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Features of Life Insurance Plans

Life insurance provides financial protection to your family in case of the policyholder’s death. It includes features like a fixed sum assured, regular premium payments, and tax benefits. Some policies offer maturity benefits and optional riders like critical illness or accidental death cover. These characteristics make life insurance a reliable way to secure your family’s future.

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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 can be categorized into two simple types:

  • Term Insurance Plans - Term life insurance 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. Term plans are the most efficient and affordable forms of life insurance policies and offer high life cover in low premium rates.
    For example, Mrs. Pooja, a 33 year old non-smoking female, with annual income of 14 Lakhs, purchased a term plan of Rs. 1 Crore for her family’s financial security, so that when she dies, the family/nominees will get the claim amount after her death.

  • 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.
    For example, you wish to have a source of wealth creation after your retirement. In this case, savings plans are a great help, as they not just secure you financially, but also make sure you have a mode of saving money. ULIP is one such savings plan available in India that provides the dual benefit of wealth creation and life cover.

*Note: You can also learn about life insurance in hindi.

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What Are The Features Of Life Insurance?

Here is a list of some characteristics of life insurance. Let’s discuss in detail:

  • Financial Protection for Dependents: The most fundamental characteristic of a life insurance plan is its role in providing financial protection. In the event of the policyholder's death during the policy term, the insurer pays a death benefit to the nominee or beneficiary. This lump sum can help dependents manage home loans, education, daily living costs, and future goals.

  • Premium Payment: Life insurance plans offer flexibility in premium payments. Depending on your income and financial planning, you can choose from:

    • Regular Pay: Premiums are paid at regular intervals (monthly, quarterly, annually).

    • Limited Pay: Pay premiums for a shorter duration while enjoying coverage for a longer period.

    • Single Pay: A one-time lump sum premium is paid for the entire policy duration.

     

    This flexibility allows policyholders to match payments with their financial capacity.

  • Wealth Creation: Unit linked insurance plans are one of the best options for investment for creating wealth. In this, a part of the premium payments will be invested in equities, and the insurer will pay dividends of the policy every year based on income generated via investments. The remaining premiums paid will be used for life insurance coverage. This is a combination of investment and insurance that helps preserve health and provide financial security to your loved ones.
    Child Plans and Pension Plans: Tailored to secure a child’s future or post-retirement income.
    Understanding these types helps you select a plan aligned with your goals.

  • Policy Term: The policy term is the duration for which the insurance cover is provided. Term plans generally offer coverage from 10 to 40 years or even till age 99 in some cases. Whole life plans provide coverage until the policyholder’s death, irrespective of when it occurs. The sum assured, or the guaranteed amount payable on death, is chosen at policy purchase. It directly influences the premium payable and should be selected based on financial needs, liabilities, and future obligations. 

  • Maturity Benefits: Some life insurance policies offer maturity benefits if the insured survives the policy term. Endowment plans, ULIPs, and money-back policies typically fall into this category. These benefits are either guaranteed returns or based on the performance of underlying investments in case of market-linked plans. Survival benefits in money-back plans are paid at specific intervals during the policy term, providing liquidity for planned expenses.

  • Add-on Riders for Enhanced Coverage: Insurance companies offer optional riders or add-ons to enhance basic life coverage at a nominal extra cost. Common riders include:

    • Accidental Death Benefit

    • Critical Illness Cover

    • Waiver of Premium

    • Income Benefit Rider

    Adding riders can customize the plan to suit specific needs, like health protection or income continuity during illness or disability.

  • Loan Facility and Surrender Value: Certain life insurance policies, like endowment or whole life plans, acquire a surrender value after a few years. This means you can surrender the policy and receive a portion of the premium paid, though this amount is often lower than the total premiums. Also, loan facilities can be availed against policies that have a cash value, offering financial support in emergencies without breaking the policy.

  • Claim Settlement: Claim settlement is the process by which the insurance company gives the plan benefits to the nominee/beneficiary in the event of the policyholder’s unforeseen absence. A smooth claim settlement process is essential to ensure financial support for the nominees/beneficiaries in a regular manner.

  • Nominee: The nominee is an individual who receives the sum assured amount of the life insurance plan. The policyholder may choose to update the nominee according to their increasing personal relationships.

  • Tax Benefits: Life insurance policies offer multiple tax advantages:

    • Under Section 80C, premiums paid up to ₹1.5 lakh annually are eligible for deductions.

    • Under Section 10(10D), the death and maturity benefits are tax-free, subject to certain conditions.

These life insurance tax benefits make life insurance a preferred tax-saving and financial security choice.

*Note: Before buying term insurance, it is advisable to understand what term insurance is and its features, including the additional riders and exclusions, as well as those of life insurance.

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How To Buy Life Insurance Plans From Policybazaar?

Now that you have understood what the characteristics of life insurance are, you can follow these steps to purchase a life insurance policy from Policybazaar:

  • Step 1: Visit Policybazaar’s website and click on Life Insurance.

  • 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 of term insurance listed above before purchasing the life insurance policy best suited to you as per your requirements from Policybazaar’s official page.

FAQs

  • Q: What are the different types of life insurance available?

    Ans: Life insurance comes in various forms, each serving specific financial goals. Common types include Term Insurance (pure protection with no maturity benefits), Whole Life Insurance (life coverage), Endowment Plans (combination of savings and insurance), ULIPs (market-linked investment with life cover), Money-Back Plans, Child Plans, and Retirement/Annuity Plans. Each plan caters to different needs, such as wealth creation, retirement planning, or securing a child's future.
  • Q: Can I purchase life insurance riders without a base policy?

    Ans: No, life insurance riders cannot be purchased as standalone products. Add-on benefits are available only when you buy a base life insurance policy. Riders like critical illness cover, accidental death benefit, or waiver of premium enhance your policy’s coverage at an additional but nominal cost.
  • Q: Are life insurance policies customizable?

    Ans: Yes, most life insurance policies offer customization options to suit your specific requirements. You can tailor your policy by selecting the sum assured, policy tenure, premium payment mode, and by adding suitable riders. This flexibility allows you to align your policy with your long-term financial goals.
  • Q: Are there age restrictions for buying life insurance?

    Ans: Life insurance policies are typically available to individuals between 18 and 60, though the exact age range may vary by insurer and policy type. Some policies, like term plans, may offer coverage up to 85 or even 99 years. It's best to check specific age eligibility criteria before purchasing.
  • Q: What are the tax benefits of life insurance policies?

    Ans: Life insurance offers attractive tax benefits:
    • Section 80C: Premiums paid are eligible for a deduction up to ₹1.5 lakh per annum.
    • Section 10(10D): The death or maturity proceeds are exempt from tax, subject to certain conditions. Additionally, premiums for health-related riders may qualify for deductions under Section 80D.
  • Q: Will I receive a payout if I survive the policy term?

    Ans: It depends on the type of policy. Term insurance usually has no maturity benefit. However, endowment plans, ULIPs, money-back plans, and guaranteed income plans offer maturity or survival benefits if the policyholder outlives the policy term. These can be received as lump sum or regular income payouts.
  • Q: How long does it take to receive the insurance amount after the policyholder’s death take?

    Ans: Claim settlement typically takes 30 to 90 days after all required documents are submitted. The timeline may vary depending on the insurer and whether additional investigations are needed. Submitting accurate documentation promptly can speed up the process.
  • Q: Can I nominate multiple beneficiaries for my life insurance policy?

    Ans: Yes, you can nominate multiple beneficiaries, such as your spouse and children. You can also assign specific percentages of the payout to each beneficiary. However, if a legal will exists, the proceeds may be distributed according to the will's terms, overriding the policy's nominations.
  • Q: Is it possible to have more than one life insurance policy?

    Ans: Absolutely. You can purchase multiple life insurance policies to match different financial goals, such as income replacement, wealth creation, or retirement planning. Owning multiple policies ensures diversified coverage across various life stages and risk needs.
  • Q: What happens if I miss a premium payment?

    Ans: If you miss a premium payment, the insurer offers a grace period (usually 15 to 30 days, depending on the payment mode). If the payment is not made within this time, the policy may lapse, and coverage will cease. Regular and timely premium payments are essential to ensure continued policy benefits.
  • What are the benefits of term life insurance?

    Ans: Here are 4 common term insurance benefits:
    • Low premium rates
    • Tax Benefits
    • Death Benefit
    • Long term coverage
  • What are the key features of a best term insurance plan in India?

    Ans: Below mentioned are the key features of a best term life insurance in India:
    • Affordable premium rates
    • Long-tenure life protection
    • Easy to understand and buy
    • Riders availability
    • Whole life protection
    • Tax benefits

Premium By Age

˜Top 5 plans based on annualized premium for bookings made on https://www.policybazaar.com  in the first 6 months of FY 24-25.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in

+Rs. 487/month (Rs.16/day) is starting price for a 1 crore term life insurance for an 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

Prices offered by the insurer are as per the approved insurance plans | #All savings and online discounts are provided by insurers as per IRDAI approved insurance plans | Standard Terms and Conditions Apply | **Tax Benefits are subject to changes in tax laws.| Policybazaar Insurance Brokers Private Limited

We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30-minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881

For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale

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+Rs. 820/month is starting price for a 2 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

+Rs. 1,443/month is starting price for a 5 crore term life insurance for an (NRI) 18 year-old male, non-smoker, with no pre-existing diseases, cover upto 38 years of age.

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