What is Life Insurance?

Life Insurance is a contract between an insurance policy holder and an insurance company. As per the contract, the insurance company promises to pay the beneficiary a sum of money in exchange for a premium, upon the death of an insured person or the policy holder. Depending on the type of insurance, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum.

Insurance is also seen as a tool to plan effectively for your future, your retirement and for your children's higher education needs.

How does a Life Insurance plan help?

Why do I need Life Insurance?

What are the benefits of having a Life Insurance plan?

How does Life Insurance work?

The first step is to buy a policy and consequently, pay the monthly or annual premium on time. In the unfortunate event of your death, the insurance company pays a pre-decided amount to your family or whoever you named as the beneficiary. The moment the life insurance policy is issued, an asset to the tune of sum assured is created. Unlike other forms of investments, insurance is the only form of investment that gives you the amount promised at the time of signing the contract.

How do I determine how much Life Insurance I need?

The insurance needs vary for every individual. It’s a personal requirement, hence, before deciding the amount, you need to consider your life goals and the ongoing inflation rate. A concept called ‘Human Life Value’ gives a fair estimate of how much life insurance is good to have. It is calculated as the amount, which if invested in a fixed deposit, would generate an income equal to your current income. The thumb rule is 10 – 12 times your current annual income is your Human Life Value. So, what you need to do is to be clear about your current financial situations, your future aspirations, current liabilities and the risks that you want to mitigate in your life to decide on the insurance cover you need.

Is Life Insurance an investment?

Yes. Life insurance is a type of investment tool to fulfil various financial milestones. It instils a habit of disciplined savings, thereby helping you build a corpus for future financial security. It can help you achieve various financial goals like paying for your children’s education, buying a house, retirement and more.

Should Life Insurance be a part of my investment portfolio?

Yes. A diversified portfolio helps you mitigate risk of investments. Apart from investing in various financial instruments, investing in life insurance is important from perspectives like financial security, fulfilling financial goals and tax planning.

What are the different categories of insurance available in the market?

There are primarily three categories of insurance – life insurance, health insurance and general insurance. General Insurance (non–life) includes everything that isn’t related to life insurance, such as motor insurance and liability insurance. Health insurance plans pay for medical and surgical expenses incurred by the insured.

What are the different types of Life Insurance plans available?

What are Term Insurance Plans?

Term insurance plans are simple and affordable; and offer pure life insurance coverage. An insurance company promises to pay the beneficiary a pre – decided lump sum amount in case of premature death of the insured. However, if the life insured survives the policy term, nothing is payable. In other words, there is no survival or savings benefit under term plan. Term insurance is a viable option for those who are looking forward for a large sum assured and low premiums.

What are the different types of Term Insurance plans?

What are Endowment Plans?

An endowment plan is a life insurance contract designed to pay a lump sum after a specific term - either on its maturity or on the premature death of the policy holder. A variant of Endowment Plan is the ‘Anticipated Endowment Plan,’ popularly known as Money Back Plan. Here, periodic payments are made to the policyholder over the policy term. The balance sum assured is paid on maturity.

What are Whole Life Plans?

Whole Life Insurance Plan guarantees to remain in force for the entire lifetime of the policy holder, provided premiums are paid regularly as per the contract of the policy. The death benefit is payable only on death, whenever it happens. A Whole Life Plan may be either a limited premium paying plan or regular premium paying plan.

What are Annuity Plans?

Annuity plans, popularly known as retirement or pension plans, provide you with financial security during your old age. Given the high cost of living, rising inflation and rising cost of health care, you can continue to live with pride and maintain a standard of living with income from your annuity/retirement plan.

What are the different type of Annuity Plans?

What is a ULIP?

ULIP stands for Unit Linked Insurance Plan which provides risk cover for the policy holder as well as investment options to invest in various funds available with the insurance company. A part of premium paid is charged towards providing life cover. The balance amount, also known as investible portion, is then invested in various funds of the policyholder’s choice based on his / her risk appetite. The funds in ULIP are a combination of various debt and equity instruments.

What is a bonus?

A bonus is an addition made to a policy that is paid out of profits made by an insurance company. Bonuses are paid only to a participating (or with–profits) policies. The bonus could be either a reversionary bonus (simple or compound) or a terminal bonus.

What are the different types of ULIP?

How to make a Life Insurance claim?

In case of death of the life assured under the plan, the nominee/ beneficiary/ assignee has to submit the claim documents to the insurance company as soon as possible to get benefits of the insurance policy. To know the complete process, click here

What is Joint Life Insurance?

Joint life policies are designed to cover couples or partners. In the event of either’s death, the surviving person would be paid the sum assured. The plan has multiple benefits and offers security in either’s absence. This could be an endowment or a term plan.

What is Health Insurance?

Health insurance is a type of insurance policy that provides for payment of expenses incurred on medical and surgical procedures. It can be either a reimbursement of expenses for an illness or injury or could be a lump sum compensation for any illness e.g. cancer. The cost of health insurance is deductible to the payer and benefits received are tax-free.

How does Health Insurance help?

Health insurance plans help you recover expenses incurred on treatment and secure you and your family in terms of both health and money. It disburses the payment towards actual medical expenses of illness or surgery. This makes health insurance extremely critical for a family’s financial wellbeing.

What is Group Insurance?

Group insurance is a type of insurance wherein a group of individuals are covered by a single insurance policy. It is generally purchased by an employer for the benefit of the employees. However, other groups, for example, members of a club can also be covered under group insurance. A master policy is issued in the name of the Master Policyholder. The group would always remain dynamic as members move in and move out of the group.

Why do I need to do tax planning?

Tax planning generates savings as it helps you minimise the amount of tax payable for the year. By planning your tax liabilities, you can enjoy benefits of investment growth and financially secure your future.

How does life insurance help in tax planning?

Though there are multiple modes for saving tax, life insurance is one of the most effective tax planning tools. With life insurance plans an individual can not only save tax but also look at achieving their long term goals.

What tax benefits can I avail through Life Insurance?

Are there any Life Insurance plans for children?

What are the benefits of Life Insurance plans for children?

Are there specific Life Insurance plans for women?

Are there specific plans for Senior Citizens?

Yes, some insurance plans offer coverage up to 75 or 80 years. However, for senior citizens, more important than insurance coverage is a need to have a secured retired life. For that purpose, annuity or pension plans provide a lifetime income.

Is online purchase of Life Insurance safe?

Yes. Buying life insurance online is safe, convenient and quick. Any insurance transaction online is safe if the website has a secured connection. This can be checked by noticing whether the website has https:// before its name in the address bar.

What is Bancassurance?

Bancassurance is the selling of insurance policies by a bank to its own customers. Banks sell the insurance policies in affiliation or partnership with an insurance company.