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Life Insurance is a much straightforward concept – you basically buy a policy that offers your beneficiary or beneficiaries a compensation when you are no more. However, certain decisions like the kind of life insurance policy to buy, the amount of death benefit and the premium you pay for your policy might be complex. Human life is very precious. You get financially as well as emotionally disturbed when you lose a family member. So, life insurance policies offer a financial sense of peace to your family in your absence. It provides them an amount in a lump sum or in installments to take care of their finances or to pay for your unpaid bank loans or debts.
Provides Life Cover: The life insurance company offers plans that provides you a life cover. The policyholder is covered against the risk of death either for a specific term or for the entire life.
Financial Security to Family: In case of an untimely death of the life assured, the life insurance company pays the nominee/beneficiary the sum assured (coverage). This way, life assured’s family is financially secured and wouldn’t have to undergo the hardship to make ends meet.
Build Corpus: With a life insurance policy you can safely build corpus while you enjoy your life’s precious moment with your family. You also get complete assurance of being provided guaranteed sum assured from the day of policy inception.
Financial Goals: You can meet your short-term and long-term financial goals without worries. Financial goals such as your child’s education and marriage or building funds for your retirement can be easily met with a life insurance.
Opt for a Bank Loan: You can opt for a bank loan on your life insurance plan. There are plans that covers you for life-long, and on the accumulation of corpus, the bank approves your loan.
Tax Benefits: All the premiums paid are tax exempted under Section 80C of Income Tax Act, 1961. And the death benefit (payouts) received by the nominee is tax exempted under the Section 10(10D) of Income Tax Act, 1961.
Peace of Mind: Your family is financially secured in case of unfortunate eventualities, you can make a roadmap to meet your various life stage financial needs, all these along with tax exemption gives peace of mind.
Life insurance offers a peace of mind during any uncertainties such as critical illness or death. The funds paid by the insurer would take care of your financial goals in your absence.
You can avail tax benefits under Section 10 (10D) of the Income Tax Act for the claim received. Additionally, you are eligible for tax exemptions under Section 80C for the premiums paid.
It offers you retirement plans to breathe a sigh of relief. It helps you build a corpus for your retirement apart from offering a life cover and offers lump sum or monthly payouts & annuities.
Usually, life insurance policies are bought with a specified motive. These motives might include, child’s education or marriage, etc. A person gets discouraged from utilizing these funds for any other motive. Therefore, the corpus of the individual increases.
Buying a life insurance policy is not really a big deal. But no one wants to unnecessarily pay a bomb for the type of policy they want to buy or purchase a policy that is actually not as per their requirement. Therefore, there things you should know before you buy a life insurance policy.
Analyze and evaluate your life insurance requirements and review your policy on time. Certain changes like marriage, an addition of a family member, job change etc. calls out for a necessity to re-evaluate your insurance needs.
The amount of income you offer to your family members who are dependent on you, your loans and financial expenses would help you to know your coverage better. Based on this, you can decide on the coverage you would need to cover your family for your financial liabilities in your absence.
Ensure you have capacity to pay the premiums. This is because, if the policy lapses due to non-payment you are goals get affected and dent your savings. Therefore, it is essential that you review your capacity to pay the premiums for the life insurance policy that you opt for.
Before finalizing on a particular insurance policy, ensure that you compare the life insurance plans of different insurers. This would give you a scope to narrow down your search as per your requirement post comparing the quotes, features, benefits etc. of different insurers. It is a known fact that online life insurance policies are cheaper than the offline ones. Therefore, ensure you buy online life insurance plans only!
Reading your policy document is very important. Not everything is covered in a life insurance policy. There are exclusions too. Therefore, knowing what is not covered is equally important to know along with knowing what is covered!
If you increase the coverage offered under your basic life insurance policy, you may consider buying riders that would fulfill all your health and other requirements. However, be wise and choose the riders. Do not jump for them if not required.
There are many life insurance companies in India. And each life insurance company offers number of life insurance plans. It is difficult to find the right type of life insurance policy. Therefore, you should know few things beforehand.
There are many benefits of buying life insurance. However, the main objective of a life insurance plan is to provide life cover to the assured. The sum assured is financial compensation in case of life assured’s untimely demise during the policy period. Hence, it is important to decide the right life insurance cover when buying life insurance.
For children’s education, you can plan separately with the help of a child plan. And for your retirement planning, you can take help of retirement plans.
If you are planning to buy a pure life insurance cover – a term plan, the financial advisors suggest to opt 15-20 times of your annual income as your life insurance cover.
For example, if annual income is Rs.5 lakh, the life insurance cover (sum assured) should be approximately Rs.1 crore.
Regardless of what life insurance plan you purchase, you must check claim settlement ratio of each life insurance company, which will build your trust in the company.
Your premiums would be lower if you buy a life insurance plan at a younger age. With your increasing age, your premiums also increases and also the insurer’s level of risk. So, don’t wait till you grey, apply today!
Research says that women generally live longer than men. Which means life insurance companies find men more risky than the women when it comes to life insurance claims. Therefore, their premiums too are slightly lower than the men. So, your life insurance premium does depend on your gender too.
Insurance companies usually calculate the premiums based on risk factors like your smoking, snuffing and drinking habits. This includes chewing tobacco and other intoxicating stuff.
The longer the duration of your coverage, the greater is the risk undertaken by the insurance company. Short-term life insurance plans have lower premiums than long-term life insurance plans. Though, short term life insurance has lower premium than long term life insurance policies, the coverage/ policy term offered is also lower. Plan for a cover that protects for a longer duration.
It is important to compare life insurance plans online, because all life insurance companies offer different life insurance plans. Moreover, each life insurance company offers a number of variants of each type of life insurance plan. And analyzing the right plan for oneself is quite a daunting task.
But don't worry.
Coverfox’s tool has transformed such a daunting task into a cake walk.
Online life insurance comparison tool removes all the guess work. Coverfox’s comparison tool helps you to find the best life insurance plan at an affordable premium!
Let's have a look at the factors you should compare while comparing life insurance plans:
Life Coverage Premium: First and foremost, ensure you are buying an adequate life cover. Once that is fixed by you, you need to compare how much it costs. Compare the premiums for the same coverage amount offered by different insurance companies. The premium for the same coverage should be pocket-friendly.
Features of the Life Insurance Plan: Compare features of different life insurance features offered by various life insurance companies. Always make sure you opt for a comprehensive life insurance policy which is customizable when it comes to policy tenure, the sum assured amount, premium paying mode and frequency, the payouts, etc.
Life Insurance Riders: Riders are add-ons that enhance your basic life insurance coverage. The life insurance riders are optional paid features. However, before buying a life insurance plan online, you should watch out for the riders you want to buy, if they are offered by a different insurer as an in-built feature. Some of the important riders you may wish to add to your policy may be available as a feature of plan offered by a different life insurance company. It is suggested to buy only riders if necessary.
Claim Settlement Ratio: Claim settlement ratio of the company symbolizes the proportion of the total claims settled against the total number of claims filed. Higher the claim settlement ratio, the better. Chances are then higher of your claim getting settled. For each life insurance company the claim settlement ratio changes every year. Therefore, it is an important factor while comparing life insurance plans.
A life insurance policy is an agreement between the insurer and the insured. Insurer would pay the sum assured when the insured pays the premium regularly. This would, however, happen only during an occurrence of an insured event. However, not anything & everything is covered in a life insurance plan. The life insurance company would investigate in case the death occurs in an unnatural way. The sum assured is not paid if death occurs due to the below reasons:
If you pass away during the policy term (the policy is yet to be matured), then your nominee can claim for your life insurance policy. This claim is a “death claim” or a “life insurance claim”. During a death claim, your nominee or your family member should intimate the claim by calling Coverfox.com.
There can be an early death or a non-early death. It is completely based on the time since the policy was bought. An early death is where you die within three years from the policy commencement date. Your nominee or the beneficiary will have to approach Coverfox.com or the insurance company and fill the claim intimation form.
The below documents would be required:
The below documents needs to be presented during a natural death claim:
The nominee or the relative should intimate the claim by calling Coverfox.com or the insurance company. The below documents need to be presented for a hassle free claim:
The below documentation needs to be presented for processing the claim:
The below documentation needs to be presented for processing the claim:
The below documentation needs to be presented for processing the claim:
The below documentation needs to be presented for processing the claim:
The insurance company would investigate the genuineness of the claim and respond to the settlement accordingly. In case of incomplete documentation, the insurance company would raise a requirement and inform the insured's nominee.
There are many insurers and each life insurance company offers different types of life insurance plans with multiple variants. It is difficult to find the best life insurance policy. However, here’s the list of few life insurance plans.
iTerm is a pure life insurance policy. A term can plan that can be purchased online without any hassle. It offers high life coverage at low premiums.
LIC – New Jeevan Anand (Endowment Plan)
New Jevan Anand is a comprehensive endowment plan by LIC. It is a traditional endowment plan, which provides insurance and an opportunity for savings.
SBI Life – Shubh Nivesh (Endowment Plan)
Shubh Nivesh is a comprehensive non-linked endowment plan by SBI Life. It provides death risk cover, which can be opted for throughout the life. It also helps you to build corpus with guaranteed maturity benefit.
SBI Life – Saral Pension (Pension Plan)
Saral Pension, as the name suggests is pension plan. It is a comprehensive and non-linked traditional retirement plan. Helps you in your retirement planning.
HDFC Life – Click2Protect Plus (Term Plan)
Click2Protect Plus is an online term insurance plan by HDFC Life. It provides life cover at a reasonable cost.
HDFC Life – Click2Invest (ULIP)
HDFC Click2Invest is an ULIP plan, which can be purchased online. It provides life coverage and also an opportunity to build corpus.
ICICI Prudential – Wealth Builder II (ULIP)
ICICI offers a complete ULIP, a unit linked plan. It provides life protection cover and opportunity of savings to build a corpus. Depending on the risk appetite, one can invest in different options to gain returns on the investment.
|Life Insurance Company||Annual New Business Premium||Total Values of Claim Settled||Average Value of claim||Claim Settlement Ratio|
|LIC||Rs. 2,64,975 crore||Rs. 9,690 crores||Rs. 1.30 lakhs||98%||Max Life||Rs. 6,970 crores||Rs. 261 crores||Rs. 2.90 lakhs||97%|
|Tata AIA Life||Rs. 1,731 crores||Rs. 87 crores||Rs. 2.70 lakhs||97%|
|ICICI Prudential Life||Rs. 4,782 crores||Rs. 406 crores||Rs. 3.80 lakhs||96%|
|Aegon Life||Rs. 336 crores||Rs. 40 crores||Rs. 7.90 lakhs||97.11%|
|HDFC Life||Rs. 7,705 crores||Rs. 300 crores||Rs. 2.50 lakhs||95%|
|Reliance Nippon||Rs. 3,070 crores||Rs. 220 crores||Rs. 1.60 lakhs||94%|
|SBI Life||Rs. 8,930 crores||Rs. 390 crores||Rs. 2.60 lakhs||93%|
|Canara HSBC Life||Rs. 734 crores||Rs. 30 crores||Rs. 5.70 lakhs||93%|
|Bajaj Allianz Life||Rs. 4,166 crores||Rs. 352 crores||Rs. 2.10 lakhs||91%|
|Sahara Life||Rs. 146 crores||Rs. 7 crores||Rs. 1.00 lakhs||90%|
|Future Generali Life||Rs. 510 crores||Rs. 30 crores||Rs. 1.90 lakhs||90%|
|Exide Life||Rs. 1,835 crores||Rs. 52 crores||Rs. 1.80 lakhs||89%|
|Kotak Life||Rs. 2,674 crores||Rs. 94 crores||Rs. 3.80 lakhs||89%|
|Birla Sunlife||Rs. 2,344 crores||Rs. 216 crores||Rs. 3.40 lakhs||89%|
|PNB Metlife||Rs. 1,905 crores||Rs. 125 crores||Rs. 4.70 lakhs||85%|
|Edelweiss Tokio Life||Rs. 251 crores||Rs. 14 crores||Rs. 11.80 lakhs||85%|
|IDBI Federal Life||Rs. 950 crores||Rs. 43 crores||Rs. 4.70 lakhs||85%|
|DHFL Pramerica||Rs. 858 crores||Rs. 14 crores||Rs. 3.00 lakhs||84%|
|Aviva Life||Rs. 883 crores||Rs. 101 crores||Rs. 8.10 lakhs||82%|
|Star Union Dai-ichi Life||Rs. 887 crores||Rs. 33 crores||Rs. 2.90 lakhs||81%|
|Bharti Axa Life||Rs. 1,043 crores||Rs. 50 crores||Rs. 5.00 lakhs||80%|
|IndiaFirst Life||Rs. 1,425 crores||Rs. 41 crores||Rs. 3.00 lakhs||72%|
|Shriram Life||Rs. 964 crores||Rs. 42 crores||Rs. 2.80 lakhs||60%|
"Source: IRDA Annual Report 2015-16"
When should I buy a life insurance policy?
It goes without saying that you should buy a life insurance policy at a younger age. This is when your life insurance premiums too are lower. Also, if are the only earning member of the family and you have dependents, you should ideally buy a life insurance plan without procrastination. If you wish to save tax deductions too, you can opt for a life insurance plan.
How much life insurance cover should I buy?
Well, life insurance cover will differ from one person to another depending upon individual requirements. Factors such as age, gender, financial liabilities, dependents and marital status play an important role to understand how much life insurance you should invest in. When you are young, you have lesser responsibilities at the same time the premiums too are lower. So, it’s better to start off early for life insurance policies. If you buy life insurance plans at a higher age, your financial responsibilities increases as well as your life insurance premiums!
How do I pay my life insurance premium?
Well, depending upon the life insurance plan that you opt for, you can pay the life insurance premiums either one time which is ‘single premium’ for a limited no. of years under ‘limited premium’ or a regular premium plan. You can pay premiums either monthly, quarterly, half-yearly or yearly again depending on the life insurance plan that you opt for.
Who should buy a whole life insurance plan?
Whole life insurance plans can be suitable type of a life insurance plan for different individuals. Basically, you should buy a whole life insurance plan in the below scenarios:
Under a whole life insurance policy can I borrow money?
Yes, you can certainly borrow money against your whole life insurance policy. The whole life insurance plan doesn’t only offer a cash value but it also ensures no date of expiry. This makes it easier for the policy holder to borrow against the whole life insurance plan. You can however contact your insurer in case of any related queries.
Why should you buy life insurance online?
You can get the best life insurance policy online. Mentioned below are the top reasons why you should buy life insurance online:
Saves time- Buying life insurance online saves your precious time since you skip through all the procedures. You simply browse, compare life insurance plans offered by different insurers and make the payment.
Reduced life insurance premium- Well, it’s a known fact that you pay lower premiums when you buy life insurance online rather than offline. The life insurance quotes offered online can be compared with different insurers before settling on a final one. Reason being the insurance company saves a lot of money on channel overheads and infrastructure. These savings are further transferred to the consumers in the form of discounted life insurance premium.
Minimum paperwork- When you buy a life insurance plan online, you minimize paperwork and filling of the forms. Besides, it is a hassle-free process of buying a life insurance policy since certificates, photo-copies of documents and other courier documents are all eliminated.
Easy access- When you buy life insurance online, the chances of the claims getting rejected are negligible since there are lesser mistakes than filling the life insurance forms manually. You can easily access your life insurance plans online since they get saved along with your details for a future reference too. You need to fill in the details again. Your life insurance policies that you have bought so far will get saved in the insurance company’s database and the life insurance policy will be in your inbox in no time! Online life insurance policies are cheaper as compared to the offline life insurance policies. Therefore, if you wish to save your time, money and the hassles, go for online life insurance plans.
What type of life insurance plan should I purchase?
The most basic and must buy is a term life insurance plan. It offers highest sum assured at a low premium as compared to any other life insurance types, as it is a pure life insurance plan. With term plan you can be assured of providing financial security to your family. If you are looking for investment opportunities – Endowment, ULIPs, and Money Back plans are good options to meet your financial goals. If you want to build corpus for your child’s education – Child Plan is the most suitable option. If you are looking for a financial vehicle to help you in your retirement planning – Retirement/Pension plan is a sound solution. As per your needs, you must shortlist the type of insurance plan you need to achieve your financial goal. Once you have shortlisted the type, you can check different variants offered by life insurance companies and compare the various life insurance options to select the best life insurance plan for yourself.
Does smoking affect my life insurance premium?
Yes, it does affect your premium. Smokers have to pay slightly higher premium than non-smokers.
Which are the most popular life insurance riders?
Riders are optional paid features. Riders help you to enhance the policy coverage. The most popular life insurance riders are:
What is Claim Settlement Ratio?
A claim settlement ratio is a percentage that indicates the number of insurance claims settled against the number of claims filed in a financial year. The higher the claim settlement ratio, the better is the life insurance company and its customer care service.
How to take a loan against life insurance?
Many may not know that a life insurance policy can act as a multi-tasker. Yes, apart from offering life cover, it also offers you a loan facility. The rates of interest too are competitive. In case of emergency situations, you can certainly avail a loan against your life insurance policy. As per the IRDAI, ULIPs and term insurance plans aren’t eligible for the loan facility. Only traditional life insurance plans and non-linked endowment plans can offer you the loan privilege.
Remember that you won’t be able to apply for a loan as soon as you buy a life insurance plan. You need to pay the premiums for a specific duration, post which you can apply for a loan facility. This duration is usually 3 years and the life insurance policy gets a surrender value.
Firstly, you need to pledge your traditional life insurance plans to get your loan sanctioned. Apart from offering a life cover, these policies also offer a savings component.
Your life insurance policy should be then assigned in the name of the insurer. This means, all the possible rights on your life insurance policy will be then transferred to the lender. Also, the surrender value should be known if you wish to apply for a loan against your insurance policy. Any insurer will grant you a loan amount based on the surrender value of the policy which is usually 80% to 90% of the surrender value depending upon one insurer to another.
At times, insurers consider 50% of the total life insurance premiums paid to calculate the maximum loan amount eligibility.
The duration to make the repayment of this loan is pretty flexible. The interest rates too are low compared to a personal loan. Banks also charge the processing fee as well as any other charges along with the processing fees.
You need to duly fill a loan application form along with the original life insurance policy. The payment receipt as well as a cancelled cheque copy and the deed of assignment also needs to be enclosed along with the loan application form.
What is maturity benefit in life insurance?
Maturity benefit in life insurance is the amount that your life insurance company pays you if you survive until the end of the policy duration. There is no maturity benefit in term insurance policy. However, there is a maturity benefit in all the other life insurance plans.
How to renew lapsed life insurance policy?
If the policyholder does not pay the premium even during the grace period after the expiry of the renewal date, the policy lapses. God forbid, if an unfortunate eventuality occurs, which leads to the death of the life assured and the policy has lapsed, the insurance company would not accept the claim. However, there is good news, a lapsed life insurance policy can be revived. The revival procedure differs from insurer to insurer. But, the following is the generic procedure for the revival of the lapsed life insurance policy.
Reinstatement: For reinstatement of a lapsed policy, you may need to submit some documents. The documentation will differ as per the time of your application for revival that is early stage revival or major stage. The documents required for the revival will also be different for each of the life insurance company.
Premium payment: If you want to revive the life insurance policy, you need to pay the due unpaid premiums along with the interest on the delayed premium, if any. The rate of interest differs for each insurance company. One more thing you need to keep in mind is, you also may have to pay a penalty.
Underwriting processing: You may be asked to provide a statement of good health or certificate of insurability or even undergo fresh medical examination. It needs to be filled in, signed and supported by identity and address proof documents of the life assured.
Please Note: Revival of a life insurance policy can impose fresh terms and conditions at the time of revival.