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Life insurance can be defined as a contract between an insurance policyholder and an insurer, where the insurer promises to pay a sum of money in exchange for a premium to a designated beneficiary upon the death of the insured person.
Life Insurance is a straightforward concept – you basically buy a policy that offers your beneficiary or beneficiary's compensation when you are no more. You need to have thorough knowledge about life insurance to be able to take a well-informed decision about the type of life insurance policy that will be best suited for your unique needs, the amount of death benefit that you should opt for, etc. Since human life is very precious, you get financially as well as emotionally disturbed when you lose a family member. In such challenging circumstances, life insurance policies offer the much-needed financial peace to your family in your absence. It provides them a lump sum or pay outs in installments, as mutually decided between you and your insurance company at the time of signing the policy. This ensures your family a reliable and stable source of income for meeting basic needs like child’s education, daily expenses, unpaid bank loans or debts (if any), etc.
Term Life Insurance
The salient features and benefits of term life insurance plans are:
AEGON Life iTerm Plan: 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.
HDFC Life Click2Protect Plus 3D Plus: Click2Protect Plus is an online term insurance plan by HDFC Life. It provides life cover at a reasonable cost.
The salient features and benefits of endowment life insurance plans are:
LIC New Jeevan Anand: 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: 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.
The salient features and benefits of unit linked insurance plans are:
HDFC Life Click2Invest: 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 :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.
The salient features and benefits of whole life insurance plans are:
The salient features and benefits of money back life insurance plans are:
The salient features and benefits of annuity/pension life insurance plans are:
SBI Life Saral Pension: 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.
Child insurance plans are an insurance cum investment product, aimed at securing the future of a child. The parent who buys this plan becomes the policyholder, while the child shall be the nominee. Child plans typically offer a lump-sum payment on the demise of the policyholder, but the policy will not cease. Instead, all future premiums get waived, with the insurer investing this money on behalf of the policyholder. The child will receive the money at specified intervals, as planned under the policy. Nearly all life insurance providers offer child plans in their portfolio. Some of them are market-linked policies, allowing policyholders to invest in equities and debt, while others are traditional plans, investing only in debt.
|1234||TERM INSURANCE||WHOLE LIFE INSURANCE||ENDOWMENT POLICIES||MONEY BACK PLANS||UNIT LINKED INSURANCE PLANS||ANNUITY PLAN|
|Overview||Pure risk protection plans||Insurance plus savings plan that provides a lifetime coverag||Insurance plus savings plan - may or may not be participatory||Insurance cum savings plan, offering guaranteed money back during the policy period||Insurance cum investment plans that are participatory in nature||Traditional plans that are non-participatory in nature|
|Term||Usually ranges from 5 years to 40 years or more||Whole life or until the age of 99/100 years||Usually ranges from 10 years to 40 years||Typically 20 years or 25 years||Usually ranges from 10 years to 30 years or more||Typically till the annuity is alive i.e. no fixed period|
|Maturity Benefits||Not payable||Payable||Payable||Payable||Payable||Payable|
A life insurance policy is an agreement between the insurer and the insured. The insurer would pay the sum assured when the insured pays the premium regularly. This would, however, happen only during the occurrence of an insured event. However, not all situations are covered in a life insurance plan. The life insurance company would investigate in case of an unnatural death of a policyholder. The sum assured is not paid if a death occurs due to any of the below reasons:
Life insurance companies offer additional riders to supplement your insurance plan. These offers benefits over and above the life covers included in your policy. Opt for riders only if it suits your unique requirements. It is neither wise to be under-insured, nor to be over-insured. Here are some of the useful riders that you may consider while buying a life insurance policy:
Here are the factors to help you understand how your life insurance premium will be calculated:
Life Insurance Online Payment
Most life insurance companies have embraced digitalization for the convenience of their customers, contributing to customer delight. These payments can be done through the following ways: The available online payment platforms are net banking, debit/credit card, mobile banking, etc. You can also opt for the auto-debit option by giving your bank the mandate to deduct the pre-determined premium amount from your account on specific dates, as per your policy terms - quarterly, half-yearly, monthly, or annually. The payment deduction can be done through, Electronic Clearing Service (ECS), NEFT, Standing Instructions (SI) mandate, eCMS, auto-debit facility, etc., as per your preference. However, these online payments options may vary among life insurance companies. These online payments can be completed by logging into the official website of your life insurance company or through the internet banking platform of your bank.
Life Insurance Offline Payment
For policyholders who prefer making their premium payments offline, it can be done in the form of cash or cheque. Cheques can be deposited by visiting any branch of the insurance company, while cash payments can be done through bank transfers in the name of the relevant life insurance company.
Impact of GST on Life Insurance Plans
The implementation of GST (Goods and Services Tax) has had an impact on life insurance plans as the premium payments are not exempted for it. Services Accounting Code (SAC) is applicable on life insurance premium payments. The SAC for GST classification for services related to life insurance policies, excluding reinsurance services, is GST Code for Life Insurance. For pension services, the applicable SAC GST code is 997131.
In the event of your unfortunate death during the policy term (the policy is yet to mature), your beneficiary/beneficiaries can claim for your life insurance policy. This claim can either be a ‘death claim’ or a ‘life insurance claim’. During a death claim, your beneficiary or a family member should intimate the claim by calling Coverfox.com. There can be an early death or death due to aging. It is completely based on the time since the policy was bought. An early death is when you die within three years from the policy commencement date. Your beneficiary/beneficiaries will have to approach Coverfox.com or the insurance company and fill the claim intimation form. The below documents would be required:
Natural Death: The below documents need to be presented during a natural death claim:
Accidental or Unnatural Death (Including Suicide): The beneficiary or a relative of the policyholder should intimate the claim by calling Coverfox.com or the insurance company. The below mentioned documents need to be presented for a hassle-free claim settlement process:
Accidental Disability and Dismemberment Claim: The below documentation needs to be presented for processing the claim:
Critical Illness: The below documentation needs to be presented for processing the claim:
Terminal Illness: The below documentation needs to be presented for processing the claim:
Waiver of Premium: The below documentation needs to be presented for processing the claim:
The insurance company would investigate the genuineness of the claim and respond about the settlement accordingly. In case of incomplete documentation, the insurance company would raise a requirement and inform the insured's nominee.
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 the financial compensation in case of the untimely demise of the insured during the policy tenure. Hence, it is important to decide the right life insurance cover while buying a life insurance policy.
How much life insurance cover do you need depends on:
For children’s education, you can plan separately with the help of a child plan. To plan your retirement, you can invest in a retirement plan.
If you are planning to buy a pure life insurance cover – a term plan is highly recommended. Opt for a life insurance cover that is 8 to 10 times of your annual income.
For example, if annual income is Rs.5 lakh, the life insurance cover (sum assured) should be approximately Rs.40 lakh. Regardless of the life insurance plan you purchase, you must check the claim settlement ratio of each life insurance company to assess the reliability and efficiency of their services.
There are many life insurance companies in India, and each company offers wide range of life insurance plans designed for varied needs of their customers. Therefore, you should know the factors you need to consider while buying a life insurance policy that is best suited for you.
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, you should know what you are investing in to be able to make a conscious decision about the life insurance you should opt for.
Review the policy Analyze and evaluate your life insurance requirements and review your policy at regular intervals. Certain changes like marriage, an addition of a family member, job change, etc. calls out for a necessity to re-evaluate your insurance needs.
Analyze your coverage The amount of income you offer to your family members who are dependent on you, your loans and financial expenses would help you analyse the coverage you should opt for on your policy. This will enable you to efficiently secure your family financially in your absence.
Ensure your premium payment capacity Ensure you have capacity to pay the premiums. If the policy lapses due to non-payment, it will not only adversely affect your future financial goals, it will also dent your savings. Therefore, it is essential that you review the amount of premium you will be able to pay and decide on the life insurance policy accordingly.
Compare quotes from different insurers Before finalizing on a particular insurance policy, ensure that you compare the life insurance plans of different insurers. This would give you the 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, it is highly recommended that you buy online life insurance plans.
Read your policy document carefully Reading your policy document is very important. There are certain exclusions to life insurance policy covers that you should be aware of, so that you can prevent misunderstandings and claim rejections later. Hence, knowing what is not covered is equally important to know along with knowing what is covered!
Do not jump for riders unnecessary If you increase the coverage offered under your basic life insurance policy, you may consider buying riders that would fulfil more requirements such as health etc. However, select the riders wisely. Opt for only those that are aligned to your unique objectives. Do not jump for them, if they are not required.
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. Analyzing the right plan for oneself could seem like 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 find the best life insurance plan, and that too at an affordable premium!
Let's have a look at the factors you should consider while comparing life insurance plans:
Life Coverage Premium: First and foremost, ensure you are buying an adequate life cover and are neither over-insured nor under-insured. After you have enlisted some policies, based on their features and benefits, you need to compare the premiums for the same coverage amount offered by each one of them.
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 with customizable policy tenure, sum assured, premium paying mode and frequency, payouts, etc., so that you can design it further to your unique needs.
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 the plan offered by a different life insurance company. However, make sure that you opt for riders only if you genuinely need them as opposed to opting for one and over-insuring your life insurance policy.
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. A higher ratio implies that the chances of your claim getting settled are also greater. For each life insurance company, the claim settlement ratio changes every year. Therefore, it is an important factor while comparing life insurance plans.
|Life Insurance Company||Annual New Business Premium||Total Values of Claim Settled||Average Value of claim|
|LIC||98.19%||Aegon Religare||95.30%||Max Life||96.23%||Canara HSBC||92.99%|
|Birla Sunlife||88.45%||Exide Life||86.10%|
|Tata AIA Life||94.47%||Reliance Life||95.01%|
|Star Union Daichi||94.08%||Future Generali||90.61%|
|ICICI Prulife||96.20%||Aviva Life||82.00%|
|PNB MetLife||92.90%||Bharti AXA Life||80.00%|
|Bajaj Allianz||91.30%||IDBI Federal Life||84.79%|
|Kotak Mahindra Life||90.73%||India First Life||72.21%|
|HDFC Std||95.02%||Shriram Life||65.66%|
|SBI Life||95.70%||DHFL Pramerica||57.19%|
|Sahara Life||89.97%||Edelweiss Tokio||85.10%|
Individuals can compare and buy life insurance policies through the website of Coverfox in just a few clicks. Here are the steps that one would need to follow to avail a life insurance cover:
Frequently Asked Questions
Q. Under a whole life insurance policy, can I borrow money?
Yes, you can borrow money against a whole life insurance policy.
Q. Does smoking affect my life insurance premium?
Yes, it does affect your premium. Smokers have to pay slightly higher premium than non-smokers.
Q. Can I have multiple life insurance policies?
Yes, you can become the policyholder of multiple life insurance policies, provided you meet certain terms and conditions.
Q. Are there life insurance plan options available for children?
Yes, there are life insurance policies that are specially customised for the unique needs of children. Such plans enable parents or legal guardians to financially plan and secure their child’s future in their absence for goals like higher education, marriage, etc.
Q. What does a life insurance policy not cover?
Life insurance policies do not cover the following:
Q. Why is life insurance more expensive for men than for women?
Women are known to live longer than men. This makes life insurance companies interpret women as low-risk applicants as opposed to men, making insurers raise the premium amounts for men.
Q. What is a ‘bonus’ in life insurance?
Bonus in life insurance refers to the additional amount that a policyholder is eligible to receive during the policy term or at its maturity on having made the required premium payments within the pre-determined time frame. This amount is a percentage of the sum assured that the insurance company pays from the profit generated by it during a financial year. Only a with-profit life insurance policy is eligible for it.
Q. How to assign life insurance benefits to someone else?
One can transfer his or her title, rights and interest in a life insurance policy to another entity by assigning it. This is generally done for providing security against a loan or securing the financial interest of the other individual. Once the life insurance policy is assigned, the assignee will get the benefits from it.
The policyholder has to send the assignment form to the insurer, mentioning the policy details that have to be assigned. Along with this, the individual needs to send the original policy and assignee's KYC documents. The assignment can be endorsed on the life insurance policy copy or a notarized assignment, confirming it can be executed.
Q. Does life insurance cover accidental death?
Yes, life insurance policies usually cover accidental death. If the policy specifically states that it does not cover death by accident or the individual feels there is a need for additional sum assured in case of accidental death, then an accidental death benefit rider can be attached to the base plan.
Q. What is the free-look period?
Every life insurance policy comes with a free-look period, which is 15 days from the date of policy issue. During this time, you can return the policy in case you are not comfortable with any terms and conditions mentioned in the policy and wish to cancel it.