining, etc., underwriters will regard his/her case as high-risk and hence s/he may be granted the life coverage insurance policy at a very high premium rate, or in the worst-case scenario, s/he might be denied the insurance.

Thus, one can conclude that there are some of the factors that determine if the underwriters will approve one's application or not. Knowing these factors can help individuals assess their risk and accordingly and estimate their premium.

What Should a High-Risk Applicant do?

Due to many factors contributing to the approval of one's application, there is always a possibility of individuals falling into the high-risk category. Such individuals either face rejection of their application or end up paying high premiums.

Thankfully, plenty of life insurers specifically focus on high-risk applicants. These companies not only offer the best life policies at affordable rates but also have a wider range of experience when it comes to dealing with high-risk applicants.

Common Life Insurance Myths

A myth is nothing but a statement that isn't backed up by facts and figures. Unfortunately, there are so many myths floating around in the insurance market that people have started believing to be true. That being said, when a policyholder buys a life insurance plan, he/she shouldn't trust any information blindly.

Mentioned below are some common life insurance myths. In order to enjoy the benefits of life insurance, insurance buyers must not pay any heed to these myths:

• Myth 1- I’m young, I don’t need to buy life insurance.

  Since life is unfair and unpredictable, some people die an untimely death. These days, the sedentary lifestyle youngsters are leading exposes them the risk of developing/ contracting various illnesses. When you’re young, it’s the perfect time to buy life coverage. At that time, you are less likely to develop/ contract the illness, so you can easily get life coverage insurance at a lower premium.

• Myth 2- My job covers me in group life coverage insurance, I don’t need an individual insurance plan.

  It is good that your employer covers you in a group life coverage plan, it is not enough. It offers basic life coverage insurance which is insufficient. Also, when you will get a better job opportunity and will switch your job, your insurance coverage would cease to exist. It isn’t guaranteed whether your new employer will offer group insurance benefit or not. You must back up your group life coverage insurance with individual insurance coverage and enjoy best of both the worlds.

• Myth 3 - Life coverage insurance policy won’t be useful if I die. I don’t need to buy it since I don’t have any dependent family member provide for.

  Going by its name, majorly people assume that life coverage insurance offers death benefit only. This statement is partially correct since life coverage insurance offers a death benefit. That being said, life coverage insurance has much more to offer above and beyond the death benefit. There are many types of life insurance plans. The death benefit is offered under a term plan. Other life policies such as unit-linked plans, endowment plans, money back plans etc. offers maturity benefit, bonuses and survival benefit on pre-decided periodicity. It helps to accomplish long and short-term goals and acts an excellent saving tool.

• Myth 4- Best life insurance comes at an expensive premium and I can’t afford it.

  It is high time this myth should be debunked. This myth makes people have second thoughts about opting for life coverage insurance and (unwillingly) jeopardize the financial future of their family. All you need is little effort to conduct an online search to find term plans. For insurance buyers falling in the age group of 25 years- 35 years insurance, providers offer a life cover of Rs1 1 crore under Rs. 1,000 per month only.

• Myth 5- Buying best life insurance plan is a time-taking process.

  Not anymore. Thanks to the internet, life insurance providers have embraced technology and they have gone digital. You can easily browse through various life insurance plans on your smartphones. Buying life insurance online is easy, simple and hassle-free. All you have to do is analyze your insurance expectations, shop around, compare shortlisted plans and buy the plan that fulfills your insurance expectations. In a matter of a few seconds, you will get a digital policy in your mailbox.

• Myth 6- I’m covered, I have purchased a life insurance plan long back.

  Change is only constant. Compare your life insurance coverage with the life coverage offered by insurers these days. You’ll be taken aback to see the drastic changes in the scope of offered coverage. Additionally, the assured sum that was adequate long back, might not be adequate now. Your children must have grown up, so must have your and their expenses (thanks to inflation). You should review your insurance expectations and insurance coverage and compare what coverage you have with what you actually want.

  If there is a gap, you can buy a life insurance plan offering adequate insurance coverage.

• Myth 7- I can’t buy multiple life insurance plans.

  You can buy various life insurance plans but you must disclose your insurance details before buying any new plan. The advantage of buying multiple life insurance plans is that if one claim gets rejected, you have other insurance plans to rely on.

  The surefire way to not to fall into a trap set by insurance myths is to read the policy wording carefully. It will leave no room for myths to flourish. Additionally, you will be able to skim through the information and differentiate facts from myths.

How to Maintain a Life Insurance Plan?

Maintaining a life insurance plan is an easy, simple and one-step process:

• Renewal before Due Date-A policyholder must pay his/her life insurance policy premium and renew his/her plan regularly to eliminate any risk of a policy lapse.

Note- While sending renewal reminders is a courtesy of the insurance company, there is no legal obligation for them to remind the policyholder.

How to Change Nominee Details?

• Nominee Details-In case a policyholder needs to change his/her nominee details, he/she can follow the steps mentioned below:
• Duly fill the form for changing the nominee and submit it.
• In case of a minor nominee, an appointee is appointed to receive the claim amount.

• Safety of Policy Document- To be on the safer side, the policyholder can store their digital policy in a digital locker. It will enhance the security of the policy in case the operating system of device on which they have saved the policy document gets corrupted or their email gets hacked, they will still have their policy.

Pros and Cons of Having Multiple Life Insurance Policies

Having multiple life policies has its own pros and cons. As the insurance needs vary from person to person, it is important to evaluate the advantages and disadvantages of having multiple life insurance plans and then make an informed decision.

Pros of Having Multiple Life Insurance Plans

• One can purchase policies with various scope of insurance coverage and policy term.
• One can avail more coverage and customize the plans accordingly in order to fulfill the short-term and long-term financial objectives.
• Instead of enhancing coverage of an existing policy, the policyholder can get additional coverage as per their need by opting for two or more life policies.
• One can purchase multiple life insurance plansfrom the same insurance provider and can qualify for a discount.

Cons of Having Multiple Life Insurance Plans

• For some people, managing different policies can be confusing and difficult especially if they have policies from multiple insurers.
• These insurance plans attract different fees while purchasing. If an individual has multiple policies then they will be required to pay more fees.

Reasons Why You Should Not Cancel Your Life insurance policy

While it is very important for every individual to have life insurance to ensure their financial safety, there are many individuals who think that it is not important to have life insurance plans.

Let's take a look at the reasons why one should not cancel the life insurance policy:

• High Life Risk Coverage

  One of the major advantages of opting for a life insurance policy is that it provides financial coverage to the family of the insured against covered eventualities. If a policyholder cancels their policy, they will lose the policy coverage and the financial benefits that come with the life insurance policy.

• Financial Assistance

  A life insurance plan provides financial aid at the time of eventuality. It provides financial assistance to the policy beneficiary as a lump sum payment in case of the policyholder’s demise.

• Better Returns

  As compared to the other investment plans, life insurance plans offer a better return on investment. This is because few of the best life policies also include the advantage of bonuses which lacks in other options of investment.

What is the Procedure for Cancelling a Life Insurance Policy?

There can be a number of reasons to cancel a life insurance policy such as a financial crisis or an urgent need for money. It is fairly easy to cancel a plan. The following process is a guide to this process:

• Visit the official website of the life insurance provider.
• Check the cancellation process of the life insurance policy. If you need any clarity, you can get in touch the customer support via your preferred mode.
• Canceling a life insurance policy can leave a door open for taxes implications. To be on the safe side, you can consult a tax expert and get your tax implications linked queries solved.

Note- If you have a whole life insurance policy, then a partial withdrawal of sum assured is allowed without complete cancellation of the policy. With a partial withdrawal, the policy will offer up a certain sum of money that you can use to address your financial needs and still enjoy insurance coverage.

Cancellation Refund

Every policy comes with a grace period/cool-off period which enables the policyholder to assess his/her insurance expectations. It gives him/her the time to make sure that the life insurance policy is the best for him/her. In case a policyholder cancels his/her policy during the grace period, he/she will be offered a refund. Also, she/he won't have to pay any additional fee.

Common Jargons Associated with Life Insurance Policies

Here are the common jargons associated with life policies:

• Insured: The person buying the policy.
• Insurer: The insurance provider selling the insurance policy.
• Sum Assured: The total amount of money guaranteed to the insured at the maturity of the life insurance plan (or death benefit depending upon the type of opted plan). Bonuses are not included in the sum assured.
• Death Benefit: The payout received by the policy beneficiary/nominee upon the demise of the policyholder.
• Accident Benefit: In case the insured meets with an accident if his/her life insurance policy offers coverage related to expenses related to the accident such as hospitalization expenditure, medical expenses, etc. the offered benefit is known as accident benefit.
• Add-on Rider: In addition to the basic insurance coverage, some insurance providers offer additional coverage at a nominal premium. The additional coverage is known as add-on rider. It helps the policyholder to enhance the basic insurance coverage as per their insurance expectations.
• Claim Settlement Ratio: It is the ratio of the total number of claims settled by the insurance provider from the total number of received claims.
• Free-look Period: If the policyholder is unsatisfied with the terms and conditions of the life insurance policy, they can cancel the policy without paying any penalties or fees during the free-look period.
• Bonus:Considering that s/he has paid all the premiums, the additional sum of money the policyholder receives during the policy term, or upon the policy maturity of the life insurance policy is referred to as the bonus.
• Moral Hazard: When an insured is involved in situations or events that could boost insurance provider’s liability to incur extra costs on their behalf, it is known as moral hazard.
• Lapsed Policy: If a policyholder fails to pay the premium before the due date, and doesn't pay the premium within the grace period, then the policy is no longer active. Such a policy is known as a lapsed policy.
• Reinstatement: If the insured does not pay due premiums for any reason, and the life insurance policy becomes inactive, the policy can be renewed. The process to make a lapsed policy active again is termed as reinstatement.
• Convertible Life Insurance Policy: If a policy comes with the flexibility of converting into a permanent policy, the insured can get his/her term life insurance policy converted to a permanent policy as per the applicable terms and conditions.
• Renewable Life Insurance Policy: The life policies having this feature enable the beneficiaries to extend the policy coverage without re-qualifying for the same.
• Single-Premium Life Insurance Policy: Single premium policy covers the insured for a specific period of time and guarantees payment to the nominee in case of the unforeseen demise of the insured, provided that the insured has paid lump sum amount as premium.
• Cash Value: If the policyholder voluntarily gets their life insurance plan terminated before the maturity date, the insurance provider will pay the policyholder a specific amount known as cash value.
• Vesting Age: The age at which a policyholder starts getting pay-outs by the insurer is known as vesting age.
• Policy Term: The time period for which a policyholder will be covered by the insurance provider is known as the policy term.
• Grace Period: If the policyholder could not renew his/her policy before the due date, the insurance provider offers an extension for the policy renewal known as the grace period. If the policyholder renews their policy within the grace period, the policy remains in an active state and offers the insurance coverage as per the applicable terms and conditions.
• Waiver of Premium: As per the applicable terms and conditions, the policyholder must pay the premiums regularly as per the opted premium frequency. Waiver of premium is an add-on rider that the insured can opt for in case he is unable to pay the premium due to illness or disability. Premium Paying Term: The total duration for which the policyholder has to pay policy premium is known as the premium payment term. Generally, the premium paying term is the same as the policy term.

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