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Life insurance is a contract between a policyholder and a life insurance company, wherein the insurance company offers financial coverage, in exchange for the life insurance premium paid during the policy term. Premium paid gets tax benefits under Section 80C and 10D of the Income Tax Act, 1961.
A life insurance company pays a pre-defined amount as a policy benefit to the beneficiaries.
A life insurance policy is an agreement between an insurance company & a policyholder that offers financial coverage under which the insurance company guarantees to pay a certain amount to the nominated beneficiary in the unfortunate event of the insured person demise during the term of life insurance plans. In exchange, the policyholder agrees to pay a predefined amount of money as premium either on a regular basis or as a single premium. If covered by the policy, coverage will be provided for critical illness as well.
Since it provides enhanced insurance coverage, it attracts an enhanced insurance premium.
True to its name, online life insurance plans are available exclusively online. An online life insurance plan also offers death benefit in the form of a high sum assured at a low premium. Moreover, online life insurance plans also offer several tax benefits under Section 80C of the Income Tax Act, 1961.
A life insurance premium is a payment that is to be paid to enjoy the life insurance benefits. The life insurance premium is paid annually, however, the mode of premium payment can be selected from monthly or half-yearly also. This premium also helps to grow the cash value of life insurance.
The insurance company determines the premium payable by the policyholder to the insurance company. Having said that, the insurance buyer gets to select the term of the policy and the sum assured.
In order to calculate the sum assured of a life insurance policy, the insurer takes various factors such as your lifestyle, occupation, number of dependents, finances, sum assured etc. into consideration.
Note- There is no premium calculator that can calculate the worth of human life.
Listed below are the best life insurance policy plans:
|Insurance Plan||Entry Age (Minimum/Maximum)||Policy Term (Minimum/Maximum)||Sum Assured (Minimum/Maximum)|
|Aegon Life iTerm Plan||18/75 years||5/40 years||10 Lakh/NA|
|Aviva I-Life Plan||18/55 years||10/35 years||25 Lakh/NA|
|Bajaj Allianz i-Secure||18/70 years||10/30 years||20 Lakh/NA|
|Bharti AXA e-Protect Term Plan||18/75 years||10/30 years||25 Lakh/NA|
|HDFC Click2Protect Plus||18 /65 years||10/30 years||10 Lakh/10 Crores|
|HDFC Life Sanchay||30/45 years||15/25 years||1,05,673/NA|
|HDFC SL Crest||14/55 years||10/10 years||(7 or 10) x Annual Premium/20 x Annual Premium|
|ICICI Pru iProtect||20/75 years||10/30 years||3 Lakh/NA|
|Kotak Life Preferred e-Term||18/75 years||10/40 years||25 Lakh/NA|
|LIC Amulya Jeevan||18/60 years||5/35 years||25 Lakh/NA|
|LIC New Jeevan Anand||18/50 years||15/50 years||1 Lakh /NA|
|LIC Term Plan||18/75 years||10/35 years||50 Lakh/NA|
|Max Life Online Term Plan||18/70 years||10/35 years||25 Lakh/100 Crores|
|SBI eShield Plan||18/70 years||5/30 years||20 Lakh/NA|
|SBI Shubh Nivesh Plan||18/60 years||5/30 years||75000/NA|
Disclaimer: As updated on 30-08-2019, this list is in no particular order.
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:
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 insurance policy is the one that fulfills the needs of the insurance buyer.
The perks of buying a life insurance policy are beyond protecting policyholder’s family in tough times. Undoubtedly, it is a necessity for a breadwinner to safeguard their dependents in case of their unfortunate and untimely demise, accident or physical disabilities that lead to a loss of income. Having said that, there is a long list of other benefits that make life insurance plans a must-have.
Sadly, most people are not aware of the many benefits offered by a life plan. All they care about are the death and disability benefits. However, there is plenty of other benefits offered by life policies such as maturity benefits, tax benefits etc.
Let's take a look at the benefits offered by life insurance plans:
Till date, many people don't know that life policies can also be used as loan collateral. Based on the type of the life insurance policy and the surrender value, the policyholder can opt for a loan from a bank or NBFC (Non-Banking Financial Company) as per applicable terms and conditions.
Most individuals are unaware of the online payment benefit (the payment mode chosen by an individual drastically affects the premium of a life insurance policy). As a matter of fact, an insurance company's administrative costs considerably go down when an individual opts to pay his premiums online.
This is because there is no paperwork-related cost involved. Also, the life insurer is able to save a significant amount on the commission, which they pay to the agents for offline insurance buying and renewing.
Please Note- This discount varies from company to company.
Almost every life insurer offers various payment periodicities to its policyholders- annual, half-yearly, quarterly or monthly mode.
If a policyholder chooses to pay the policy premium on an annual basis, the company can use it for investment purpose that automatically means more profits and benefits for the company.
Once a policyholder chooses the payment periodicity, this discount is often already included in the premium rate charged by the life insurer.
There are some life insurers that provide an option for policyholders who own a business. In the case of policyholder’s demise, their business partners can purchase the policyholder’s share without any hassles. In this scenario, the business partner will simply have to sign an agreement with the life insurer and the pay-out received after selling the policyholder's share will be given to their dependents.
However, it's important to understand that the nominee or the dependents of the policyholder won’t get a stake in the company.
For paying a life policy premium, a policyholder is eligible for a tax rebate under Section 80C of the Income Tax Act 1961. Irrespective for oneself, their spouse or their children, the premium paid for parents and in-laws is exempted.
This benefit is offered by all the life insurers - be it private sector life insurers or public sector life insurers.
Additionally, the maturity benefit of life policies also qualifies for tax deductions under Section 10 (10D) of the Income Tax Act, 1961.
The life insurance plans not just offer financial protection to the policyholder's family or dependents, but also offer the advantage of tax benefit. Here are the tax benefits offered under a life insurance plan:
There are various investment options that provide the benefit of tax exemption U/S 80C of Income Tax Act. Under ITA, the Hindu Undivided Families (HUF) and individuals can avail the tax exemption.
Under different sections of IT Act such as 80C, 80CC, and 80CCE, the policyholder can avail the maximum tax exemption of up to Rs.1, 50, 000.
The premiums paid up to a maximum 20 percent of the sum assured amount are applicable for deductions. In case, the premium amount paid by the insured, in a particular financial year, is more than 20 percent of the actual sum insured, it does not qualify for tax benefit. In addition to that, policies issued before March 31, 2012, are applicable for tax this exemption.
On the other hand, for the insurance policies issued on or after April 1, 2012, the tax exemption is only applicable for the premiums payable not exceeding 10 percent of the actual Sum assured.
In case, the policyholder claims tax exemption under Section 80C and if the life insurance policy has been terminated or canceled within a period of 2 years from policy issuance, then the tax benefit availed by the insured will be reversed. This type of tax deduction is valid on all types of life insurance plans, except Unit Linked Insurance Plans (ULIPs).
For ULIPs, if the insured claims tax exemption U/S 80C and if the plan has been terminated or canceled within the initial 5 years of the policy tenure, then the tax exemption availed by the insured will be reversed.
Any amount of money received under life insurance plans is eligible for a tax deduction. The sum assured amount received can be:
Let's have a look at the situations where life insurance policy benefit is taxable:
In order to offer the best coverage, life policies are divided into two categories. The first offers pure life coverage and the second offer a perfect blend of insurance & investment.
In order to know what life insurance plan is suitable for an individual, it's important to know what types of life policies are offered in the Indian insurance market.
Mentioned below are the different type of insurance plans and coverage:
|Life Insurance Plans||Coverage|
|Term Plans||Pure risk cover|
|ULIPs||Insurance + Investment benefits|
|Endowment Plans||Insurance cover + Savings|
|Money Back Plans||Insurance cover with periodic returns|
|Whole Life Insurance Plans||Coverage for a lifetime|
|Child Plans||To create a corpus for child's education, wedding etc.|
|Retirement Plans||Financial cushion aiding financial independence post retirement.|
Here are the details of the aforementioned life insurance plans:
Term insurance is the most basic form of life coverage. It is affordable insurance that one can buy easily, without any hassles.
Simply put, a term insurance plan offers death cover for a stipulated time period. God forbid, in the event of the sudden demise of the insured during the policy tenure, the insurance provider offers a pre-decided death benefit as a lump sum, as a monthly/ annual pay-out, or as combined benefits to the nominee. The best term plan offers comprehensive coverage at a competitive premium.
A unit-linked insurance plan or ULIP is a type of life coverage plan that offers a perfect blend of insurance & investment. It comes with a long-term investment opportunity along with valuable investment flexibility.
The premium paid towards a ULIP is partly used as a risk-cover for life coverage plan and the remainder is invested in market funds such as debts, equities, bonds, market funds, hybrid funds etc. The selection of the market funds depends purely on the risk appetite of the insurance buyer. Based on that, the insurer invests the amount in the capital market as per the insured's preference.
Endowment plans are also known as traditional life insurance plans. These plans come with an element of saving. As compared to the risk factor of other investment products, the risk involved is lower (so are the returns).
An endowment policy is a combination of a life coverage plan and savings plan. It invests a particular amount in life coverage and the remaining amount is invested by the provider. In case the policyholder outlives the policy term, the insurance provider offers a maturity benefit to him/her. Furthermore, some life insurance endowment policies may offer bonuses on pre-specified periods. If applicable, the bonuses are paid either to the policyholder at the time of policy maturity or to the nominee in case of a death claim.
Return on Investment- It acts as a long-term financial planning tool that offers returns on investment at the time of maturity.
True to its name, this type of life coverage plan offers a stipulated percentage of the assured sum. It is paid back to the policyholder at pre-decided intervals. This payback benefit is known as a survival benefit.
Money back is the best type of life insurance policy for individuals who want their investments to be accompanied by an element of liquidity. Furthermore, these plans are eligible for bonuses as declared by the provider (if any).
Accomplishment of Short -Term Financial Goals- It acts as a tool to accomplish short-term financial goals and a golden opportunity to earn a return on investment at the time of maturity.
A whole life insurance plan offers life coverage as long as the insured lives. There are a few providers that offer life coverage up to 100 years of age. Contrary to the coverage offered by term plans, this plan offers extensive insurance coverage.
The sum assured is computed when the life coverage plan is purchased and is payable to the nominee after the demise of the insured. Along with the sum assured, bonuses (if any) are also paid to the nominee. It is one of the best life insurance policies that offer coverage up to whole life at low premiums.
A variant of whole life insurance is available in the market that clubs the benefits of life insurance plans with ULIPs. A whole life ULIP offers extensive coverage along with high returns.
Please Note- In case the policyholder outlives the 100 years of age, the insurance provider pays the benefit of matured endowment coverage to the policyholder.
A child plan acts as a tool to generate funds for the policyholder’s child. A child plan helps one build a corpus for their child that can be used for the child’s education and wedding. Generally, child plans either provide benefits as installments on an annual basis or a 1-time payout once the insured child is 18 years of age.
In an unfortunate event of the untimely demise of the policyholder during the policy term, immediate premium payment is payable by the insurer. In such cases, some insurance providers waive off future premiums but the plan continues till the opted policy term.
A retirement plan, also known as an annuity or pension plan, helps the insured accumulate a corpus for their retirement. Typically, retirement plans provide benefits in the form of installments on an annual basis or a 1-time pay-out once insured is 60 years of age. In case the insured outlives the policy term, the plan offers vesting benefit. In case of the insured's demise, it offers the death benefit to the policy nominee.
Note- In case of the insured's demise while the policy is active, the life insurer pays a pre-decided amount to insured's nominee.
|Basis||Term Policies||Whole Life Insurance Policies||Endowment Plans||Unit Linked Insurance Plans||Money Back Plans||Pension/Annuity Plan|
|Overview||Term life insurance plans are the simplest form of life coverage.||These plans offer protection till whole of life and may or may not have an investment component.||These plans offer protection along with investment component. The returns has some amount of guaranteed component that could be as high as 100% guaranteed returns..||These plans offer market linked returns along with protection component. The investment returns completely depend on the performance of fund and are not guaranteed by the insurer.||These plans offer protection along with investment component. The returns could be in form of an income for a fixed period of years.||These plans offer income till a person survives. Some plans also have a return of purchase price on death.|
|Policy Term*||Usually range from 5 years to 50 years||This policy covers the whole life of life insured.||Generally, ranges between 10 years to 35 years.||Term ranges from 10 years to 20 years.||Generally, it can be up to 25 years.||No fixed term.|
|Maturity Benefits||You are not paid any maturity benefit on the survival.||You are paid the maturity benefits while you reach a certain age (maybe between 80 to 100 years).||You will be paid the maturity benefits if you survive the policy term.||You can avail the maturity benefits on your survival at the end of the policy term.||You are offered the survival benefits on the maturity of your policy.||No maturity benefit is offered. You are entitled to a regular income till you survive.|
|Death Benefits||In case of your demise, while the life insurance policy is active, the sum assured is paid to the beneficiary.||In case of your demise, while the life insurance policy is active, the sum assured is paid to the beneficiary.||The death benefit is paid to the beneficiary upon demise of the life insured.||The death benefit is paid to the beneficiary in case of life insured’s demise while the policy is active.||The death benefit is paid to the beneficiary in case of the life insured’s demise while the policy is still active.||A few plans provide a provision to return the amount invested in case of life insured’s demise.|
|Ideal for||These plans are ideal for individuals who are seeking to safeguard the financial interest of their loved ones without paying excessive premiums.||The whole life insurance plans are ideal for individuals who wish to safeguard the financial interest of their loved ones and want to leave a legacy amount||These plans are perfect for individuals who want financial protection along with guaranteed returns from investment.||This is a best-suited plan for individuals with a medium-term investment goal to expand their portfolio. Moreover, it is an ideal plan for people with high income and good investment sense.||The individuals looking for securing their life and wanting to earn money at a regular interval of time. Best-suited for individuals seeking protection plus investment benefit.||This scheme is an ideal option for individuals who want to secure their retirement by getting a source of regular income after retirement.|
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 coverage plan.
Choosing the right life insurance rider is as crucial as buying life coverage 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 coverage insurance rider.
Here are some of the rider options available for policyholders:
1. 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:
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 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 coverage insurance 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 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:
4. 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:
Generally, the inclusions are mentioned in the policy copy. The insurance experts recommend the insurance buyers to carefully go through the fine print of the policy copy.
Though a life insurance policy offers financial cover against multiple eventualities, there are certain situations in which the insurance company doesn’t provide the insurance coverage.
Here's a quick rundown of the some of the common exclusions of life plans:
1. 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.
2. Self-Inflicted Injuries
Accidental deaths resulting from deliberate self-harm, self-abuse, or psychological disorders are usually not covered under life coverage insurance. The beneficiary of the policy cannot file a claim if the death of the policyholder takes place due to any such reason.
3. 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 insurance coverage in our country. However, this extended coverage comes at a higher premium cost.
4. 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.
5. 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 insurance coverage will be provided.
6. 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 coverage insurance 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.
7. 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.
It is advised that you thoroughly read the life insurance policy's document and understand all the terms and conditions. It can be a little monotonous but it will be worth the weariness. Opting for a policy without going through the inclusions and exclusions can cost you more than you can imagine.
Nobody wants their loved ones to face financial crises in their absence. So, it is suggested to be aware of all the inclusions and exclusions of the life insurance policy. Knowing the policy inclusions and exclusions will enable you to know what not to do to ensure smooth claim processing.
Life coverage 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 coverage insurance plan is formulated on the basis of age, lifestyle, and financial goals of the insurance buyer. It is best to buy life coverage 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:
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 coverage 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 coverage insurance with a sum assured of Rs. 50 lakh for a yearly premium starting from Rs. 3776.
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 coverage 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 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 coverage insurance.
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 coverage insurance, especially if he/she is the breadwinner of the family or has huge financial liabilities to pay off.
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.
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 coverage insurance at a later stage in life, then he/she will end up paying a higher premium. Besides, purchasing a life coverage 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 coverage 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.
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 coverage 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 coverage 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 coverage 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:
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 coverage 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.
The current lifestyle plays a vital role in determining the cover amount one is going to need for his/her life coverage 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 1.5 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.
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 coverage 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.
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.
As per IRDA, here is the Claim Settlement Ratio of various life insurance providers in India:
|Insurer||Death Claims Received||Death Claims Paid||Claims Rejected/Repudiated||Claim Pending||Claim Settlement Ratio (CSR in %age)|
|HDFC Standard Life||12,946||12,822||23||34||99.04%|
|Canara HSBC Oriental||1006||946||0||1||94.04%|
|Future Generali India||1,157||1,101||4||8||95.16%|
|PNB Metlife India||4170||4,012||0||0||96.21%|
|Star Union Daichi||1,258||1,217||1||5||96.74%|
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 97.68% for FY 2018-19. There has been a decline from the CSR of 97.74% for 2018-19. The claim rejection ratio decreased to 1.10% as compared to 1.73% in FY 2018-19.
The report by IRDA also implies that the CSR of LIC was 98.04% at March-end in 2018. This was 98.331 on March 31, 2017. 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 95.42%, while in the previous financial year it was 93.72%. The claim repudiation ratio also came down to 3.97% for 2018-19 from 4.85% for the fiscal year 2018-19.
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:
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:
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
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
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) -
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
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 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
|Insurance Company||Claim Settlement Ratio|
|Life Insurance Corporation||97.79%|
Disclaimer- This list is in no particular order.
When it comes to claim settlement, the life insurance sector has seen a growth of 7.8% in the last 3 years. In 2016, 8.5 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.
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
Informed Insurance Decision
Note- Try to select the life insurer with the highest claim settlement ratio, if it meets your key requirements.
Ease of Access
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.
Mentioned below are the steps:
Step 1- 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.
Step 2- Furnish Relevant Documents
Next, the applicant needs to attach the relevant documents, such as identity proof, address proof, income proof, and health certificates.
Step 3- Pay the Premium
The next step is to pay the life coverage 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.
Step 4- 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.
Here's a quick rundown of certain facts that one must consider to make the right purchase:
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.
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 coverage insurance at a younger age. This way, one will be able to get a high sum assured.
If one wants to buy life coverage 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.
If one is the only breadwinner of the family, buying life coverage 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.
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.
Shortlist insurance plans after comparing them on our website, check the plan details and then finalize a life coverage insurance.
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.
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.
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.|
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:
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:
Insurance companies would ask for address details of the applicant. The following documents can be used as address proof:
One can provide the following documents as ID 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:
Apart from the KYC documents, here are some other documents that an applicant would have to submit at the time of buying life coverage insurance:
The premium of life coverage 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:
Once the insurance buyers enter all the required information, an estimate premium amount will be calculated.
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.
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 coverage insurance plan:
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:
*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:
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.
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.
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.
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 coverage insurance plan.
If one does not have life coverage 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.
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:
How does a Group Life Insurance Policy work?
Note- The sum assured is based on the individual's salary package and varies from one company to another.
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:
|Individual Life insurance policy||Group Life insurance policy|
|The policyholder owns the insurance contract.||The employer or the organization owns the contract and certificates are issued to the employees.|
|The policyholder can cancel the life insurance policy as per their discretion.||The employer/company can cancel the life insurance policy.|
|The coverage is not affected by the policyholder's status of employment.||One is covered as long as she/he is an employee or a member of the organization.Note- Terms and conditions related to probation and notice period vary organization to organization.|
|The premiums are computed based on the individual's age and medical history. The life insurance company considers all the risk factors before providing insurance coverage.||It is dependent on the financial strength of the employer or the organization.|
|A life insurance policy premium increases as an individual ages.||The premium is not dependent on an individual's risk factor.|
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.
Definition of Underwriting
In simple words, underwriting refers to the process followed by an insurance company wherein an underwriter analyzes the risk involved in insuring a particular applicant. In the evaluation process, the amount of coverage as well as payable premium is decided.
While underwriting a prospective customer, the underwriter aims to protect the insurer's business if the prospective customer appears to be too risky.
Keeping this point in mind, one should understand that if they are too risky to the insurance company, s/he may be denied life coverage insurance.
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:
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.
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.
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:
|Plan Name||Entry Age||Policy Term||Benefits|
|Reliance Super Golden Years Plan||Minimum: 66 yearsMaximum: 75 years||10 years||
|HDFC Life Click2 Protect Plus Term Plan||Minimum: 18 yearsMaximum: 65 yearsMaturity Age: 75 years||10 years -40 years||
|SBI Life e Shield||Minimum: 18 yearsMaximum: For increasing cover: 60 yearsFor level cover-65 years||Minimum: 5 yearsMaximum: 30 years||
|Aegon Life Insta Pension Plan||For SelfMinimum: 50 yearsMaximum: 75 years For SpouseMinimum: 50 yearsMaximum: 75 years||
Disclaimer: As updated on 30-08-2019, this list is in no particular order.
For working women, financial planning is essential. It makes sure that they can chase and fulfill their financial goals. Having life coverage 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:
|Plan Name||Entry Age||Sum Assured||Policy Term||Benefits|
Shriram New ShriVivah Plan
Minimum: 18 years
Maximum: 50 years
Rs. 1 lakh
10/ 15/ 20 years
- Death benefit
- Maturity benefits (reversionary bonus and terminal bonus)
Minimum: 18 years
Maximum: 55 years
Rs. 25 lakh
- Money-back facility
- Tax rebate on higher sum assured
- Option to pay the premiums in advance
- Rider cover such as critical illness, accidental benefit, congenital disability
PNB Mera Term Plan
Minimum: 18 years
Maximum: 65 years
Maturity: 99 years for all options (75 years for joint life cover option)
Rs. 10 lakh
81 years for all options
10 to 40 years for joint life cover option
- Death benefit
- Premium can be paid monthly, half-yearly or annually
- Tax benefit to be earned
- Return of the policy premium on survival
SBI Life Smart Women Advantage Plan
Minimum: 18 years
Maximum: 50 years (for the base plan)
35 years (for APC & CA option)
Maturity: 60 years
2 lakh to 10 lakh
10 and 15 years
- Death benefit
- Option for inbuilt premium waiver in case of critical illness
Every smoker should have life coverage 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 coverage insurance application of smokers.
Here are some life insurance plans specifically-designed for smokers:
|Plan Name||Entry Age||Sum Assured||Policy Tenure||Benefits|
|Aegon Life iTerm Insurance Plan||Minimum: 18 yearsMaximum: 65 yearsMaturity age: 75 years||Rs. 25 lakh||Minimum: 5 years Maximum: 40 to 75 years||
|Aviva i-Life||Minimum: 18 yearsMaximum: 55 yearsMaturity: 70 years||Minimum: 25 lakhMaximum: No limit||10 to 35 years||
|Bharti AXA Life eProtect||Minimum: 18 yearsMaximum: 65 yearsMaturity: 75 years||Rs. 25 lakh||10 to 30 years||
|Bajaj Allianz Life eTouch||NA||Up to Rs. 10 cr||NA||
Disclaimer: As updated on 30-08-2019, this list is in no particular order.
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:
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.
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:
|Account||Suitable For||Account Type||Premium can be paid from||Currency of premium||Tax|
|NRE (Non-Resident External Account)||NRIs having a source of income only in abroad.||Savings/ current/ fixed deposits account||Abroad||INR||Exempted|
|NRO (Non-Resident Ordinary Account)||NRIs having a source of income in a foreign country as well as India.||Savings/ current/ fixed deposits account||Abroad and India both||INR||Exempted|
|FCNR (Foreign Currency Non-Resident Account)||NRIs wanting to invest in India, who don't want to expose themselves to currency-related risk(s).||Fixed deposit||Abroad||
Any of the following:
Disclaimer- As updated on 30-08-2019, the payment modes mentioned-above are in no particular rank.
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:
Let's take a look at the eligibility criteria for NRIs purchasing a life insurance plan in India:
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.
Maintaining a life insurance plan is an easy, simple and one-step process:
Note- While sending renewal reminders is a courtesy of the insurance company, there is no legal obligation for them to remind the policyholder.
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
Cons of Having Multiple Life Insurance Plans
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:
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.
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.
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.
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:
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.
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.
The implementation of Goods and Services Tax (GST) has influenced the prices of almost all consumer products and services. The service sector, at present, contributes to 60% of the Gross Domestic Product (GDP). The life insurance industry is a part of the service sector that got greatly affected by the GST.
Life insurance was taxed between the range of 1.5% and 15% before the implementation of GST. Before the implementation of GST, the applicable rate of service tax was decided based on the type of policy. The burden of indirect taxes was passed on to the end customer; the 18% tax rate under the GST was likely to make life policies more unreachable to a larger chunk of customers, which in turn, was likely to lower the level of insurance penetration in India. Despite this, now insurance penetration has witnessed a growth of 8% (CAGR) approximately.
In comparison to countries like Australia, Malaysia, Africa, Singapore, etc. where the government provides the life insurance benefit as a part of social security, imposing taxes on the insurance products and services deters many people from considering buying life cover for themselves and their dependents.
GST Rate-Before and After
|Insurance Products||Before||After||Applicable on|
|Term Insurance Premium||15||18||On the total premium amount|
|Health Insurance Premium||15||18||On the total premium amount|
|Endowment Plan Premium (First year)||15||18||On 3.75% of the total premium|
|Endowment Plan Premium (Renewal)||15||18||On 1.875% of the total premium|
|ULIP||15||18||On the premium amount minus the amount of investment|
|Add-on Riders Premium||15||18||On the total premium amount|
|Car Insurance||15||18||On the total premium amount|
|Periodicity-Single Premium||15||18||On 10% of the total premium|
Here are the common jargons associated with life policies:
No, you can’t sell your term life insurance plan. However, there is an option of surrendering the plan or taking a loan against the plan.
TPA stands for Third Party Administrator. It is an agency/organization having a license from (IRDA) Insurance Regulatory Development Authority of India to process claim requests. Additionally, it provides a cashless facility on behalf of the insurance provider.
It completely depends on your insurance needs. However, it is beneficial to have enhanced insurance coverage and opt for life insurance and critical illness cover both.
While buying a life insurance plan, you must follow the dos and don’ts mentioned below: Dos 1. Before buying a plan, thoroughly analyse your needs. 2. Shortlist plans based on your needs. Go online then compare multiple plans. 3. Ask as much as questions regarding the plan to clear your doubts. 4. Fill the application form carefully. 5. Make sure the information filled in the application form is true. 6. Keep a copy of the filled application form or any declaration or terms that are being agreed upon during contract signing. Don'ts 1. Do not leave any column unfilled in the application form. 2. Don’t let anyone else fill your application form on your behalf. 3. Don’t mislead the insurer by providing false information. 4. Do not delay or miss your premium payment
To enjoy the uninterrupted policy benefits, you need to renew your policy on time. If you forget to renew your policy, it lapses. In such a case, you need to submit a valid proof of the delay and pay the premium. The company will charge a penalty for the lapsed period.
Yes, there are many differences between life insurance and general insurance. General insurance doesn’t offer life coverage while life insurance offers life coverage, in case of the sudden demise of the insured. General insurance can be availed for prized possessions, such as a car, a two-wheeler, or home. Life insurance doesn’t offer any such coverage.
A contingent beneficiary is the one who receives the policy benefits if the primary beneficiary is dead, unable to receive the benefit or refuses the policy benefit upon the demise of the policyholder.
Yes, the policy benefit will be provided.
Yes, term life insurance covers natural death.
Yes, you can have more than one term insurance policies from different insurance providers. As far as death claim is concerned, both the insurers will pay the cover amount to the nominee.
The basic life insurance is a contract between an insurer and an insured. Wherein in exchange for a certain premium, in case of policyholder’s demise, the policy nominee is offered a lump-sum amount as the death benefit.
Every insurance company has a different sum assured limit set for different plans. The maximum coverage depends upon different factors such as the insured’s age, health status, occupation, etc.
The sum assured is provided to the policy nominee (appointed by the policyholder) in case of the unfortunate demise of the policyholder.
The death claim can be processed and the sum assured can be paid in as little as 10 to 14 days provided all the documents submitted by a claimant are in order. In any case, most of the insurance companies don’t take more than 30-60 days to provide the sum assured to the nominee.
In case the policyholder outlives the policy term, no survival benefit is offered.
Life policies offer a death benefit and build cash value which can be used to borrow money.
In term life insurance, no survival benefit is provided for outliving the policy tenure. Some policies like whole life insurance provide the insured with maturity benefit in case they outlive the policy term.
In case a policyholder hasn’t nominated any beneficiary, the death benefit will be either provided to her/his legal heir or will go to the estate.
The maximum coverage tenure of a life insurance plan varies insurance plan to insurance plan.
There are no separate funds provided for taking care of funeral expenses. In case of the policyholder’s unfortunate demise, life policies provide the payout to the nominee which they can use to pay for the funeral expenses.
It totally depends on the policy you opt for.
The answer totally depends on the stage of life the policyholder is at and their financial expectations.
If you are suffering from a terminal illness, you wouldn’t be eligible for a regular life insurance policy.
If you stop paying your life insurance premium, your policy will get lapsed after the end of the grace period.
In case your policy nominee dies before you, you can add new nominee. In case you don’t, your heir or estate will become your nominee by default.
Life insurance plans such as pension plan/ retirement plan helps to secure your financial future post-retirement.
Yes. Insurance providers offer a grace period of 30 days in case a policyholder has missed premium payments.
It depends on the payout option opted by the policyholder at the time of buying the policy. Additionally, for some plans, the nominees have the flexibility of selecting how they want to receive the death benefit.
If you are suffering from a terminal illness, you wouldn’t be eligible for a regular life insurance policy. However, you can always apply for an accident-only policy that will help your nominees get financial aid if you die from an accidental death.