Life Insurance

A life insurance is a type of protection plan, which provides insurance coverage to the family of the insured in case of any eventuality. In life insurance, a pre-determined amount of money is paid by an insurance company either on the demise of the insured or after the completion of a specific term period of the life insurance policy. Life insurance is considered as one of the most secured & safest ways to provide financial protection to the insured family in times of financial hardship.

What is Life Insurance Policy?

Life Insurance

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.

Online Life Insurance Plans

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.

Who Determines Life Insurance Premium?

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.

Best Life Insurance Plans in India 2019

Listed below are the best 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.

Why it is Important to Buy Life Insurance Policy?

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

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

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

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

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

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

Benefits of Life Insurance Plans

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:

Acts as a Loan Collateral

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.

  • Loan Amount: Generally, the loan amount is a percentage of the surrender value of the life policy and it can go up to 90%. There are few companies that only allow for a loan up to 50 percent of the total premium amount paid by the policyholder.

Online Payment Discount

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.

Discount as per the Opted Payment Periodicity

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.

Taking Care of Business

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.

Tax Benefits

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.

Details of Tax Benefit

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:

Tax Deductions Under Section 80C

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.

Eligibility for Tax Deduction

Section 10 (10D)

Any amount of money received under life insurance plans is eligible for a tax deduction. The sum assured amount received can be:

  • Death Benefit
  • Survival Benefit
  • Surrender Value
  • Maturity Benefit
  • Sum accrued through the bonus
  • Interest earned on ULIPs

Exemption of Tax Deduction

Let's have a look at the situations where life insurance policy benefit is taxable:

  • Annuity and pension plan payouts.
  • Employer-sponsored group life policies.
  • Plans that are bought between April 1, 2003-March 31, 2012, whose premium rate in any year is more than 20% of the sum assured.
  • Plans that are bought after April 1, 2012, in case the premium of the policy in any year is more than 10% of the sum assured
  • Plans that are bought after April 1, 2013, by individuals who suffer from disability or diseases. Under Section 80DDB, in case, the premium of the policies is more than 15% of the sum insured.

Note:

  • The above-mentioned points are not applicable to death claims for any amount of sum assured that a nominee receives in case of the unfortunate demise of the insured.
    No limit on the highest amount of deduction is applicable under Section 10 (10D) of the Income Tax Act, 1961.
  • The above-mentioned data is taken from the IT Act, Tax laws are subject to change, it is important to go through the latest tax changes under the aforementioned sections before opting for a plan.

Types of Life Insurance Policies

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.

life insurance plans

Here are the details of the aforementioned life insurance plans:

Term 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.

Benefits of Term Life Insurance Plans

Death Benefit

The death benefit is paid as monthly payouts, a lump sum, or both.

Please Note- No payout is paid in case the insured outlives the policy tenure.

Additional Riders

In order to enhance the insurance coverage offered by a basic life policy, term plans come with various optional riders. Depending on their expectations, the policyholder can opt for the same.

Unit Linked Insurance Plans

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.

Benefits of ULIPs

  • Best of Both Worlds- It offers the benefits of life coverage as well as investment.
  • Ease of Investment- Based on the risk appetite, it offers various investment options for insurance buyers.
  • Complete Autonomy- It offers complete autonomy of selecting the preferred investment option to the insurance buyers.

Endowment Plans

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.

Benefit of Endowment Plans

Return on Investment- It acts as a long-term financial planning tool that offers returns on investment at the time of maturity.

Money Back Life Insurance Plans

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).

Benefit of Money Back Plans

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.

Whole Life Insurance Plans

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.

Whole Life ULIP

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.

Benefits of Whole Life Insurance Plan

  • Coverage- It offers lifelong insurance coverage to the policyholder.
  • Partial Withdrawals- Upon the completion of the premium payment period, it offers the facility of partial withdrawals
  • Age No Bar- It comes without any age limit with respect to the eligibility criteria.

Child Plans

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.

Child Plan Benefits

  • Secured Future- Even if the parents of the insured child pass away, it ensures that the future of the insured child is safe and secure.
  • Financial Support- It helps parents accumulate funds for major events in their child's life such as education, wedding etc.

Retirement Plans

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.

Retirement Plan Benefits

  • Corpus Generation- It helps the insured build a corpus for their retirement.
  • Financial Independence- It offers much-needed financial independence to the insured.
  • Long-Term Savings- It acts as a great tool for long-term savings.
  • Retirement Goals- It helps to accomplish retirement goals with complete autonomy.
  • Death Benefit- It offers death benefit which is either fund value or 105 percent of paid premiums.
  • Vesting Benefit- The plan offers fund value as a payout.

Comparing the Types of Life Insurance Policy

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.

Life Insurance Riders & Their Importance

What are Life Insurance Riders?

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

Types of Life Insurance Riders

Here are some of the rider options available for policyholders:

Critical Illness Rider

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

The life insurer offers the rider benefits upon the diagnosis of the covered critical illness. Though many of the above listed critical illnesses may not cause immediate death, the treatment could cost a bomb. Under this rider, the insured can use the sum assured to pay for the treatment expenses. The only condition is that the policyholder will have to survive the waiting period.

As no one can ensure 100 percent guarantee against a critical illness, this rider can be opted by:

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

Waiver of Premium Rider

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

In such a situation, waiver of premium rider acts as life a savior, as all the future premiums of the life insurance policy will be waived off and the policy will remain in force.

In case the premiums are not paid due to the death or accidental disability of the policyholder, the premium for the base policy and riders will be waived off and the policy will continue.

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

Accidental Death Benefit Rider

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

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

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

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

Accidental Total and Permanent Disability Rider

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

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

This rider is important to buy for the individuals who:

  • Commute and travel on a daily basis by bike, car, public transport, train, or commercial vehicle.
  • Do physical work in on-site civil work or factories or travel frequently for business.

  • Term Rider: This rider offers a monthly income or lump sum to the beneficiary in the event of the premature death of the insured. The term rider offers extra coverage for death in addition to the base sum assured which is pre-determined by the insurer.
  • Hospital Cash Rider: Under this rider, a fixed amount is paid in case of emergency/planned hospitalization. The benefit amount, terms and conditions, and sum assured may vary from insurer to insurer. This rider benefit offered by life insurers for those policyholders who want coverage for expenses related to emergency hospitalization.
  • Surgical Care Rider: Under this rider, a lump sum amount is paid if the insured undergoes an unavoidable surgery in India. However, the rider benefit may vary plan to plan or severity of the surgery. This rider benefit can be opted by anyone who wants to cover the expenses for surgery in case of any eventualities. This helps in avoiding any out-of-pocket expenses that may burn a hole in one's pocket.

Inclusions and Exclusions of a Life Insurance Policy

Inclusions

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.

Exclusions

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:

Death as a Result of Lifestyle Diseases

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

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

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

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

Self-Inflicted Injuries

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

Participating in Extreme Sports Activities

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

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

Man-Made Disasters

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

Loss of life due to HIV and STDs

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

Intoxication and Overdose of Drugs

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

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.

Need for Reading the Fine-Print Carefully

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.

The Right Age to Buy Life Coverage Insurance

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:

At the age of 20

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

In this regard, a life coverage plan helps a person mitigate financial risks in case of their untimely demise. One big benefit of purchasing life 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.

At the Age of the 30s

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

This is the time that one thinks of buying life 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 40

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

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

At the age of 50

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

At the Age 65

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

How Does Age Affect Life Insurance Premium Rates?

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

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

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

If a person waits to buy life 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.

How Much Insurance Cover Does One Need?

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

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

How Much Does one Owe?

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

For instance, Mr Kumar has a debt of Rs.20 Lakhs and he opted for a life 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.

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

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

Are there any Future Financial Liabilities to Take Care of?

There may be certain future needs to keep in the account for (such as one's kids' higher education, wedding, etc.), while calculating the cover amount of life 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.

Claim Settlement Ratios of Life Insurance Companies in India

As of October 2018, 24 companies sell life insurance plans in India. Of all these 24 providers, the only provider under the public sector is the Life Insurance Cooperation of India. The rest of the 23 companies are either private providers or joint ventures between national or international insurance/finance companies and private or public sector banks/financial institutions.

Access to the life insurance sector was given to private life insurers in the year 2000. Also, most of the private insurers have partnered with international insurance companies to offer life insurance in India.

An important parameter to ensure the financial health of the insurance company is by checking its Claim Settlement Ratio.

What is Claim Settlement Ratio?

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

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

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

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

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

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

Claim Settlement Ratio of Life Insurance Providers for 2017-18

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)
LIC 735,879 724,596 4,958 3,203 98.05
Max Life 10,329 10,152 178 3 98.26
HDFC Standard Life 12,507 12,289 208 59 97.80
Aegon Life 554 530 24 0 95.67
SBI Life 18,753 18,274 496 132 96.76
ICICI Prudential 11,423 11,216 203 36 97.88
Exide Life 3,357 3,250 102 0 96.81
Tata AIA 2,850 2,793 57 0 98
Canara HSBC Oriental 836 797 38 1 95.22
Birla Sunlife 5,443 5,292 154 48 97.22
Reliance Nippon 8,952 8,553 403 35 95.54
Edelweiss Tokio 189 180 9 0 95.24
Bharti AXA 854 860 21 34 96.85
Bajaj Allianz 14,252 13,176 829 63 92.04
Kotak Mahindra 3,055 2,881 175 19 94.30
DHFL Pramerica 586 572 13 6 96.62
IDBI Federal 1,154 1068 87 7 91.99
Sahara Life 18753 18274 496 26 82.74
Future Generali India 1,274 1,202 69 17 93.11
PNB Metlife India 3,981 3,726 329 108 91.12
Star Union Daichi 1,222 1,145 81 19 92.26
India First 1,781 1,626 181 29 89.83
Shriram Life 2,853 2,524 560 293 80.23
Aviva 1111 1058 54 8 94.45

Disclaimer: The ranking of insurance companies is not in any particular order.

The claim settlement ratio for the sector, on the whole, stands at 97.68% for FY 2017-18. There has been a decline from the CSR of 97.74% for 2016-17. The claim rejection ratio decreased to 1.10% as compared to 1.73% in FY 2016-17.

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 2016-17.

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 2017-18 was 95.42%, while in the previous financial year it was 93.72%. The claim repudiation ratio also came down to 3.97% for 2017-18 from 4.85% for the fiscal year 2016-17.

When to File Claims for Life insurance plans?

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

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

Here is How to File a Claim In Case of Death

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

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

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

If the life insurance policy has been purchased offline, then the insurer would have provided a claim intimation form at the time of the policy purchase.

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

Claim Processing: In case of accidental or natural death, the beneficiary or the nominee needs to submit all the supporting documents to the life insurer as a part of the claim process.

The claim support team will verify the insurance documents and claim declaration. In some cases, they might ask the beneficiary to submit a few other documents.

Documents to be submitted

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

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

Approval and Pay-out

  • Once all the documents have been submitted, and the life insurer has verified it, the claim will be settled by the insurer.
  • The life insurer can ask for the beneficiary's bank details - a canceled cheque or a copy of the bank account passbook, which must be attested by the bank authorities.
  • For nominee's identity proof, a copy of passport, voter identity card, PAN card, Aadhaar card etc. needs to be submitted.
  • Generally, the claim settlement process takes 30 days. Once approved, the insurer may immediately make the payout.
  • Some insurers make the payments through the Electronic Clearance Service or ECS, which is an alternative method to make bulk payments.

Aforementioned are the basic set of documents that are required to process a claim.

Here are a few other documents that the insurer can ask for (if need be) -

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

Here is how to file a Claim for the Maturity of the Life Insurance Policy

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

Here is a simple process to file a maturity claim with minimal paperwork.

When the policy is about to mature, the life insurer generally intimates the policyholder at least 1-2 months in advance. All the details regarding the maturity date, maturity amount, and discharge voucher are provided to the insured.

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

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

Points to Remember

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

IRDA Claim Settlement Ratio for Top 10 Life Insurance Companies

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 2016-17 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 98.04%
Max Life 98.26%
HDFC Life 97.80%
AEGON Religare 95.67%
ICICI Life 97.88%
SBI Life 96.76%
Exide Life 96.81%
TATA AIG 98%
Canara HSBC OBC 95.22%
Birla Sunlife 97.22%

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.

Online Life Insurance vs. Offline Life Insurance

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

The Cost Factor

  • Online Life Insurance-Buying life insurance online is 40 to 60% economical because the commission charged by agents is eliminated.
  • Offline Life Insurance- Since the commission charged by agents is paid from policyholder’s pocket, the premium charged for insurance plans is on the higher side.

Comparison

  • Online Life Insurance- When purchasing life insurance online, one can compare various plans offered by different insurance companies. One can check and carefully analyze which company charges a lesser premium, which plan offers greater coverage, and then select the one that serves the purpose right. When buying insurance online, even customization is possible.
  • Offline Life Insurance- When buying life insurance offline, i.e. from an agent, one does not have the option to compare various plans.

Transparency

  • Online Life Insurance- When searching online, one can log on to the company's website and download the policy document. It is easier to understand the policy benefits and limitations online. One can even save such documents on their system for future references, thus reducing the chances of being misled.
  • Offline Life Insurance- Quite the reverse, when purchasing offline, there is always a chance for an individual to be misled by the agent. Usually, higher expectations are set to close the deal, which only leads to disappointment later on.

Informed Insurance Decision

  • Online Life Insurance- One can check the claim settlement ratio of the insurer from which he/she is planning to purchase a life insurance policy. It will help one to analyze whether the insurance company will be able to settle the claim or not. Once assured, an individual can enjoy the peace of mind.
  • Offline Life Insurance- When buying insurance offline, one is dependent on the particular insurance agent to furnish statistics about the claim settlement record of the company, and the authenticity of the insurance agent is always questionable.

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

Ease of Access

  • Online Life Insurance-Insurance companies functioning online are accessible to their customers 24*7. One can always reach out to the customer care team to get his/her concerns addressed.
  • Offline Life Insurance- When it comes to insurance agents, their availability is limited; they won’t be available around the clock.

Flexibility

  • Online Life Insurance-There is more flexibility when one purchases a life insurance plan online, as he/she can choose from a range of options. It is recommended to compare life insurance plans online.
  • Offline Life Insurance- An insurance agent tries selling the plan that provides a higher commission.

Policy Reviews

  • Online Life Insurance-Online customer reviews can help one to understand the market presence of the insurance company and the services offered by them.
  • Offline Life Insurance- An insurance agent tells good things about an insurance plan and insurance provider.

Step by Step Process to Buy Life Insurance Plans Online

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

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

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.

Guidelines to Select the Best Life Insurance Policy

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

Claim Settlement Ratio

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

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

Time Period

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

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

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

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

Premium

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.

Dependents

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.

Evaluate the Sum Assured of Insurance

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

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

Compare Life Insurance Quotations

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

Purchase Policy Online

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

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

Keep it Safe

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

Life Insurance Online Payment

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

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

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

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

Document Required for Buying Life Insurance Policy

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

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

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

Income Certificate

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

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

Address Proof

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

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

Identity Proof

One can provide the following documents as ID proof:

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

Age Proof

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

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

Other Documents

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

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

Please Note:

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

How to Calculate Life Insurance Policy Premium?

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:

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

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

Features of Life Insurance Premium Calculator

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

Steps to Use Life Insurance Premium Calculator

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

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

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

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

Factors that Affect Life Insurance Policy Premium

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

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

Personal Factors

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

Insurer Related Factors

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

Policy Related Factors

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

Illustration of Calculation of Life Insurance Policy Premium

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

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

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

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

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

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

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

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

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

Comparison of Various Life Insurance Plans

Term Life Insurance vs. Whole Life Insurance

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

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

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

Which one is Ideal?

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

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

Life Insurance Plan Vs. Life Annuity Plan

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

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

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

Which one is Ideal?

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

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

Best Plan for Different Phases of Life

Best Plan for Youngsters and First-time Policy Buyers

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

Best Plan for Married Individuals having Children

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

Group Life Insurance Policy

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

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

Features and Benefits

Here are the features and benefits of group life insurance:

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

How does a Group Life Insurance Policy work?

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

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

What is the Validity of a Group Life Insurance Policy?

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

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

Individual Life Insurance Policy vs. Group Life Insurance Policy

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

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.

Everything You Need To Know About Underwriting

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.

Different Factors Taken into Consideration While Underwriting a Life Insurance Policy

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

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

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

What Should a High-Risk Applicant do?

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

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

Life Insurance Policy for Senior Citizens

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
  • The plan offers a flexible unit-linked pension benefit.
  • The insured can choose from eight different investment funds to invest in.
  • In the event of death of the policyholder, the beneficiary will receive the sum assured.
  • There is flexibility in paying premiums -regular and single.
  • Top-up benefits also can be availed.
  • The premium paid is free from the tax deduction.
  • On vesting, the policyholder can buy an annuity plan for full fund value.
HDFC Life Click2 Protect Plus Term Plan Minimum: 18 yearsMaximum: 65 yearsMaturity Age: 75 years 10 years -40 years
  • Life coverage is offered to the nominee in case of the sudden demise of the insured.
  • Under Section 80C and 10D of Income Tax Act, 1961, the insured can avail tax benefit for the premium paid towards the life insurance policy.
  • Upon the death of the insured, the nominee will receive the sum assured and a monthly allowance for the next 10 years will be provided.
  • The nominee will also receive the pre-decided amount along with the remaining sum assured divided into monthly income for the next 15 years.
SBI Life e Shield Minimum: 18 yearsMaximum: For increasing cover: 60 yearsFor level cover-65 years Minimum: 5 yearsMaximum: 30 years
  • The death benefit is offered to the nominee.
  • Accidental death benefit equal to the sum assured will be provided.
  • A free-look period of 15 days is offered. During this period, the insured can cancel the policy if not satisfied.
  • Non-smokers can avail discount on premiums.
  • It comes with two rider options to avail enhanced insurance coverage.
  • It offers tax benefits for the premium paid.
Aegon Life Insta Pension Plan For SelfMinimum: 50 yearsMaximum: 75 years For SpouseMinimum: 50 yearsMaximum: 75 years  
  • Insured and spouse are offered with income for a lifetime based on the annuity payout.
  • Free-look period of 15 days is offered to cancel the policy if not satisfied with the coverage.
  • In case of the sudden demise of the insured, the annuity will be continuously paid to the spouse.

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

Life Insurance Policy for Women

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 yearsMaximum: 50 years Rs. 1 lakh 10/ 15/ 20 years
  • In case of sudden demise of the life insured, the nominee will be paid the sum assured as well as the terminal bonus.
  • Upon maturity, insured is eligible to get maturity benefit(s), which is a combination of reversionary bonus and terminal bonus.
Jeevan Bharti-I Minimum: 18 yearsMaximum: 55 years Rs. 25 lakh 15-20 years
  • It offers money back facility that can be converted into an annuity.
  • Insured can avail rebate on high sum assured.
  • Insured can pay the premium in advance as well.
  • If premium payment is missed, the policy covers the insured automatically for 3 years.
  • The policy comes with critical illness rider, accidental benefit and congenital disability benefits.
PNB Mera Term Plan Minimum: 18 yearsMaximum: 65 yearsMaturity: 99 years for all options75 years for joint life cover option Rs. 10 lakh 81 years for all options10 to 40 years for joint life cover option
  • Death benefit is offered to the nominee in case of the insured’s death.
  • Insured can pay premium on a monthly, half-yearly or annually frequency.
  • Excellent tax benefits are offered on the premium paid towards life insurance.
  • There may be options for the return of the entire premium if the policyholder outlives the policy tenure.
SBI Life Smart Women Advantage Plan Minimum: 18 yearsMaximum: 50 years (for the base plan)35 years (for APC & CA option)Maturity: 60 years 2 lakh to 10 lakh 10 and 15 years
  • In case of sudden demise of the insured, sum assured + Vested Simple Reversionary Bonuses with Terminal bonus will be paid to the beneficiary.
  • The policy will be terminated after the insurer pays the death benefit.
  • In case of a major critical illness, the option for inbuilt premium waiver is offered.
  • The plan offers death benefit and critical illness cover.

Life Insurance Policy for Smokers

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 yearsMaximum: 40 to 75 years
  • Enjoy life coverage up to the age of 100.
  • Additional coverage for critical illness, disability and accidental cover.
  • Option to increase the life cover to meet family needs.
  • Inbuilt terminal illness benefit.
  • Avail tax benefits on premium paid.
  • Policy offers flexibility to choose death benefit payout.
  • Non-smokers and women can avail this plan at a lower premium.
  • Surrender benefit is available in single pay premium mode only.
Aviva i-Life Minimum: 18 yearsMaximum: 55 yearsMaturity: 70 years Minimum: 25 lakhMaximum: No limit 10 to 35 years
  • Death benefit is offered to the nominee in case of sudden death of insured.
  • 30 days grace period is offered to renew the policy in case insured has missed the policy renewal.
  • Insured can enjoy tax benefits.
  • Free-look period of 30 days is offered within that insured can cancel policy.
  • 5% of the additional rebate is offered to women.
  • Insurer offers a rebate on larger sum assured
Bharti AXA Life eProtect Minimum: 18 yearsMaximum: 65 yearsMaturity: 75 years Rs. 25 lakh 10 to 30 years
  • Offers death benefit cover.
  • Critical illness, disability and accidental death riders are available at low additional premiums.
  • Tax benefits can be availed.
  • Premium can be paid on monthly/quarterly/half-yearly/ yearly periodicity.
  • Death benefit is offered to the nominee in lump sum for 15 years after insured’s death.
Bajaj Allianz Life eTouch NA Up to Rs. 10 cr NA
  • Offers life coverage with accidental death, disability and critical illness cover.
  • Offers multiple premium payment options, such as monthly, quarterly, half-yearly and annually.
  • Flexibility to select various covers to increase policy coverage.
  • Entitles the nominee to receive a lump sum as monthly income in case of insured’s death.
  • Lower premium offered for non-smokers.

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

Life Insurance Policy for NRIs

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

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

Purpose of an NRI Life Insurance Plan

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

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

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

Payment Mode

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

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

  • U.S.Dollar
  • Pound
  • Euro
  • Australian Dollar
  • Sterling
  • Canadian Dollar
Exempted

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

When to Buy NRI Life Insurance?

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

From Where to buy NRI Insurance?

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

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

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

What are the Eligibility Criteria for Buying NRI Plans?

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

  • Person of Indian Origin- The insurance buyer/ his/her parents or grandparents must have been a citizen of India.
  • Spouse- The insurance buyer must be a spouse of an Indian citizen.
  • Valid Passport-The insurance applicant must hold a valid passport issued by the Indian government.

Common Life Insurance Myths

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

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

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

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

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

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

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

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

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

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

Myth5- Buying best life insurance plan is a time-taking process.

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

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

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

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

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

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

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

How to Maintain a Life Insurance Plan?

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

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

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

How to Change Nominee Details?

  • Nominee Details-In case a policyholder needs to change his/her nominee details, he/she can follow the steps mentioned below:
    • Duly fill the form for changing the nominee and submit it.
    • In case of a minor nominee, an appointee is appointed to receive the claim amount.
  • Safety of Policy Document- To be on the safer side, the policyholder can store their digital policy in a digital locker. It will enhance the security of the policy in case the operating system of device on which they have saved the policy document gets corrupted or their email gets hacked, they will still have their policy.

Pros and Cons of Having Multiple Life Insurance Policies

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

Pros of Having Multiple Life Insurance Plans

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

Cons of Having Multiple Life Insurance Plans

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

Reasons Why You Should Not Cancel Your Life insurance policy

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

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

High Life Risk Coverage

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

Financial Assistance

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

Better Returns

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

What is the Procedure for Cancelling a Life Insurance Policy?

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

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

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

Cancellation Refund

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

Impact of GST on Life Insurance

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

Common Jargons Associated with Life Insurance Policies

Here are the common jargons associated with life policies:

  • Insured: The person buying the policy.
  • Insurer: The insurance provider selling the insurance policy.
  • Sum Assured: The total amount of money guaranteed to the insured at the maturity of the life insurance plan (or death benefit depending upon the type of opted plan). Bonuses are not included in the sum assured.
  • Death Benefit: The payout received by the policy beneficiary/nominee upon the demise of the policyholder.
  • Accident Benefit: In case the insured meets with an accident if his/her life insurance policy offers coverage related to expenses related to the accident such as hospitalization expenditure, medical expenses, etc. the offered benefit is known as accident benefit.
  • Add-on Rider: In addition to the basic insurance coverage, some insurance providers offer additional coverage at a nominal premium. The additional coverage is known as add-on rider. It helps the policyholder to enhance the basic insurance coverage as per their insurance expectations.
  • Claim Settlement Ratio: It is the ratio of the total number of claims settled by the insurance provider from the total number of received claims.
  • Free-look Period: If the policyholder is unsatisfied with the terms and conditions of the life insurance policy, they can cancel the policy without paying any penalties or fees during the free-look period.
  • Bonus:Considering that s/he has paid all the premiums, the additional sum of money the policyholder receives during the policy term, or upon the policy maturity of the life insurance policy is referred to as the bonus.
  • Moral Hazard: When an insured is involved in situations or events that could boost insurance provider’s liability to incur extra costs on their behalf, it is known as moral hazard.
  • Lapsed Policy: If a policyholder fails to pay the premium before the due date, and doesn't pay the premium within the grace period, then the policy is no longer active. Such a policy is known as a lapsed policy.
  • Reinstatement: If the insured does not pay due premiums for any reason, and the life insurance policybecomes inactive, the policy can be renewed. The process to make a lapsed policy active again is termed as reinstatement.
  • Convertible Life Insurance Policy: If a policy comes with the flexibility of converting into a permanent policy, the insured can get his/her term life insurance policy converted to a permanent policy as per the applicable terms and conditions.
  • Renewable Life Insurance Policy: The life policies having this feature enable the beneficiaries to extend the policy coverage without re-qualifying for the same.
  • Single-Premium Life Insurance Policy: Single premium policy covers the insured for a specific period of time and guarantees payment to the nominee in case of the unforeseen demise of the insured, provided that the insured has paid lump sum amount as premium.
  • Cash Value: If the policyholder voluntarily gets their life insurance plan terminated before the maturity date, the insurance provider will pay the policyholder a specific amount known as cash value.
  • Vesting Age: The age at which a policyholder starts getting pay-outs by the insurer is known as vesting age.
  • Policy Term: The time period for which a policyholder will be covered by the insurance provider is known as the policy term.
  • Grace Period: If the policyholder could not renew his/her policy before the due date, the insurance provider offers an extension for the policy renewal known as the grace period. If the policyholder renews their policy within the grace period, the policy remains in an active state and offers the insurance coverage as per the applicable terms and conditions.
  • Waiver of Premium: As per the applicable terms and conditions, the policyholder must pay the premiums regularly as per the opted premium frequency. Waiver of premium is an add-on rider that the insured can opt for in case he is unable to pay the premium due to illness or disability. Premium Paying Term: The total duration for which the policyholder has to pay policy premium is known as the premium payment term. Generally, the premium paying term is the same as the policy term.
Written By: PolicyBazaar - Updated: 07 November 2019
Q:

How much does life insurance cost per month?

Ans:

There are several basic factors that contribute to the cost of a life insurance policy. Few of these factors are your financial needs, the type of life insurance policy you choose, the coverage amount you are looking for, your age, overall health, gender, occupation and the results of the pre-medical tests (if any). Based on that, the policy premium is computed.

Q:

How much life insurance do I need?

Ans:

Life insurance coverage depends on several factors such as your annual income, number of dependents, amount of debt or balance on the mortgage, etc. This factor affects how much insurance coverage you need.

Q:

Is a cover of Rs. 5,00,000 life insurance policy sufficient?

Ans:

The best option to calculate the right insurance amount is following the thumb rule of getting the cover of 10-20 times your annual income. The cover of Rs. 5,00,000 will be sufficient or insufficient depends on your annual income.

Q:

How can I take a loan against my life insurance policy?

Ans:

You can avail a loan against life policies like whole life insurance or endowment policies after meeting the pre-requisite requirements. The maximum amount of loan depends upon the surrender value and the type of policy. The loan value can be the maximum 80-90% of the surrender value of the

Q:

What is the maximum age for life insurance?

Ans:

Since the maximum age for this insurance plan is set by the insurer, there isn’t a universal age limit. Having said that, the general maximum age limit set by the life insurance companies falls somewhere between 75 years and 80 years.

Q:

What is the average life insurance payout?

Ans:

The payout is computed based on various factors such as paid premium, terms and conditions, applicant’s age, gender, nature of the occupation, etc.

Q:

Who can claim life insurance after death?

Ans:

After the death of the insured, their nominee or the legal heir can claim life insurance.

Q:

Can life insurance be cashed in before death?

Ans:

Yes, depending upon the cash value of the particular life insurance policy, the policy can be cashed-in. Cash value is a part of a life insurance policy’s death benefit which can be liquidated. Different insurers have set different cash value growth rates. It’s also referred to as ROA- Rate of Accumulation. In case the policyholder takes a loan against the cash value and passes away while the loan is outstanding, the death benefit is reduced by the amount of the outstanding loan.

Q:

Does a policyholder get life insurance benefit if he/she commits suicide?

Ans:

If a policyholder commits suicide within 12 months of purchasing a policy, the nominee won’t get any insurance benefits. However, the insurance company will pay the life insurance premium amount received till date by the insured after deducting service charges, administration charges and processing fee.

Q:

Does life insurance offers tax any tax benefits?

Ans:

The death benefit received by the policy nominee is tax-free for. However, there are certain scenarios wherein the life insurance benefit can be taxed. In case of a Keyman insurance policy, the maturity proceeds won’t be tax-free.

Q:

What is the rule of thumb for life insurance?

Ans:

One fundamental rule of thumb is that the death benefit of one’s life insurance policy must be equal to 10-20 times their yearly salary. However, like any thumb rule, this is not always accurate.

Q:

What happens to the cash value of a life insurance policy upon the death of policyholder?

Ans:

In the case of the policyholder’s demise before the withdrawal of the cash value, the cash value won’t be paid out to the beneficiary. Cash value is an investment that comes with many life policies and a whole life insurance policy.

Q:

What are the different types of life insurance?

Ans:

The most common life policies in India are:

1. Term Life Insurance

2. Whole Life Policy

3. Endowment Plans

4. Unit Linked Insurance Plans (ULIPs)

5. Money Back Policy

6. Child Insurance Plans

7. Annuity Plans

Q:

What is the cash value of a life insurance policy?

Ans:

The cash value of a life insurance policy is the amount of money offered to the policyholder, in case they cancel the policy. In order to receive the cash value, the policyholder has to surrender their rights and all the future benefits offered by the policy.

Q:

What is paid up value in a life insurance policy?

Ans:

The paid-up value is the reduced sum assured, in case the insured fails to pay the premium for his/her policy on time and the policy lapses.

Q:

What is the cash surrender value of a life insurance policy?

Ans:

The cash surrender value of a life insurance policy is the amount of money paid to the insured by the insurer in case of the insured voluntary terminates the policy before its maturity or in case any eventuality affecting the policyholder.

Q:

Will I get my money back if I cancel my life insurance?

Ans:

The insurance company is not bound by any law to reimburse any amount of the policyholder’s premiums if the policyholder decides to cancel the insurance policy. However, if the policy has cash value accumulated during the tenure, then cash surrender value of the policy and the cash value is paid to the policyholder.

Q:

Would I get my money back at the end of a term life insurance plan?

Ans:

If you have a basic term insurance plan, you will not get your money back at the end of the policy term. However, some insurers offer term insurance plans that provide money back at the end of the term. Such plans come at a higher insurance premium and are called TROP (Term Insurance – Return of Premium).  

Q:

Which insurance provider offers the option of converting a term life plan into a whole life insurance plan?

Ans:

LIC offers convertible term insurance at an affordable premium. The plan can be converted into a whole life insurance plan or an endowment plan as per your needs.

Q:

Can I sell my term life insurance plan?

Ans:

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.

Q:

What is TPA in insurance?

Ans:

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.

Q:

Life insurance and critical illness cover- do I need both?

Ans:

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.

Q:

What are the dos and don’ts when it comes to life insurance?

Ans:

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

Q:

How to revive a lapsed life insurance policy?

Ans:

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.

Q:

Are there any differences between life insurance and general insurance?

Ans:

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.

Q:

Who is a contingent beneficiary?

Ans:

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.

Q:

What is a life insurance rider?

Ans:

A rider works as an add-on to a life insurance policy. You can opt for a particular rider and enhance the basic insurance coverage.

Q:

In case the policyholder passes away in a foreign country, will death benefit paid out to the policy nominee?

Ans:

Yes, the policy benefit will be provided.

Q:

Does term life insurance provide coverage in case of natural death?

Ans:

 Yes, term life insurance covers natural death.

Q:

Can I have more than one term insurance policies?

Ans:

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.

Q:

When should you get life insurance?

Ans:

There can’t be any defined optimal age for buying a life insurance policy. Technically, the younger you are while buying a term plan, the better it is. Life insurance is an age-branded product. It means that as years keep on passing, the policy becomes pricier. 

Q:

What is the basic life insurance?

Ans:

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.

Q:

What is the maximum amount of life insurance coverage I can get?

Ans:

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.

Q:

In case the policyholder passes away, who gets the money from a life insurance policy?

Ans:

The sum assured is provided to the policy nominee (appointed by the policyholder) in case of the unfortunate demise of the policyholder.

Q:

How long does it take to get life insurance money after policyholder’s death?

Ans:

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.

Q:

If I survive the policy tenure of my term insurance, would I get any benefit?

Ans:

In case the policyholder outlives the policy term, no survival benefit is offered.

Q:

Can I withdraw money from my life insurance?

Ans:

Life policies offer a death benefit and build cash value which can be used to borrow money.

Q:

What happens if I outlive my life insurance policy term?

Ans:

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.

Q:

What happens if a policyholder doesn’t add any beneficiary?

Ans:

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.

Q:

At what age does a life insurance plan end?

Ans:

The maximum coverage tenure of a life insurance plan varies insurance plan to insurance plan.

Q:

Does life insurance covers the funeral expenses?

Ans:

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.

Q:

How much sum assured will I get from life insurance?

Ans:

It totally depends on the policy you opt for.

Q:

Is a term plan better than whole life insurance?

Ans:

The answer totally depends on the stage of life the policyholder is at and their financial expectations.

Q:

Can I get life insurance if I’m suffering from a terminal illness?

Ans:

If you are suffering from a terminal illness, you wouldn’t be eligible for a regular life insurance policy.

Q:

What happens if I stop paying life insurance premium?

Ans:

If you stop paying your life insurance premium, your policy will get lapsed after the end of the grace period.

Q:

What will happen if my life insurance nominee dies before me?

Ans:

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.

Q:

Is life insurance needed in retirement?

Ans:

Life insurance plans such as pension plan/ retirement plan helps to secure your financial future post-retirement.

Q:

Is there a grace period provided for life insurance?

Ans:

Yes. Insurance providers offer a grace period of 30 days in case a policyholder has missed premium payments.

Q:

Is life insurance benefit paid in a lump sum?

Ans:

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.

Q:

Can I get life insurance with a terminal illness?

Ans:

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.

No. of families Protected
by Policybazaar
738,256

Total Coverage(Sum Assured) 648256 Crore

We protect 1 life every minute 13 Nov, 19
Life Insurance Reviews
TOTAL REVIEWS (70)
Saurabh
Adivada, October 21, 2019
It was the best decision
It was a good decision of mine to purchase the life insurance policy from policybazaar. As they provide the best insurance policies and also I can compare them very easily going through their website. Even the customer service is also very good.
Kumarswami
Yeleswarm, July 26, 2019
Customer service assistance is best
First time ever I took insurance and a life insurance policy from policybazaar. First of all there great and enthusiastic customer support. After that the plans and benefits are good. Another one is they provide quick and proper services. And I am sure if right now they are good enough then definitely they will provide better services in the future too.
KIshan
Tezpur, July 23, 2019
Best experience ever
The customer service of policybazaar is really great and helpful. I got myself insured from here and took a life insurance cover. It was a good experience to get a better plan with great benefits from them. Would recommend to all.
Salman
Rudauli, July 21, 2019
Good customer support
I purchased the life insurance policy from policybazaar and recently I raised a claim issue. Earlier I was frightened as the company would accept it or not or they will resolve my claim query early or not. But after getting in touch with the claim ream they were just acknowledging my query. And it was really grateful for me that they were onto my query and was resolving it. At the end it was resolved. I am happy. Thank you team.
Karan
Musiri, July 18, 2019
Timely assistance
When you can get the facility online with a lot of benefits and less premium rate. Then you must go on. I got the insurance from policybazaar with these features.
Manoj
Yamunanagar, July 15, 2019
Really like the policy
To improve the financial crisis, I purchased the life insurance plan and also to keep my family protected if some mis-hapenning takes place. I felt little relived while getting my policy done.
Jagdish
Phoolpur, July 12, 2019
Good interface
I took a Life Insurance Plan. The process and website both are good, easy and unique. I researched a lot before getting an insurance. Thanks Team.
Manav
Tohana, July 10, 2019
Claim was clear easily
Although I didn’t faced and claim assistance issue yet. But uptil now everything is fine after taking insurance policy for me and my family from policybazaar. I am sure if there will be any problem related to claim it will also be resolved on timely basis. As, I used to have few queries in the starting and they used to reply very quickly and resolved it too. Thank PB.
Shikayna
Nainital, July 08, 2019
Good benefits
Life Insurance is really important policy which we need to get in our life. One can get ultimate amount of benefits as well as in less premium amount. Riders are also included in them which I got. The best part of riders is that it gives extra protection and coverage towards us. And for that you need to pay little amount of extra premium. I feel that this plan was good for me and my family.
Rohit
Vikas_nagar, July 04, 2019
It was the best decision
It was a good decision of mine to purchase the life insurance policy from policybazaar. As they provide the best insurance policies and also I can compare them very easily going through their website. Even the customer service is also very good.
Priya
Nedumangad, June 30, 2019
My friend recommended me
One of my friend recommended me to purchase the Life insurance policy from policybazaar. It is hassle free and you can compare the best plan and can buy it very easily.
Mohan
Madhupur, May 23, 2018
GOOD SERVIECES
Policybazaar is very good; it has got lot of information from the website. I have purchased Max Life Online Term Plan Plus from Policybazaar.I had filled the form online it was very easy and simple to fill the form online. I had got about 3 to 4 calls from policybazaar and resolved my queries. I got to know about policybazaar from one of my friend. Services of policybazaar are also very GOOOD.
Somashekar
Cochin, May 23, 2018
Team Efforts
I bought a life insurance policy from Policybazaar.com and I found the entire process completely easy and pleasant. Everything was done smoothly online and the entire team was very professional and co-operative. Medical check up was also done at home easily. I am pretty much satisfied with the entire experience.
Sunitha
Sangrur, May 23, 2018
Impressive work
Policybazaar.com’s Life Insurance Online Plan Purchase is very easy. Customer Support is superb. Online processes are quick and very User Friendly. Very impressive benefits were given by the company’s policy with minimum premium. Policy period also maximum up to 75 years which is more than other companies. Follow-up by support staff is fine.
Sonu
Rupnagar, May 23, 2018
GOOD
I was looking for life insurance for a while and came across this site called policybazaar, I searched and came through policybazar. I filled my details and got a call from their executive. The process was very good and very easy.I am satisfied with the services provided.
Jayalakshmi
Firozabad, May 23, 2018
BETTER THAN OTHER SITES
I used to get my policy renewal from other insurance company. Randomly one day I searched online for policy and came across policybazaar.com. After comparing the quotes I realized I have been made fool all this time by my agent then I decided and purchased Max Life Shiksha Plus Plan child plan from policybazaar. I realized that I had purchased policy with a higher premium. I got the same policy at much cheaper price on policybazaar with more benefit. This is a good site to compare and buy quotes.One must buy from policybazaar only.
TRILOKESH
Patna, May 23, 2018
AVERAGE
I tried to get the life insurance from policybazaar website online. I got a call from their customer care person who guided me in buying a particular policy which will be good for me. After telling my needs the customer guy guided me on which policy to buy. I went ahead and bought the same. But only thing which I didn’t liked is the documents are not yet issued to me. I liked the service they gave to me.
Shyam
Chennai, May 23, 2018
NICE PLATFORM
There are many insurance companies in India but it is not possible to visit personally and demand estimated value of premium. Policybazaar is the best platform where you get estimate value of various company, there was in depth information about policy. I have purchased Bajaj Allianz Goal Assure from policybazaar. On this platform you fill your details and you get know which product suits you the best .As per your choice you choose your premium that's it. Customer care of the policybazaar is so cooperative and helpful.
Sandhya
Kanpur, May 22, 2018
PLEASED
I bought term insurance from policybazaar filled in my details on their website and pretty soon got a call from one of their executives. He was very supportive and very well trained. He gave me detailed advice about the products and guided me in buying absolutely what I wanted and what suited my requirements. So satisfied with the policybazaar.
Ajit
Haldia, May 22, 2018
Much Better Experience
While taking the life insurance policy, we have done the research on best term policies which are available in the market and found that Policybazaar.com is providing more better features as compared to other plans and policy premium is not expensive compare to others. Policybazaar team personally came to our residence to explain about the plan and helped while filling the policy, so they are very helpful. Policy covers the policy till age of 75 years. I have suggested this to one of my colleagues, we both bought this policy on the same day, I recommend Policybazaar.com to everyone.
Tejpal
Dhar, May 22, 2018
Cheap and Useful
The life insurance plan is easy to buy. The Policybazaar.com’s web site navigation is user friendly. The best thing is everything is online all my submission of documents and papers is online. This makes the old traditional method of photo copying the documents and submit it to an agent and later wait for them to reach, uploading them online removes the in between agent. Door step free medical service with additional riders. Cheapest premium and fast policy generation.
Kishor
Bikaner, May 22, 2018
Quick Response
I bought a Life Insurance plan last month and my experience with Policybazaar.com was nice. Right from buying the plan online till medicals and receiving of all the policy related documents, process was quite easy and hassle free. No needed to follow up with their them for anything. So overall it was a nice experience and even if you need help, just drop a mail to your sales executive and they will call and resolve your queries on immediate basis.
Viswas
Agra, May 22, 2018
Low Premium
It’s a very nice and awesome website as here products are very reliable and genuine and I am feeling myself the lucky person to have a product from this website. Recently I have purchased a life insurance policy from Policybazaar.com. And trust me, it’s such a lovely and fantastic product and I think all salaried class person have to go through it and also avail the benefit in income tax also. Premium rates are not so high and is affordable by all. So guys for what are u waiting for go for this product as soon as possible.
Tanisha
Palwal, May 18, 2018
EASY TO COMAPARE
1. Insurance acts as an emergency money that helps us in case of any miss happening. We always get call from different insurance agencies giving different types of policy also there are many companies providing many good options to choose from but we want to get the best deal and trusted one. For fulfilling this purpose we visit insurance office nearby and ask about policies and it consumes a lot of time and sometimes we get a bad deal by the insurance officer and we are not able to avail its benefits properly and it becomes a headache. Policybazaar is a site that offers us to compare between the policies with providing thousands of policies to choose from. Comparing is very easy as we just have to select the category about which we have to take insurance and what is our budget and our location. So I purchased life insurance of Max Life Online Term Plan Plus from policybazaar.
Jai
Masur, May 18, 2018
HELPFUL
: I was very keen to purchase a life insurance for myself. Then I searched online and then I came across policybazaar. I read articles that were given on the website I must they helped me a lot, very informative. Then I thought to give policybazaar a try and to my surprise I was amazed I submitted all the details and got a call from them. They guided me to figure out what product I should buy and soon I purchased a life insurance of SBI eShield Plan. They delivered what they promised. Good job policybazaar. I will surely recommend this.
Customer Reviews

What our customers say...

The services provided by Policybazaar are extremely helpful in making the right choice. Overall I had a good experience with Policybazaar.
Parag Lele

Parag Lele

Thank you for facilitating and following up on the policy. Its been a very pleasurable experience with you folks at Policybazaar.
Ananth Narayan

Ananth Narayan

Very simple to use, friendly website
Shraddha Sharma

Shraddha Sharma

Mumbai
Thanks for correction done in time and really Appreciated....!! GOOD TO HAVE POLICYBAZAAR..!! LIFE IS EASY WITH YOU..!!
Bhaaskar Lokhande

Bhaaskar Lokhande

You are doing a great job. Proud to be a customer of Policybazaar.
Neha Jain

Neha Jain

Thanking you very much for your support for getting our policy quickly, I would appreciate your work.
Prabhat Yadav

Prabhat Yadav

Got good deal without agent calling or speaking to anyone!!
Sonia Khanna

Sonia Khanna

Ahemdabad
I would like to thank the website 'www.policybazaar.com' because of which i could get a good policy.
Rashmi Sirsath

Rashmi Sirsath

I did not even need help from an agent! This is very good!
Urvashi Solanki

Urvashi Solanki

Gurgaon
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