Life is full of uncertainties, but you need to devise ways to manage the risks arising out of these issues. A life insurance policy is one such means of providing financial security to the family in case of any eventuality like the sudden demise of the breadwinner. To get the benefit when needed, you should know and understand life insurance plans & policies in India.
Life insurance provides financial protection to the family in cases like the sudden death or the permanent disability of the main earning member of the family. Thus, it is an assurance that the insurance company will take care of the financial well-being of the family members even when the breadwinner is not around. This is done by paying the sum assured to the nominee or the beneficiary. The insurance can also cover other contingencies like critical illness and permanent or temporary disability. The policyholder is called the insured, while the insurance company is called the insurer.
A life insurance policy helps in meeting three goals in life. Let us look at them :
Protection : A life insurance policy provides financial security to the family on the untimely demise of the insured.
Investment : Along with protection, life insurance also helps in investment so that the money can be used for meeting various financial goals.
Savings : Along with protection, through life insurance, you also get to save money which can be used during retirement or for other financial needs.
A premium is the amount paid to the insurance company for getting a life insurance policy. The premium or the cost of the insurance is an important aspect to be considered before finalising a policy. It depends on various factors like age and gender. To reap the benefits of the insurance policy, it is important to pay the premium on time. In case of a non-payment or a payment delay, the policy can be considered as a lapsed policy. However, before a policy happens to expire, you usually get a grace period of 30 days. The payment mode can be regular or single. A regular payment can be monthly, annually and so on. Let us understand some factors on which the premium depends.
Age :This is an important deciding factor while buying an insurance policy. Older you are, higher the premium amount. Accordingly, younger people have to pay lower premium amount for a life insurance policy.
Gender : Premium amount for women is lower compared to that for men.
Smoker/Non-smoker : In case you are a smoker, the premium will be higher because you are prone to higher risks in life. Thus, a non-smoker has to pay lower premium.
Sum assured :Higher the sum assured or the death benefit, higher the premium amount to be paid.
Policy term : If the policy is for a longer duration, the premium amount will be higher.
Life insurance is of 7 types. And each has its own features and specialties. You can choose them as per your need and requirement. They are: Term Insurance, Whole Life Insurance, Endowment Policy, Money Back Policy, Child Plan, Retirement or Annuity Plan and United Linked Insurance Plan (ULIP).
Term Life Insurance
Whole Life Insurance
Money Back Policy
ULIP (Unit Linked Insurance Plans)
Group life insurance is a type of life insurance that covers a group of people. It is mostly provided by companies to its employees. As the insurance is done in a group, a group life insurance is considered cost-effective. The group can comprise lawyers, members of cooperative banks, societies, doctors, etc. This life insurance can be contributory, where the employees contribute along with the employer in the payment of the premium, or non-contributory, where the employer pays the entire premium amount.
You can brave various situations of life when you are young; however, in old age you need more protection and security. To manage such circumstances of life in old age, life insurance for senior citizens can be a good option. The insurance also provides financial coverage at times of need. For instance, in case you do not have any support for your spouse, life insurance for senior citizens can provide financial security to the spouse in case of your sudden demise. The death benefit can also be used to manage loans, debts and other financial needs.
Along with the standard coverage which varies with plan to plan, you can further enhance the protection with the help of riders, such as accidental death benefit rider, total or permanent disability rider and many more. The additional benefits can be availed on payment of some extra amount. Following are some common riders :
Following are the standard set of documents required to process a claim :
In case of untimely demise of the insured, the nominee or beneficiary can file a claim to get the sum assured :