Life insurance is the best way to create wealth & secure family’s future in the event of unfortunate death of the policyholder. Life insurance can be availed either through “Term plans” that offer life cover for family’s protection or through “Investment Plans” that help in wealth creation with financial security to meet individuals financial goals
Build financial backup & secure family’s future by choosing a “Term insurance plan”. Suitable for someone who wishes to ensure adequate financial backup is available to the family in case of his/her untimely death.
Be financially secure by choosing an “Investment plan” to meet financial goals like child’s education or stable income source for post-retirement. Suitable for someone who is looking for long term wealth creation through Market linked or Guaranteed returns in addition to family’s protection through in-built life cover.
A life insurance policy is an agreement between an insurance company and a policyholder, where the life insurer promises to pay a fixed amount of money in return for a premium, after a set time period or upon the life assured’s death.
There are two simple types of life insurance policies:
1. Pure Protection plan i.e., Term Insurance Plan
2. Savings Plan
Pure Protection plans are specifically designed to protect the future of your family by providing a lump sum payment, in case of your absence. Whereas a savings plan is a financial product that helps in planning long-term goals like buying a home, fees for children’s higher education, and more while providing life coverage benefits.
The purest and most affordable type of life insurance plan that offers financial coverage to the policyholder against the fixed amount of premiums for a specific duration. In case of policyholder's untimely death, their nominee receives the Cover Amount, as per the chosen policy.
TROP(Term Return of Premium) is a variant of term insurance that provides an additional feature of Survival benefit. In addition to the life cover, if the policyholder survives the entire Policy Term, then all the premiums are paid back, excluding GST.
Under Whole Life Insurance, the policyholder is covered till the age of 100 years. If you want to leave a legacy for your family, and ensure that they are always financially covered, then Whole life Term Insurance is the best option for you.
Market Linked Systematic Investment Plan (ULIP)
Unit linked investment plans (ULIPs) are unique market-linked life insurance plans that provide dual benefits of wealth creation through investments (in equity, debt or both) and a life insurance cover. High performing ULIPs have shown 15-20% returns (tax free), making it a popular choice for medium to long term investors.
Guaranteed Return Plan (Endowment Policy)
A guaranteed high return with a life cover, is what an endowment plan offers. These are the preferred investment option for someone looking for a fixed lump sum as maturity after a specific duration. With a life cover benefit on death event and better returns than other fixed investment plans, makes these plans a must have inclusion in the investment portfolio.
These are long-term investment plans which offer opportunities to get a stable post retirement income. During the investment period, a premium amount is paid at regular intervals which accumulates & grows. The maturity amount is then paid back post retirement based on the preference in-terms of lump sum or regular income.
These plans are designed to enable financial security for children where the returns on the investment helps fulfil a child's future needs like education. Child plans specifically ensures these remain intact even in your absence by providing life cover to the nominee & funding the balance premiums through the insurer thus ensuring the a secured future of the child
Financial Security
The primary benefit of a life insurance policy is that it provides long time financial stability to the policyholder’s family in case of any unfortunate event.
Death Benefit
In case of any unfortunate event with the policyholder, the insurer provides financial protection in form of a death payout. The appointed nominee receives the entire sum assured plus the bonus accumulated over a time
Maturity Benefits
When the policy matures, some life insurance plans offer the policyholder the full premium amount paid during the policy term.
Guaranteed Returns
Life insurance plans guarantee that you receive a fixed amount after a specific term. The return you get can help in paying the loan, child’s higher education, and other expenses.
Wealth Creation
Life insurance Savings plans such as ULIPs offer wealth creation benefits also. In such plans, you can invest your premium amount in different funds based on the risk appetite. These life insurance policies are good wealth-makers in the long run
Tax Benefits
Policyholders can avail of tax savings benefit up to Rs. 1.5 Lakhs u/s 80C of the Income Tax Act, 1961, for life insurance premium amount paid. Also, the payout received from an insurer is exempt from tax u/s 10(10D) of ITA and the premium amount paid for riders such as critical illness can be claimed u/s 80D.
Riders
Riders such as critical illness, waiver of premium, etc. are add-ons to your current base plan, which help customize the policy according to your specific needs.
Flexible premium payment option
Policyholders can choose the frequency of premium payments as per their requirements. For example, you can choose to pay premiums as a lump sum amount for your life insurance policy, or could pay them at periodic time periods like monthly, quarterly, half-yearly, or yearly.
Retirement Planning
Annuity-based life insurance plans give a monthly pension to the policyholder on maturity and help plan a secured retirement.
Loan Facility
Certain life insurance plans provide the option of a loan and allow to borrow some percentage of plan value or the sum assured depending on the policy T&Cs.
Let’s understand how life insurance plans work with the help of an example:
First, you should choose a life insurance plan that suits you the best. If you are married and have kids, a plan that promises a higher life coverage will be beneficial for your children’s higher education and their future. Depending upon the terms and conditions of the plan, you can either pay on an annual or a monthly basis.
In case of an unforeseen death, the nominated individual should inform the life insurer and file a claim. The nominee is required to submit some relevant documents such as a death certificate, identity proof, etc. The insurer company, after the verification, pays the life cover amount to the nominee.
Thus, the future of your family is protected with life insurance and they can fulfill their dreams even after your absence.
To get insured from the comfort of home, an individual can buy life insurance online from Policybazaar. Follow these simple steps to buy life insurance online from Policybazaar.
Step 1- Decide on the goal for which one wants to avail a life insurance plan
Step 2- Understand & compare the types of Life insurance options that’ll help meet the goals
Step 3- Provide preliminary information to get personalized quotations or plan options
Step 4-Choose and compare the plans from the options that get displayed. The insurance buyers can anytime avail “free” of cost & personalized Financial expert assistance to compare and review plan options.
Term Insurance is a simple plan, which takes care of the expenses of your family in your absence in the form of a huge life cover for a very small premium. In case of policyholder's untimely death, their family or nominee receives the Cover Amount as per the policy. The plan can be customized to one's needs by including add-on benefits like: Early Payout on Critical Illness, Additional payout on Accidental Death, Additional benefits on Diagnosis of Critical Illness, etc.
Term Life Insurance is for everyone. If any of your family member is dependent on you for their expenses or future needs, then it is highly recommended that you get covered under Term Policy. For example, Your spouse/kids who may be dependent on you currently as well as in future. Similarly your parents who may not be dependent completely on you currently but, may be dependent on their retirement. Buying a Term life Insurance will ensure that your family is not impacted financially in your absence.
Your Cover amount of Term Insurance should be a factor of your family's expenses keeping in mind the inflation as well.
A simple way to calculate is going upto 25x of your annual earnings so as to sufficiently cover your family's financial needs in your absence.
Term insurance plan offers an option of Return of Premium. In case you choose this option, all the premium paid, excluding GST, is paid back as Survival Benefit, in case policyholder survives the Policy Term
Whole Life Insurance is type of Term Life Insurance, where policyholder is covered till 99 yrs. This variant enables you to leave a legacy for your family in your absence.
Policy Term is the period till which you are covered under your chosen policy. Post that period the policy matures and you are no longer covered under the benefits of your policy.
In case, the opted policy offeres return of Premium benefit, then all the premium, excluding gst are paid back.
Add-ons are optional; however, including them in your primary policy can be very useful in unexpected events. They provide enhanced Life Cover at affordable premiums. You can have additional benefits within a single policy, like waiver of premium, critical illness benefit, accidental death benefit, income on disability, etc.
Here are some points that should be considered to avoid rejection of your term insurance claim:
Life insurance investment plans and mutual funds are 2 very different investment products. Even though it is tough to compare these investment options together,
Life insurance investment plans like ULIP are good for individuals who:
Investment options like Mutual Funds are suitable for someone who:
One should do thorough research before investing in any option like market-linked or guaranteed return plans. Following are some pointers to be considered before making a selection
Asset allocation, in basic language, means allocating or dividing your assets amongst various asset types, such as bonds, cash, stock, etc. The primary purpose behind the allocation of assets is to minimize market volatility and maximize returns. Allocation of assets works best for an individual when the following factors are taken into consideration:
Any residential Indian citizen above the age group of 18 years can invest in various investment plans of their own choice. While making an investment in investment plans, the important eligibility criteria that are required to be fulfilled are:
Fund Value is the total monetary worth units of a policy owned by the policyholder. Fund Value can be easily calculated by multiplying the NAV (Net Asset Value) of each unit by the Number of Units held by the policyholder.
There are several online tracking apps available on the internet where any individual can easily track their fund values.
Yes, as per FEMA (Foreign Exchange Management Act), any NRI (Non-Resident Indian) or PIO (Person of Indian Origin) who lives abroad has all the rights to purchase any life insurance investment plan available in India, just like any other resident in India.
Any person of Indian origin can buy life insurance investment plans to protect and safeguard themselves and their families.
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