Life Insurance

At the end of the day, our family is all we have. You can achieve every goal in life, climb the ladder of success, and fulfil all your dreams - but only seeing your family safe and happy can make your heart truly smile. Make you feel complete. And since they mean so much to you, it’s unarguably important to protect them from the uncertainties of life. To take care of them, even in your absence. More so, if they are dependent on you.

Life Insurance is the priceless protection you can gift your loved ones. It helps them lead a sweet, comfortable lifestyle, even when you are not around.

So let’s decode it to the T, shall we?
 

What is Life Insurance?

Life insurance is a contract between you and the insurance company. It’s designed to pay a sum assured to your chosen nominee, in case you pass away during the policy term. You need to pay a certain premium fee, in exchange for financial coverage.

In addition to the sum assured they provide to your family in your absence, several life insurance products also serve as an investment option. They can be used to fund several future financial goals. This may include short-term goals (utility bills, groceries, EMI, etc.) and long-term goals (buying a house, retirement planning, children’s wedding expenses, etc.).
 

Why do You Need Life Insurance?

It is a known fact that life is uncertain. So, it’s essential to secure your future as well as the future of your loved ones, especially those who rely on you financially. That's where life insurance comes in - it's designed to safeguard your family's financial well-being and ensure your dreams remain intact, no matter what.

Here are some reasons why a life insurance plan is an absolute necessity -

• Offers Financial Protection
  While having savings is beneficial, it's improbable that they would be adequate to cover your family's expenses for an extended period if an unexpected event were to occur. That's where a life insurance policy comes in.  It not only provides a shield for your financial responsibilities but also guarantees a financial payout to your family members in the event of your absence.
   
• Replaces Your Lost Income
  If you are a salaried individual, self-employed, or own a small business, your income plays a crucial role in meeting your family's daily needs. From housing and food to utilities, clothing, car maintenance, outstanding loans, and health care premiums - all of these expenses are likely part of your monthly budget. Even in the event of your absence, your family will still need to cover these expenses. That's where a life insurance plan comes in. It provides a death benefit that can help replace your income and support your family's financial needs - in case the unfortunate happens.
   
• Pays Off Outstanding Debt
  A life insurance policy can also help your loved ones pay off any outstanding debts, such as home loans, business loans, etc., in your absence. By investing in such a policy, you can prevent your family from shouldering financial obligations during an already challenging period.
   
• Protects Financial Goals
  A life insurance plan serves as a crucial tool to address your and your family’s financial obligations. Whether it's meeting short-term needs or achieving long-term financial goals like your child's education, marriage, or building funds for your retirement, a life insurance policy provides a reliable means to pursue these objectives without compromising on your standard of living.
   
• Taxation Benefits
  Additionally, a life insurance plan also offers tax benefits. You can avail of tax deductions up to ₹ 1.5 lakhs under Section 80C* on the annual premiums you pay. Also, the payout amount you or your nominee receive under the policy is exempt from tax as per Section 10(10D)** of the Income Tax Act, 1961. Please note that tax benefits are subject to terms and conditions specified under the Income Tax Act.

Important Terminologies of Life Insurance?

• Policyholder
  An individual who purchases and owns an insurance policy. They are required to pay the premiums to keep the policy active.
   
• Life Assured
  An individual whose life is covered under the life insurance policy. In case of the death of this individual during the policy term, the insurance company pays the claim to the nominee. The life assured may or may not be the same as the policyholder.
   
• Nominee
  The person who receives financial benefits from the insurance company, in case the life assured passes away during the policy term. The nominee can be the life assured’s spouse, child, parent, etc.
   
• Policy Term
  It is the maximum period of time the life cover will remain active. In case the life assured doesn’t survive this policy term, their nominee will receive the policy’s financial benefits.
   
• Death Benefit
  A life insurance policy pays a death benefit to the nominee if the life assured dies while the policy is active. They can use this money to fulfil their financial goals, pay off daily expenses and loans, and lead a comfortable life.
  
  Note: The death benefit depends on the life insurance policy you choose.
   
• Maturity Benefit
  A life insurance policy pays a maturity benefit to the life assured if they survive the policy duration. The payable amount depends on the insurer and the policy you own.
  
  Note: No maturity benefit is payable in the case of term life plans.
   
• Maturity Benefit
  A life insurance policy pays a maturity benefit to the life assured if they survive the policy duration. The payable amount depends on the insurer and the policy you own.
  
  Note: No maturity benefit is payable in the case of term life plans.
   
• Grace Period
  It is the extra time frame that your insurer gives you to pay your overdue premiums - in case you missed paying your premiums on time.
  
  Note: Keep in mind that if the premiums are not paid within the Grace Period your life insurance policy will lapse and you will no longer be able to avail of its benefits.
   
• Policy Lapse
  If you fail to pay your premiums by the due date (the final date for making the payment), insurers offer you a grace period. If you don’t pay the premiums even during this grace period, your policy will become inactive, and you’ll lose your coverage. This is called Policy Lapse.
   
• Exclusions
  These are certain risks or expenses that will not be covered under your life insurance policy.
   
• Free Look Period
  It is the time given to you after policy purchase, during which you can review the policy and return it to the insurer if you feel unsatisfied. You will receive a refund of the premiums you have paid. The Free Look Period usually lasts for 15 days from the date of receipt of the policy document.
   
• Note: Certain charges, such as administration charges and stamp duty charges, may be deducted from your refund amount.
   
• Insurable Interest
  An ‘insurable interest’ basically means that the policyholder posseses a genuine reason for buying life insurance on another person. This element helps prevent anyone buying life insurance on other people simply to gain a profit if they die.
   
• Cash Value
  It is the money that accumulates in your life insurance policy over time and earns interest as long as the policy is active. You can borrow, withdraw, or use this money to cover your future premiums.
  
  Note: Not all life insurance plans have this benefit. So read the policy document carefully before making a purchase.
   
• Surrender Value
  It is the sum of money that your insurer will pay you if you surrender, i.e., discontinue your life insurance policy before it matures.
  
  Generally, a life insurance policy acquires a surrender value if you have paid the premiums regularly for at least 2-3 years. This time frame may vary across insurers and products.
• Riders
  They are add-on benefits that can be added to your existing policy by paying an additional premium. They enhance the coverage and make the policy more comprehensive.

How does Life Insurance Work?

Life Insurance, in a simple sense, is a contract between you (the policyholder) and the insurance company. The insurance company pays you or your nominee the benefits of the plan (depending on the policy type) and you are required to pay a premium to keep your policy and coverage active.

For example, Mr Malhotra buys an endowment plan with a sum assured of Rs 50 Lakhs and a policy term of 20 years. He is required to pay an annual premium of Rs 1 Lakh for the same over the course of the policy term. He appoints his spouse as the nominee.

 Now, if Mr Malhotra passes away during these 20 years, his nominee will receive Rs 50 Lakhs as the death benefit.

 If Mr Malhotra survives these 20 years, he will receive Rs 50 Lakhs as the maturity benefit.

Note: Some life insurance plans may also pay you survival benefits.
 

Types of Life Insurance Policies

• Term Life Insurance
  Acts as a replacement for your income and helps your family lead a comfortable lifestyle in your absence.

  Benefit	How It Works
  Death Benefit	If you don’t survive the policy term, your nominee will be eligible to receive the total sum assured as the death benefit.
  Maturity Benefit	If you survive the policy term, no benefit is paid. However, if you buy a Term Return of Premium (TROP) plan, you will receive the amount of premiums paid (minus taxes) - once the policy matures.

• Whole Life Insurance
  Covers you till the age of 99-100, and acts like a legacy for your heirs.

  Benefit	How It Works
  Death Benefit	If you don’t survive the policy term, your nominee will receive the total sum assured as the death benefit.
  Maturity Benefit	If you survive the policy term, you will receive the sum assured as a maturity benefit.
  Survival Benefit	Depending on your insurer and product, you may receive a survival benefit at the end of your premium payment term. It can either be a predetermined amount or a percentage of the sum assured.

• Unit Linked Insurance Plan (ULIP)

  Gives you a combo of stock market-linked investment and insurance coverag.

  Benefit	How It Works
  Death Benefit	If you don’t survive the policy term, your nominee will be entitled to a death benefit, which can either be -  Sum Assured + Fund Value  The higher of either Sum Assured or Fund Value
  Maturity Benefit	If you survive the policy term, you will be eligible to receive a maturity benefit. It is equal to the fund value of your investment on the date of maturity.

• Endowment Plan
  Provides insurance coverage while simultaneously helping you build a savings fund.

  Benefit	How It Works
  Death Benefit	If you don’t survive the policy term, your nominee will receive a death benefit. This can be either the sum assured or a multiple of the annual premiums you pay.
  Maturity Benefit	If you survive the policy term, you will receive a maturity benefit as a lump sum amount. This can be the total premiums paid (minus taxes), a portion of the premiums paid, or an amount agreed upon while buying the policy.

• Money Back Plan
  Gives your ‘money back’ in the form of periodic payments, as well as an insurance cover.

  Benefit	How It Works
  Death Benefit	If you don’t survive the policy term, your nominee will be eligible to receive the sum assured as the death benefit.
  Maturity Benefit	If you survive the policy term, you will be eligible to receive a maturity benefit. It can be the sum assured, the survival benefit as regular payouts, or a total lump sum of the payouts.
  Survival Benefit	Depending on your insurer and product, you may receive regular payments at specified intervals. They can be either a percentage of the sum assured or a percentage of the annual premium you have paid.

• Child Insurance Plan
  Helps you accumulate a fund to fulfil your child’s dreams and secure their future.

  Benefit	How It Works
  Death Benefit	If you don’t survive the policy term, your child will receive a death benefit if they have attained the age of 18. Otherwise, an appointee nominated by you will receive the death benefit on their behalf. The main feature of a child insurance plan is that if you pass away, the insurance will waive the remaining premiums and your child will receive the predetermined amount when the policy matures.
  Maturity Benefit	If you survive the policy term, you will receive the sum assured as a maturity benefit.

• Retirement Plan
  Designed to look after your retirement years, by helping you meet living expenses amidst the rising costs.

  3 Types of Retirement Plans	How They Work
  Single Premium Annuity Plan	You make a single lump sum investment and once you retire, you receive a regular income.
  General Annuity Plan	You invest money in the plan regularly for a certain period. The accumulated money is converted into a stable income. And it’s paid to you periodically - during your retirement years.
  Pension Accumulation Plan	You pay premiums for the plan during the policy term. The accrued money becomes a pension fund, which is paid to you as a lump sum when you retire.

• Group Life Insurance Plan
  A group of people are covered under one single plan. A good option for employees of a company, members of a bank, club or any professional organisation.

  Benefit	How It Works
  Low-cost cover	Members get a default life cover, often at lower prices.
  No prerequisites	Pre-medical screening is not required up to a certain limit.

Key Features of Life Insurance Policies

Let’s take a look at some of the key features of a life insurance policy -

• Premium
  To maintain your life insurance coverage, you will need to pay regular premiums. You can pay these premiums either monthly, quarterly, half-annually or annually. The premium amount is determined based on factors such as age, health, cover amount, lifestyle, policy duration, etc.
   
• Death Benefit
  The primary purpose of a life insurance policy is to provide financial protection to your loved ones when you are no longer there. Your nominee will receive a death benefit if you pass away during the policy period. The death benefit, usually established at the time of policy purchase, can be either a fixed or variable amount, contingent on the policy type. This amount can be utilised for various purposes, such as settling outstanding debts, covering living expenses, and more. Importantly, the death benefit is given only if the policy is active at the time of your demise.
   
• Maturity Benefit
  Some life insurance policies also offer a maturity benefit. The maturity benefit is the amount you receive when your life insurance policy reaches its maturity date. You'll find the maturity date in your policy document, and it is usually the end of the policy term. However, not all life insurance policies offer this benefit. For example, term insurance policies don’t offer a maturity benefit. So, if you survive the policy duration of a term life insurance policy, you won’t be paid anything.
   
• Survival Benefit
  Survival benefit is the amount of money you receive if you survive a specified period of time mentioned in the policy term. The key objective of a survival benefit is to offer financial liquidity to you during your lifetime. This benefit serves as a valuable resource that can be utilised to meet various financial obligations, address emergencies, etc., throughout the policy term. Additionally, it can function as a supplementary income source, enhancing your overall financial standing. However, please note that this benefit may not be available under all types of life insurance policies.
   
• Policy Term
  The policy term refers to the duration for which your life insurance policy coverage remains in effect. It can vary depending on the type of policy, ranging from a few years to your entire lifetime.
   
• Riders
  Life insurance policies offer additional riders or add-on benefits that can enhance your coverage at a certain extra cost. Some of the riders include critical illness cover, accidental disability rider, accidental death benefit rider, etc. Buying riders is a breeze - you don’t have to undergo any extra medical tests or paperwork - beyond the ones you already undergo for the base life insurance policy.
   

Top Life Insurance Plans 2024
 

 

Please note that the data in the above table is as of June 2024.

 

Who can Purchase Life Insurance?

Buying life insurance is a wise decision if you fall under any of these categories -

• You Have Financial Dependents
  If you have financial dependents relying on you for their livelihood, investing in a life insurance plan is essential. It offers protection and financial stability for your loved ones when you are no longer there to support them. Whether it's for your children's education, marriage, or any other family needs, a life insurance plan serves as a reliable income replacement.
   
• You Have Outstanding Debts
  If you find yourself burdened with outstanding debts, such as student loans, home loans, etc., it is essential to invest in a life insurance policy. Remember, your debt doesn't disappear when you pass away. If you want to protect your loved ones from inheriting your financial obligations in case of an unfortunate event during the policy period, you can consider buying life insurance.
   
• You Have Plans Of Starting a Family/ Getting Married
  If you're about to tie the knot or are thinking about starting a family, it's crucial to have a solid understanding of your finances and a plan in place. As you embark on your new chapter, it's important to consider your financial needs at each milestone. A prudent way to start this journey is by exploring the possibilities offered by a life insurance policy.
   
• You Own A Business
  If you're a single entrepreneur, freelancer, or business owner, you may have concerns about the future of your business. That's where a life insurance plan comes to the rescue. In the unfortunate event of your untimely demise, a life insurance policy can provide the necessary funds to keep your business running smoothly or ensure a seamless transition of ownership. Thus sustaining the livelihood of your employees, partners, or family involved with the business.
   
• You Only Have Employer Insurance
  If you rely solely on your employer's life insurance plan, it's important to consider getting your own personal life insurance policy. This is because your coverage is tied to your employment, meaning that if you change jobs or leave your current one, you may lose your life insurance coverage. Additionally, it's worth noting that life insurance cannot be ported.
   
• You Want To Plan For Retirement
  If you're diligently saving for your retirement, you're probably seeking peace of mind. Life insurance can provide just that. It not only acts as a financial shield while you're working, but it can also become a valuable tool for estate planning, ensuring a smooth transfer of wealth to your heirs. There are various life insurance plans tailored for retirement planning, such as pension plans, annuity plans, etc. Conduct thorough research and choose a suitable plan that aligns with your unique needs.
   

Choosing The Best Life Insurance Plans in India 2023

Choosing the right type of life insurance plan is crucial. However, with numerous options available, it can be challenging to determine the best fit for your needs. Here are some things in mind before selecting a life insurance plan -

• Determining Your Needs
  When it comes to selecting the right life insurance policy, you need to assess your own needs and requirements. Consider factors like your age, income, financial responsibilities, and your dependents' needs. By thoroughly analysing these factors, you can find the perfect policy that will protect your loved ones in your absence.
   
• Choose The Policy Type
  Here are some of the life insurance policy options available in India -
  • Term life insurance: If you have loved ones who depend on your income, consider purchasing a term life insurance policy to provide them with financial support in case something happens to you.
  • Endowment Policy: If you're aiming to save for long-term financial goals such as your child's education, wedding, etc, consider an endowment policy. It provides both life cover and a savings component, making it an ideal choice.
  • Retirement Policy: If you're thinking about saving for your retirement, consider investing in a retirement policy. It guarantees a consistent income after you retire, allowing you to maintain your lifestyle and cover any expenses that may arise.

There are more types of life insurance plans available. And, each type has its own advantages and disadvantages, so it's important to research and understand them before making a decision.

• Decide On The Cover Amount
  Now, it's time for you to figure out the right cover amount. Take a moment to carefully calculate this amount, as it will be the sum your family receives in the event of your unfortunate passing. It will also be the amount you receive to help you achieve your financial goals(under some plans) if you outlive the policy term. Make sure the cover amount comfortably meets both your and your family’s needs.
  
  To determine the right cover amount, you can make use of various life insurance cover calculators available online. All you need to do is provide details such as your age, income, occupation, and so on. Another option is to reach out to a financial advisor who can assist you in evaluating your requirements and selecting an appropriate cover amount.
   
• Determine The Policy Tenure
  The 'policy tenure' is the timeframe during which your life insurance policy will provide coverage. To determine the right policy term, consider various factors like your age, financial goals, and how long your family will rely on your income. As a general rule, it is recommended that you subtract your current age from the age you plan to reach your goals or retire.
   
• Evaluate The Policy Features
  Look for features like riders, etc., that can enhance your base life insurance policy coverage. Riders are optional benefits that provide an additional payout in specific circumstances at a certain extra cost. For example, the accidental death benefit rider pays under a life insurance plan pays an additional sum of money to your family if you pass away due to an accident. Some of the riders include accidental death benefit rider,  critical illness rider, waiver of premium rider, hospital care rider, etc.
   
• Compare The Premiums
  Once you've narrowed down your options, it's time to compare premium quotes from different insurance providers. Make sure to compare policies with the same coverage and features. This will help you find the perfect policy that fits both your budget and your expectations.
   
• Assess The Insurance Company
  Before you choose an insurance provider, ensure you check its financial stability, reputation, customer reviews, claim settlement track record, etc. It's important that you choose an insurer that offers quality services and is reliable in times of need. This will increase the chances of your or your family's claim being settled smoothly and ensure you receive timely support.
   
• Review The Policy Document
  Make sure you understand all the terms and conditions, including exclusions, limitations, lock-in periods and situations where claims may get rejected. If there are any doubts or questions, don't hesitate to reach out to the insurance company for clarification.
  
  Remember, selecting the best life insurance plan requires careful consideration and research. Taking the time to understand your needs and comparing different options will help you make an informed decision.
   

Best Life Insurance Policy in India With High Returns

Among the diverse life insurance policies available in India, the Unit Linked Insurance Plan (ULIP) stands out as a noteworthy option for those seeking potentially higher returns.

A Unit Linked Insurance Plan, or ULIP for short, combines investment and insurance into one convenient package. When you pay your premium, a part of it goes towards providing life insurance coverage for you, while the rest is invested in the funds that you choose.

ULIPs, unlike other life insurance plans, have the potential to offer higher returns. A part of your premium, as discussed earlier, is invested in market-linked instruments that offer various investment options such as equity, debts, money market funds, and more. These options can be tailored to match your financial goals and risk appetite.

For example,

• If you are seeking higher returns and are open to taking risks, consider investing in equity-based funds.
• If you prefer a more cautious approach and steady returns, a balanced fund that combines equity and debt may be the right choice for you.
• If you are looking for a short-term and highly liquid investment, a money market fund is worth considering.

ULIP is a long-term investment option. By investing in it, you can save and grow your money at the same time instead of just leaving it in a savings account or spending it all. Also, staying invested for a period of 5-10 years can generate favourable returns on your investment.

Moreover, ULIPs offer a distinctive feature called Fund Switching. It enables you to switch between funds, thereby providing the flexibility to mitigate potential losses and take advantage of emerging investment opportunities. By utilising this feature, you can maximise your returns throughout the duration of the policy.

While you may be enticed by the potential for high returns, it's important to consider the risks involved with ULIPs, especially if you choose equity-based funds. If you have a strong appetite for risk, this option could be rewarding for you. However, if you prefer a more balanced approach, you can consider medium-risk or low-risk funds like debt funds, etc.
 

What are The Main Benefits of Life Insurance Policies?

Depending on the product you choose, you get to avail of a myriad of benefits, like -

• Financial Stability
  The sum assured your family receives can help cover their daily expenses and alleviate financial stress in the event of your untimely death.
   
• Coverage For A Lifetime
  Some life insurance policies expire after a certain period of time, but others offer lifelong protection. For eg, a Whole Life Insurance Policy covers you for the entirety of your life - until you turn 99 or 100 years old.
   
• Death Benefit
  The insurance company pays the chosen sum assured to your nominee if you pass away during the policy period.
   
• Maturity Benefit
  If you survive the policy term, some life insurance plans also pay you the chosen sum assured.
   
• Survival Benefit
  This benefit is provided at the end of the premium payment term (i.e. once you’ve paid off all the policy premiums) by some life insurance products.
   
• Option To Apply for a loan
  After a certain time span, also known as the lock-in period, you can use some types of life insurance plans as collateral to take loans against them.
   
• Cash Value
  A cash value is built using the premiums you pay, which can either be withdrawn or borrowed against.
   
• Tax benefits
  You can get tax deductions on the life insurance premiums you pay - under Section 80C of the Income Tax Act, 1961 - up to Rs 1.5 Lakhs every year.
  
  The life insurance payout you or your family will receive is also entirely tax-free - under Section 10(10D) of the Income Tax Act.
   

Summary Table of Benefits

How Much Life Insurance Coverage Do You Need?

There are many types of life insurance products available in the market. But before buying any of them, you need to decide on a life cover amount that is sufficient for your family. The cover should be big enough to -

•  Sustain the rising inflation and living costs
•  Settle all pending loans
•  Build a suitable income replacement for your family
•  Let them lead a comfortable lifestyle, even in your absence

For products that are a mix of insurance+investment, that give you a regular payout or a post-retirement income - you need to calculate how much to invest. This will ensure that the amount you receive on maturity is adequate enough to fulfil your long-term goals.

But, keep in mind that life insurance policies with an investment component (endowment plans, money-back plans, etc.) should be considered money-building avenues. The death benefit that your family will receive should be thought of as a policy feature and should not be your primary motive for investing in such plans. The cover amount of such products is usually 10x the premium you pay - which will not suffice your loved one’s needs if you, unfortunately, pass away. You should simultaneously buy term insurance to create a financial cushion for them.

So assess your needs and objectives, choose your product, and decide on the coverage accordingly.

How to Calculate Your Life Insurance Premium?

Insurers agree to cover your financial risks in exchange for premiums that need to be paid either monthly, quarterly, semi-annually, or annually. The amount you pay depends on factors like your age, the desired sum assured, lifestyle choices, policy term, medical history, occupation, etc. It's important to pay these premiums regularly to keep your policy active. So, make sure the premium amount you agree to pay is easy on your wallet and doesn't cause financial strain.

Here’s how you can calculate your premium,

1. Gather information about certain aspects such as coverage amount, policy duration, premium payment option (regular pay, singular pay, limited pay), etc., that need to be tailored to your unique needs.
2. You can make use of life insurance premium calculators on various websites that can help you calculate the premium of your desired life insurance policy.
3. Alternatively, you can visit our website to simplify the process. Navigate to the 'Life Insurance' section, input the required details, and proceed to 'Compare Quotes.' A list of plans will be displayed. Experiment with various policy aspects, such as term, coverage amount, premium payment frequency, etc., to observe how these adjustments can influence the premiums.

If you're still unsure, you can also take a look at the brochure. Once you're done with your research, you can narrow down your options to a few policies that look promising and then choose the life insurance policy that best suits your needs.
 

Factors That Impact Life Insurance Premiums

Let's look at some of the factors that can influence your life insurance premiums -

• Age
  Age is a significant factor that impacts life insurance policy premiums. As you grow older, your health risks tend to increase, which can result in higher premiums. It is, therefore, advisable to consider investing in a life insurance policy at a younger age. This is especially important if you have financial dependents or outstanding debts that would need to be taken care of in the event of your unfortunate passing. By doing so, you can secure lower premiums and potentially save money in the long run.

• Sum Assured
  One of the most significant factors of a life insurance plan is the sum assured. It is the amount of financial coverage you or your family would receive from your life insurance policy. Ensure that you select the right cover amount that aligns with your and your family's financial needs and obligations.

• Lifestyle
  Your lifestyle choices can have a significant impact on the premiums you pay for life insurance. Insurance companies carefully assess the level of risk associated with your application. And factors such as smoking, excessive alcohol consumption, history of drug use, etc., can increase your chances of developing medical conditions and potentially having a shorter life expectancy. As a result, insurers may require you to pay higher life insurance policy premiums to offset this increased risk.

• Policy Tenure
  Policy tenure refers to the length of time your life insurance plan remains active, and it plays a significant role in determining the premium you'll need to pay. It's crucial to carefully select a tenure that aligns with your specific needs and financial goals.

• Medical History
  Your and your family's medical history plays a significant role in determining the premiums for your life insurance policy. If you suffer from a serious medical condition, you may find yourself paying higher premiums or possibly being denied coverage altogether.

• Gender
  Insurance companies calculate premiums differently for men and women, taking into account the differences in life expectancy. Insurance companies consider the statistical likelihood that women tend to live longer than men. They then adjust their premiums to reflect this difference in risk coverage.

• Occupation
  Your occupation also influences your life insurance policy premiums. Insurance companies carefully assess the level of risk associated with your profession. If your occupation is categorised as high-risk, the insurance company expects a higher likelihood of death and, consequently, will demand a higher premium to sufficiently account for that increased risk. Conversely, if your occupation is viewed as low-risk, the premium may be lower due to the reduced chance of death.

• Riders
  As discussed earlier, riders are optional covers that you can add to your base life insurance plan, allowing you to enhance your coverage in specific situations. These riders include critical illness riders, accidental death benefit riders, waiver of premium riders, etc. However, it's worth noting that adding these riders will increase the premiums you need to pay. The more riders you choose to include, the higher the premiums will be. However, it shouldn’t deter you from such riders if there is a genuine need.

• Type of Policy
  There are various types of life insurance plans available, such as term insurance, whole life insurance, ULIPs, pension plans, etc., each with its unique features and benefits. The type of life insurance plan you opt for will determine the premiums you pay. For example, a term life insurance plan tends to be more affordable compared to a whole life insurance plan.

• Other Features
  Life insurance policies come with additional features such as increasing or decreasing cover, limited pay, single pay, etc. These features can impact your premiums. For example, limited or single payment policies come with higher premiums compared to regular payment options. It's crucial to carefully consider the features you want, as they can directly affect the cost of your premiums.

 

Life Insurance Riders

Riders are add-on benefits that are available at a certain extra yet reasonable cost. Under specific circumstances, they kick in and provide additional financial relief.

• Benefits of Riders

1. They enhance your coverage: They provide added protection against several risks. In case the incident covered by the rider happens, you receive the rider’s benefit.
2. They are convenient: You don’t have to go through any extra paperwork or medical tests - besides the one you’ve already done - to purchase a rider.
3. They save time: By not having to manage another insurance policy, and getting the benefits of many in one - you save time and effort.

• Types of Riders

1. Hospital Care Rider: If you undergo hospitalisation for a treatment that is medically necessary, this rider will pay a fixed amount of money on a daily basis for each day you are hospitalised.
2. Surgical Care Rider: If you are hospitalised for a medical surgery for a minimum period of 24 hours and actually undergo that surgery - you will receive a fixed sum of money.
3. Accidental Death Benefit Rider: It pays an additional sum of money to your family if you pass away due to an accident.
4. Accidental Disability Rider: It will provide an additional sum of money, in case you meet with an accident that leads to permanent disability.
5. Critical Illness Rider: It will offer a fixed amount of money in case you get diagnosed with the listed critical illness during the policy period.
6. Waiver of Premium Rider: It is of 2 types -
7. Waiver of Premium due to Critical Illness Rider: With this rider in place - all your pending premiums will be waived if you contract one of the listed critical illnesses.
8. Waiver of Premium due to Disability Rider: With this rider in place - all your pending premiums will be waived, in case you undergo injuries that lead to permanent disability.

Please Note: Depending on the product and the insurer, there may be more types of riders available. Please read the policy wording carefully before buying.
 

How to Save Tax With Life Insurance?

Here's a breakdown of tax benefits offered by life insurance -

• The premiums you pay for your life insurance policy are eligible for a tax deduction of up to ₹1.5 lakhs per year under Section 80C of the Income Tax Act, 1961.
• As per Section 10(10D) of the Act, the payout you or your nominee receive from a life insurance policy is exempted from taxation.

Please keep in mind that the limits for claiming deductions and exemptions may be subject to change in accordance with the provisions of the Income Tax Act, 1961. And, to claim tax benefits , you must ensure that you are making premium payments to an insurance company authorised by the IRDAI (Insurance Regulatory and Development Authority of India).
 

Things to Note Before Buying Life Insurance

Here are 7 points you should remember before buying your preferred plan -

• Choose The Right Type Of policy

  First and foremost, you need to decide on the type of policy you need to buy. It should cater to your and your family’s financial goals. For instance, if you simply want to protect your family from financial instability in your absence, you can buy a term insurance plan. If you want a steady retirement income, you should go for an annuity plan. And so on.

  Understand what each plan type has to offer (features, benefits, etc.) and its limitations as well. This will help you make an informed decision.

• Choose An Adequate Cover

  As important as it is to get the right life insurance product, it is equally important to get the right amount of coverage. Consider your family’s expenses, long-term goals, as well as loans/liabilities and savings/investments. And calculate an amount that will keep them financially afloat in the future.

• Choose A Reputable Insurance Company

  Buying from a good and genuine insurer will make sure your policy journey is smooth and seamless. This is all the more important at the time of death claims since you won't be there to help your family if anything goes awry.

• Check The Claim Settlement Ratio (CSR)

  Claim settlement ratio is a metric that shows you the ratio of the number of claims settled by the insurance provider divided by the number of claims received by it in a given financial year. A high CSR means that a greater number of claims are being settled by the insurance company - which is a good indicator.

• Fill Out The Proposal Form All By Yourself

  Nobody knows you better than you know yourself. If someone else fills out your form on your behalf, there is always a possibility of wrong information being entered or important details being left out. So make sure you fill it out yourself carefully and disclose all that’s asked of you.

• Hand-pick customization options

You can personalise your policy as per your requirements. You can go for features, like - increasing cover to ensure your family is adequately covered throughout, limited pay to speed up premium payments, etc.

You can also strengthen your coverage by adding riders. Before you opt for one -

1.  Check whether you really need it or not.
2.  Buy only if it fits your needs.
3.  Don’t buy it by default - as not all of them might be helpful.

• Keep All Policy-Related Files Safe

  Many insurance companies provide an e-insurance account facility, where you can store and access your life insurance plan digitally. You can also open a Digilocker account and store your policy-related documents. Ensure you share these credentials and account details with your family/nominee, so they can easily access them at the time of claim in your absence.
   

Life Insurance Claims Process

In Case You Don’t Survive The Policy Term

• Notify The Insurer

In case you pass away, your nominee must contact the insurance company as soon as possible.

The usual options to intimate are:

1. Through the insurance company’s toll-free or SMS
2. Through email
3. Through the insurance company’s website

• Submit Relevant Documents

  Then, your nominee will have to to fill out the claim form either online or offline. They will also have to submit the required documents to the insurer.

• Submit Additional Documents If Needed

Once the initial list of docs is submitted, the insurer may request additional documents. The nominee must ensure they are checking emails/messages/letters received from the insurer for such requests - and submitting all documents promptly.

• List of Mandatory Documents Required

1. Claimant statement form
2. Death certificate (self-attested copy)
3. KYC document of the beneficiary (self-attested copy)
4. Bank details of the beneficiary

• Additional Requirements For Claims Within 3 Yearsd

1. Original policy document
2. Medical attendant's certificate (if any)
3. Self-attested copies of hospital or treatment records (if any)
4. Employer's certificate (if applicable)

• Additional Requirements For Accidental Or Unnatural Death Claims

1. FIR and final police closure report
2. Driving licence (in case of demise while driving)
3. Post mortem report
4. Valid insurance document of the vehicle (in case of death due to a road traffic accident)
5. Police inquest report/inquest panchnama
6. Newspaper cutting (if any)

• Claim Approval And Payout

  Once submitted, the insurer will review the documents and decide whether or not to approve the claim. If approved - the claim will be paid according to the payout option selected by you during the policy purchase.

In Case You Survive The Policy Term

• Contact Your Insurer

  If you, the insured person, want to file a claim, you need to visit your insurance company's branch office and provide the required documents.

• Submit Relevant Documents

  For a claim request to be processed, you need to submit the following documents -

  Duly filled claim form or policy payout form in the specified format

  Original Policy Document

• Verification

  An assessor will then verify the submitted documents, to determine whether the claim is valid or not.

• Claim Approval And Payout

  Once the claim is verified and approved, the maturity amount will be credited to your registered bank account. All plans except ULIPs will have a fixed sum that will be paid to you.

  For ULIPs, your insurer will credit the maturity amount to your bank account the day after you make the claim. This amount depends on the NAV on the date of maturity of your policy at the time of market closing (3 PM) if it’s a working day. If it’s not, the amount will be determined based on the next working day’s NAV.

  If, for any reason, the insurer denies the claim, they will contact you via phone, SMS, or email to inform you about the same.

  Please Note: Documents needed for a life insurance claim, as well as the steps involved may vary across insurers. So read the policy wordings thoroughly.

 

How to Buy The Best Life Insurance Policy Online From SMC?

To purchase the best life insurance policy online from SMC, follow these steps -

1. Visit https://www.smcinsurance.com/.
2. Click on 'Life Insurance.'
3. Provide your gender, full name, date of birth, and mobile number.
4. Answer basic lifestyle questions, including smoking or tobacco use, annual income, desired coverage, and policy term.
5. Click 'Compare Quotes.'
6. Review available life insurance plans.
7. Adjust policy details such as term, coverage amount, premium payment frequency, etc. and observe how premiums change.
8. Download brochures to learn more about the life insurance plans.
9. Once you've selected your desired life insurance plan, click 'Buy Now' and proceed with the application process.
    

Frequently Asked Questions (FAQs)