Life Insurance-Frequently Asked Questions

Why do I need to buy life insurance policy? 241 Views

You should buy life insurance cover because it ensures that life style of your family/economic dependents will remain intact even if you’re not around. In case of your untimely demise, your family may face critical financial blow, your children’s education can be badly affected. But a good life insurance policy can fulfill their all financial needs be it education of your children or marriage. Life insurance policy with money back or pension plan can provide you financial support once you stop working or at different milestones of your life. Also, an investment or saving plan can be a constant source of your income

What are different typesof life insurance policies? 225 Views

Life insurance policies in India come in a variety of offerings catering to the needs of protection, savings and protection-cum-savings. Some of them are:

(a) Term Insurance plan

(b) Whole- life insurance plan

(c) Endowment plan

(d) Money-back plan

(e) Pension plan

(f) Child plan

(g) ULIPs (unit-linked plans)

What is term insurance policy? 242 Views

The Term Insurance Policy is a pure protection plan that ensures the financial freedom to your family/ dependents. It’s an agreement between the insurer and the policyholder, in which the policyholder needs to pay a pre-fixed premium amount on a specified frequency. The insurer, on the other hand, assures the policyholder to pay the sum insured to the nominee/ beneficiary in case of the untimely death of the insured during the policy term, provided the policy is in force.

Who should buy term insurance policy? 185 Views

Term Insurance provides financial protection for your family, when you are not there to back them. If you are the sole earning member of the family, it is quite essential for you to secure the future of your family with a term plan. As, it is the pure protection plan, it comes with low premium rates and high sum assured.

What is life insurance policy? 195 Views

A Life Insurance policy is a contract between the policyholder and the insurance company wherein the later promises to pay a pre-defined amount called sum insured to the beneficiary /nominee after the death of the life insured, within the policy period. While the policyholder, in order to avail the benefits, agrees to pay premiums for a certain period either monthly, half-yearly or yearly.

Some life insurance policies come with pure protection, some with protection-cum-investment while some come with investment only.

Whose life should be insured? 192 Views

A person whose death will cause a financial loss to the family can be insured. Insurance indemnifies only the financial loss. Like One can take a policy on himself/herself if human life value. If you are earning and have financial obligations and you are the only bread-winner of the family, you must secure your life with an adequate sum insured.

How do I calculate my life insurance need? 212 Views

In order to assess your life insurance need, you may consider these following factors, such as

Number of financial dependents such as your spouse, children, and dependent parents.
How much debt/liabilities, including home loan, auto loan do you have.
How much money your children will require to pursue their education.
How much money your family will require to maintain the same lifestyle.

Considering the above mentioned factors, you can easily compute the amount you may need to fulfill the financial need of your family, when you are not there. You may also take assistance from an insurance adviser assessing your insurance need.

When should I buy life insurance cover? 154 Views

You should buy life insurance cover as early as possible. Policy taken in younger age costs you less as the age is the major factor considered for premium calculation. Also, policy bought in your early age may not require medical check-up. Once you suffer from any critical illness, insurer may not accept your proposal.

What should be the policy term? 164 Views

The thumb-rule of insurance is to ‘protect your life till you contribute financially to your family’. It should be treated as the replacement of your income. The policy term up to 60 or 65 years of your age is considered an ideal one.

What is endowment plan? 183 Views

An endowment plan is a life insurance policy tailored to pay a guaranteed sum assured with bonuses after a pre-specified time (maturity) normally for 10 years, 15 years or 20 years. The policyholder is also entitled to get accumulated bonuses accrued over the time. In case of the death of the life insured, total sum assured with accumulated bonuses is paid to the beneficiary/nominee, and policy terminates.

What is money-back policy? 161 Views

Money-back policy is a saving plan with added benefit of life protection. Under the plan, policyholder gets amount equivalent to a pre-defined percentage of sum assured at regular intervals as survival benefit throughout the policy period. In case the policyholder dies during the policy term, the nominee gets the entire sum assured without deducting any amount paid earlier as survival benefits, and policy terminates

Whatis pension plan? 146 Views

Pension or retirement plan is a type of life insurance wherein the policyholder sets aside a part of his/her income for post- retirement inflows. The insurer, then invests the sum on behalf of the policyholder, and pays benefits to the policyholder post-retirement.

The policyholder itself chooses its retirement time.

In general, there are two types of pension plans- (1) Defined-benefit plans, and (2) Defined-contribution plans.

What is child insurance policy? 136 Views

A child insurance policy is an efficient financial tool to secure child’s different milestones of his life be it education, marriage, business or home even after the early demise of the parents. Unlike other life insurance policies, a child plan does not terminate after the demise of the parents. The best part of a child insurance policy lies in its waiver-of-premium feature; under which even after the unfortunate death of the policyholder, policy does continue paying all benefits, and all future premiums is borne by the insurer on behalf of the policyholder.

What is unit-linked investment policy (ULIP)? 124 Views

Unit-linked plan is an insurance product offered by life insurance companies that fulfill both the investment appetite and protection need of the policyholder under a single policy. A part of the premium paid is utilised providing life insurance cover to the policyholder while the rest of the portion is invested in various equity and debt schemes.

Investments made under the policy are subject to risks associated with capital markets, and the risk involved is borne by the policyholder.

What is group life insurance policy? 134 Views

A group life insurance policy is an insurance that covers a group of people, normally who are member of any society, organisation, labour union or common employees of any company. Premium per person charged under such a policy is much less than if they had to buy individually.

From where should I buy insurance? 158 Views

Don’t buy insurance just because the agent is your kin / friend or your neighbor has bought. The better way is to first assess your insurance needs, for the purpose you may seek help of an insurance expert. You can even talk to different agents of various insurers in order to make an informed decision. Remember, an inappropriate insurance policy of inadequate sum assured may not help you much when you need it, and thus the purpose of your insurance is not met.

The best way to pick the right insurance policy is comparing policies online with an Insurance Web Aggregator.

Can I get my policy cancelled once bought? 164 Views

Yes, protecting policyholders’ right, the Insurance Regulatory and development authority has made regulation that if the policyholder doesn’t like any of the terms or conditions under the policy, can get it cancelled within the free-look period stating the reason. In life insurance policy, free-look period is 15 days from the date of receiving policy documents.

Can I get full refund of premium if cancel within the free-look period? 147 Views

Yes, you have the right to get your life insurance policy cancelled within the free-look period, if you disagree with any of the terms or conditions in the policy. However, the onus to prove receipt date is on the policyholder. After deducting a proportionate risk premium for the period plus expenses incurred in medical check-up if conducted plus stamp duty charges, you’ll be entitled to get premium refunded.

Should I make payments through the agent? 141 Views

You have both the options to pay premiums either the insurer or through the agent. In case you make payments via an agent, make sure the cheque is written in the name of the insurer. Also, don’t forget to receive the receipt from the insurer.

What will happen if I fail to pay premium on time? 174 Views

If you fail to pay the premium on or before the scheduled date, you will be provided with the grace period, during which you need to pay all the pending premiums, else the policy lapses. All life insurers in India allow its policyholders to reinstate/revive their policies within a certain period after the policy has lapsed /expired subject to acceptance as per underwriting guidelines.

But you must know that insurers do not cover risks for the reinstatement period. Also, insurer may charge you the late fine.

Is the amount received on maturity eligible for tax exemption? 123 Views

All insurance policies do not have the eligibility for tax exemption. You should go through the tax provisions under section 10 (10D) prior to buying a policy.

Is the amount received as death benefit eligible for tax exemption? 125 Views

Yes, amount received as death benefit is eligible for tax exemption under section 10(10D) of Income Tax Act.

How can I file a claim under the policy? 172 Views

In case of the death of the life insured, you should send claim intimation to the concerned insurance company as early as possible. Thereafter, a fully filled and signed claim form obtained from company’s office or downloaded from its website, with documents such as - death certificate, legal heir certificate if the applicant is not an assignee/nominee, policy document, post-mortem report, etc. should be sent to the claim settlement department of the company.

In case of maturity, the insurer will normally send you the intimation along with a discharge voucher at least 2-3 months prior to the date of maturity. You need to send the signed discharge voucher along with the policy bond in original.According to a circular of IRDAI released in September 2015, the insurance companies shall not have to stress on discharge vouchers regarding the release of admitted claim amounts.