Provides Financial Protection to your Family
Among various insurance products, LIFE INSURANCE has been the most popular. It is an important part of financial planning. Life insurance provides financial protection to the family in case of the death of the breadwinner of the family. It enables the family to lead the same standard of life even after the demise of the head of the family.
Life Insurance is a contract between the insurance company called INSURER and the Policyholder called INSURED. The amount guaranteed is called the SUM ASSURED. The insurance company guarantees the payment of the sum assured to the named beneficiary in case of death of the insured.
Type of Life Insurance
Term Insurance Plan
Term Plans are considered as the basic and most affordable plans as premium is less compare to other life insurance plans. After completion of the plan, no amount is payable. In this type of plan, the premium increases with age and could be paid annually or in a lump sum.
Endowment Plan
In Endowment Plans, the sum assured is paid along with the profits at the end of the term. This plan pays out the sum assured in both situations i.e. death or survival.
Type of Life Insurance Policies
- Endowment Policy
In this policy, the sum assured is paid in both the situations i.e. death or survival. The amount is paid either on maturity or death of the policyholder. - Unit Linked Insurance Plan
In this plan, the amount of premium is invested in the Equities and debt instruments. Here, the return is not guaranteed and is market-driven. It offers to build a good sum at the end of the plan. In this plan, policyholders can choose the type of plan in which the amount of premium to be invested. He can change the plan any number of times during the term of the policy. - Money Back Policy
In this policy the policyholder receives a certain percentage of sum assured at regular intervals say 5,10,15,20 years. In case of survival remaining amount along with the bonus is paid on maturity. In case of death sum assured is paid. - Whole Life Policy
This policy provides coverage throughout the life of the policyholder. The premium is paid for a certain number of years only say for 20 years. - Pension Plan
In this plan, an annuity is paid to the policyholder against the accumulated fund at the end of the term of the plan. Policyholders can also obtain the accumulated amount in a lump sum in place of the annuity.
Buying Decisions
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- Track Record of the company
Before buying a policy track record of the company is to be checked about its promoters, claim settlement ratio, customer service, etc. - Terms and Conditions of the policy
Terms and Conditions of the policy are to be read carefully – whether any exclusions are there or not. - Premium Payment Options
The company offers to pay a premium in Monthly, Quarterly, Half-yearly, and yearly installments. The company also offers a discount on Yearly payment of premium. Payment option to be chosen based on income. - Free Look Period
Some companies offer a free look period from 15- 30 days. The policyholder has an option to return the policy if not satisfied within the free look period. - Claim Settlement Ratio
The claim settlement ratio is an indicator of companies’ promptness of settlement of claims. The higher the ratio, the better is the company. This can be checked on the web site of the companies.
- Track Record of the company
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MEDICAL CHECK-UP
The issuance of a life insurance policy depends upon the good health of the policyholder. Hence, a comprehensive medical check-up is done before issuing the policy. A medical check-up is arranged by the Insurance company at their cost through their approved doctors/hospitals. The premium also depends upon the medical condition and habits. The premium is higher for those who are consuming alcohol and tobacco. For any pre-existing disease, too, premiums may vary.
RIDERS
Riders mean obtaining additional coverage by paying extra premium. The following type of riders are available:
- Accidental death benefit– In the policy, the risk of accidental death can be covered.
- Disability– In case policyholders become disabled due to some reasons, either sum assured is a payable or certain percentage of the sum assured is paid.
- Critical Illness-If policyholder is diagnosed with any critical illness like Cancer etc. the sum assured will become payable.
LIfe Insurance Benefits
Protection
This is the first and foremost benefit of life insurance. It provides financial protection to the family in case of death of the policyholder.
Investment
It offers an opportunity for investment through the Unit linked plans. There is a possibility of accumulating a huge sum at the end of the term of the policy.
Income Tax Benefits
The premium paid for the insurance policies is eligible for the income tax deductions under Section 10,80C and 80 CCC of the Act.
