Characteristics of Life Insurance Plans

Life insurance plans are essential for anyone looking to secure their family in case of an eventuality. They help you secure your family’s financial future as well as achieve your lifelong goals. Let us see the benefits of a life insurance policy and the various characteristics of life insurance plans. 

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What is a Life Insurance Policy?

Life insurance plans help secure your family financially, in case of your unfortunate death. All you have to do is pay your premiums for the policy term and during that tenure, if you suffer an unfortunate death, your family will receive the sum assured selected at the time of policy purchase. Broadly, life insurance plans are categorized into two types: 

  • Term Insurance Plans - Term plans are pure-protection plans that offer a death benefit in the form of a lump sum payment to your family/nominee in your absence at affordable premium rates.

  • Savings Plan - These plans provide a guaranteed payout at regular intervals to meet your financial goals such as buying a house or paying for your child’s higher education while providing life-cover benefits.

Why Should You Buy Life Insurance Plans?

Let us see the various reasons why purchasing a life insurance policy could benefit you:

  • Life insurance plans offer a lump sum payout in case of your unfortunate demise which can be used by your nominees to maintain their current lifestyle.

  • Life insurance pays for disabilities caused due to accidents with their Accidental Disability Rider.

  • You can also get cover against critical illnesses and job loss with riders like Critical Illness Rider and Income Benefit Rider.

  • You can secure your post-retirement needs to maintain your current lifestyle even after the loss of monthly income.

  • You can use the funds received at maturity to fulfill your child’s dreams and aspirations by paying for their higher education or marriage.

Key Features of Life Insurance

Here are the key features of Life insurance plans: 

  • Family Protection: A life insurance plan can protect your family in case of an eventuality by providing them with a death benefit in case of your unfortunate demise during the policy term.

  • Sum Assured: This is the amount paid to your family in case of your unforeseen death or as a maturity benefit if you survive the policy term. Life insurance plans offer you the option of choosing a sum assured large enough to help your family live comfortably in your absence. 

  • Policy Term: Policy term is the specified tenure for which the insurance company offers a life cover and the term during which the contract is in force. You can select the policy term as per your requirement and stay covered under a life insurance plan for as long as you want. Several plans like Zero-cost Term Insurance Plans give you the option of canceling your life insurance policy at specific age decided by the insurer and returning the premium amount paid until that point. 

  • Premium Payments: Life insurance plans offer you life cover for the desired policy term in exchange for premiums paid on a regular basis. You can also select to pay the premiums in a single lump sum amount as a single premium or for a limited term. You can choose to pay your premiums at the frequency best suited for your lifestyle like monthly, quarterly, bi-annually, or annually.

  • Wealth Creation: Various life insurance plans like savings plans help you grow your wealth over time with their investment (ULIPs) feature. The returns from these plans can be used to fund your child’s marriage, higher education, or your unexpected medical expenses in the long run. 

  • Assign Nominee: Life insurance plans provide you with the flexibility to assign and choose between your preferred nominees at any point during your life insurance term.

  • Claim Benefit: The family of the policyholder can file for a claim benefit in case the life assured suffers an unfortunate death during the policy tenure. The nominee will be eligible to receive the predetermined payout payable by the insurance company.

  • Tax Benefits: Almost all life insurance plans offer tax benefits under Section 80C and Section 10(10D) of the Income Tax Act, of 1961.

  • Death Benefit: A life insurance plan will provide a lump sum death benefit to your nominees in case of your unfortunate death within the policy tenure. This amount can be used by your family to meet their financial obligations in your absence.

  • Maturity Benefit: In case you outlive the policy term then you will receive the sum assured as the maturity benefit, in case of a savings plan. Term plans conventionally don't offer any maturity benefit but several variants of term plans like Term Insurance with Return of Premium return the premiums paid during the policy term, at the end of the policy tenure.

How To Buy Life Insurance Plans From Policybazaar?

Here is a list of all the steps you need to follow to purchase a life insurance policy from Policybazaar

  • Step 1: Visit Policybazaar’s Life Insurance Plans page.

  • Step 2: Select the type of life insurance plan you want to purchase i.e., term plan or investment plan.

  • Step 3: Fill in your basic details like name, date of birth, contact number, and gender.

  • Step 4: Answer the questions regarding your smoking and chewing tobacco habits, your annual income, occupation type, and qualifications.

  • Step 5: Select the life insurance policy most suitable for you and proceed to pay.

Final Thoughts

Before buying life insurance it is important to understand the characteristics of life insurance plans to make the most of your plans. You can go through the characteristics listed above before purchasing the life insurance policy best suited to you as per your requirements from Policybazaar’s official page.

FAQ's

  • What are the main characteristics of term life insurance?

    Ans: The main characteristics of term life insurance are:
    • Affordable premium rates
    • Premium payment flexibility
    • Easy to purchase
    • Additional rider benefits
    • Whole life cover
  • What are the different types of life insurance plans?

    Ans: Here is a list of all the types of life insurance plans available:
    • Term Insurance Plans
    • Term Return of Premium
    • Whole Life Insurance
    • Market Linked Systematic Investment Plan (ULIP)
    • Endowment Plan
    • Retirement Plan
    • Child Plan
  • Can You Buy life insurance plan riders instead of a Base Policy?

    Ans: No, you cannot purchase a rider without a base plan as riders are add-on benefits that you can add to your base plan to enhance its coverage. Therefore you need to have a base life insurance in place to add a rider to it.
  • Will you get a return at the end of the policy term for your life insurance plan?

    Ans: You can get a maturity benefit depending on the type of life insurance plan you have opted for. With a savings life plan, you can receive the sum assured at the time of policy purchase at the maturity whereas a term plan with a return of premium option will provide you with all the premium paid during the policy tenure, at the end of the policy term.
  • How long can your life insurance policy last?

    Ans: Your life insurance policy’s validity will be as long as the policy term is selected at the time of policy purchase. You will not be covered under the policy benefits in case you
    1. Die during the policy term
    2. Outlive the policy term

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