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Life Insurance is a much uncomplicated 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. 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.
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. Because 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.
The below things would help you decide what exactly you should look for in 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 or demotion 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 your capacity to pay the premiums. This is because, the premiums might increase and in the future, you might not be in a position to pay the premiums.
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!
The below steps would help you find the best life insurance policy in India:
Always buy insurance with an objective. If you don’t have any reason to buy, it’s better not to buy simply because you may end up buying an unwanted product. For instance, if you have no dependents, you may simply opt for a mediclaim instead of a life insurance policy.
If you are the only sole earner of the family, you should buy a life insurance plan. This is because your dependent family should not suffer due to sudden income loss after you are gone.
It is advisable to opt for insurance plans to provide your family a financial help during any uncertainties like death or critical illness, etc. Term insurance is advisable to fulfill these conditions.
Once you know the need and type of policy you wish to opt for, determining the coverage amount becomes a bit too complicated. This is because no one wants to remain under-insured. It is advisable to opt for a minimum sum assured of 8-10 times of your gross annual income.
Always check the claim settlement ratio of the insurance company you wish to buy a life insurance plan from. This is because you will know the worth of the insurance company that would help your beloved family to settle the claims in your absence.
Many times insurance companies reject the claims with reasons as silly as correct information not provided at the time of filling the proposal form. Giving true information about the pre-existing diseases, smoking habits, etc. would help you from losing any policy benefits and smooth claim settlement.
Before opting for a life insurance, watch out for your outstanding liabilities like car loan, home loan etc. This is because you would know what coverage to opt for depending upon the outstanding debts.
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 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.
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.
A life insurance agreement between the insurer and the insured 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 are covered in a life insurance plan. The 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 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.
|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||95%|
|HDFC Life||Rs. 7,705 crores||Rs. 300 crores||Rs. 2.50 lakhs||95%|
|Reliance Life||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"