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Life Insurance

What is Life Insurance?

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.

Key Features of Life Insurance Policies

Long Term Saving
Life insurance helps you in saving and building your wealth. It is a systematic way to safeguard you financially and take care of your future plans like a child’s education, marriage, retirement etc. Therefore, you get the dual benefits of Savings as well as Protection.
Life Stage Specific Planning
Life insurance companies offers plans customized for different stages of life. Every family has certain goals for which a lot of planning is required. These goals may include planning for your kid’s education, buying a house, planning funds for your retirement, etc.
Life Cover
The primary and the most important advantage of a life insurance policy is providing a life cover. The insurance company is liable to pay the life cover to your nominee in case of any unfortunate event. This life cover ensures to keep you and your family secured always in an unfortunate event.
Tax Saving
The premiums that you pay for your life insurance plan gets you tax exemption U/S 80C, 80CC, 80CCE up to Rs. 1.5 lakh and U/S 10 (10D) for amounts received under life - Under Section 80D, tax exemption for Self, Spouse and dependent children Up to Rs. 25,000; for parents up to Rs. 25,000 and Senior Citizen Parents up to Rs. 30,000 can be availed.

Types of Life Insurance Plans

There are various types of life insurance policies. They are mentioned below:

Term Insurance

Term insurance is the simplest and most affordable type of life insurance cover. This type of life insurance plan basically provides financial aid for a specified period only. It offers your beneficiaries an amount in lump sum or annually / monthly or a combination of both once you are gone. But, term insurance doesn’t offer any paybacks, if you survive the term.

For example, The Sharma siblings Ajay and Vijay bought term plans in December 1985 with life covers of Rs. 1 crore each with a policy term of 30 years. They paid the premiums on time for the entire term. In 2010, Ajay passed away, leaving behind loads and loads of bank loan’s. But his wife (nominee) provided the necessary documents for the claim settlement and received the entire life cover worth 1 crore.

On the other hand, Vijay outlived the policy term. He was upset that he did not get any benefit from the term plan for which he had paid the premiums regularly. However, the reason you should buy a term plan is to get a larger coverage at a minimal premium. This would provide financial security for your beloved family.

Endowment Plans

This type of life insurance plans offers both insurance as well as investment benefits. Endowment plans allocate certain value towards the life cover, while the balance value is invested by the insurance company. In this type of life insurance plan, bonuses are also declared periodically, which are paid either on maturity of the policy or on the death of the insured. A lump sum amount comprising of the life cover and accumulated bonuses is paid on maturity or after the specified duration, or to the beneficiary on the death of the insured whichever is earlier.

For example, Rohit bought an endowment plan for tenure of 30 years for a sum assured of Rs. 10 lakhs. Rohit survives the entire tenure of 30 years and therefore the insurance company pays him the maturity benefit, i.e. the entire sum assured of Rs. 10 lakhs and the accumulated bonus (if any). But, if Rohit doesn’t survive the policy term, the nominee would receive the sum assured (as death benefit) of Rs. 10 lakhs (Plus Bonus (if any) and the policy will be terminated.

Unit Linked Plans (ULIPs)

In this type of life insurance, a certain portion of the premium is paid towards the life cover of the insured while the balance amount is invested in equities and debts as per your choice and risk appetite. In these plans the investment risk is borne by the policyholder.

For example, Amit bought a ULIP for 20 years with an annual premium of Rs. 20,000. The plan would fetch him a cover of Rs. 2 lakh (10 times of Rs. 20,000). Post deduction of charges, say Rs. 5,000, the balance amount of Rs. 15,000 would be invested in a fund. Suppose the NAV of the fund is Rs. 10, Amit will get 1500 units (15000/10) of the fund. The value of your fund will also increase if the NAV increases and would decrease if the NAV decreases.

Money Back Life Insurance

In the Money Back Life Insurance policies, a periodic payment is made to the insured only if he is alive as a survival benefit. However, on death of the insured, the insurance company pays the entire sum assured along with the survival benefit.

For example, Rita bought a money back life insurance plan for a term of 20 years and a sum assured of Rs.5 lakh. She would get 15% of the total sum assured after the 5th, 10th and 15th years of the policy term. In short, she would get 60% of the sum assured as the survival benefit and 40% of the sum assured on maturity.

Whole Life Insurance

Here, a dual benefit of insurance, as well as an investment, is offered. An insurance cover for 100 years or for the whole life of the insured, whichever is earlier is provided by the whole life insurance plan. The nominee or the beneficiary is also paid a bonus that is calculated on the total sum assured. This amount is paid only after the death of the insured. The whole life insurance is also a good option for senior citizens, This is because along with the comprehensive coverage, whole life insurance also offers no age bar when it comes to the eligibility criteria. A whole life ULIP insurance offers benefits like growth of cash value, uniform premium payments, tax benefits and cash withdrawal options.

For example, Shilpa got a whole life insurance plan with a sum assured of Rs. 1 crore for a term of 20 years. She pays an annual premium of Rs. 1 lakh regularly. In case of any critical illness, Shilpa would get a certain amount and the future premiums would be waived off. In case of death, the whole life insurance will pay the nominee a compensation too.

Child Plans

A child insurance plan pays a lump-sum amount equal to the sum assured on the death of the parent and the policy continues till the end of the policy term with all future premiums waived off. At the end of the policy term maturity, the benefit is paid to the child. Thus, parents can ensure that their child's needs are taken care of even if they are not around.

For example, Mahesh buys a Child Insurance Plan for a sum assured of Rs. 10 Lakhs and policy term of 20 years. In case of his death during the 5th policy year, Nidhi his daughter will immediately get Rs. 10 Lakhs. The policy will continue as planned and the remaining future premiums will be waived off by the Insurance Company. Then when the policy matures at the end of 20th year, the insurance company will pay the maturity benefit to Nidhi.

Pension Plan

A Pension plan helps in building a retirement corpus by inculcating saving habit within one. One pays regular premiums for a certain period of time after which he gets a regular income to have a happy retired life. This premium is invested by the insurance company into a safe fixed income product or in the markets as per one’s choice. On the determined retirement date, the accumulated amount is used for buying an annuity plan, which pays a certain income on a regular basis. These annuity payments can be either monthly, quarterly, half yearly, or yearly as per the options offered by the insurance company.

For example, Subhash buys a pension plan and pays Rs. 50,000 every year, regularly for a period of 20 years. At the end of the policy term, the accumulated money is used for buying an annuity plan which pays Subhash a regular monthly income of Rs. 25,000 until his death.

Benefits of Buying Life Insurance

  • 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.

Why Life Insurance is Necessary?

Apart from providing financial aid to the insured’s family, life insurance also offers the below benefits that make it a necessity to buy:
  • Certainty
    Certainty

    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.

  • Tax exemption
    Tax exemption

    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.

  • Retirement plans
    Retirement plans

    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.

  • Encourages savings
    Encourages savings

    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.

Consider the Following Things Before Buying a Life Insurance Policy

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.

Review your life insurance requirements timely

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.

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 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 for payments of the premium

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.

Compare the quotes with different insurers

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!

Read your policy carefully

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!

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 fulfill all your health and other requirements. However, be wise and choose the riders. Do not jump for them if not required.

How to Choose the Best Life Insurance Plan?

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.

Factors to Consider to Buy Best Life Insurance Policy in India

Analyze your insurance need

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.

Number of dependents

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.

Opt for term plans

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.

Know the coverage amount

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. Therefore, chose your life insurance policy wisely by selecting the correct coverage amount.

Research the insurance company you opt for

Always check the claim settlement ratio of the insurance company you wish to buy a life insurance plan from. This is because you must know the worth of the insurance company that would help your beloved family to settle the claims in your absence.

Reveal all the details to the insurance company

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.

Buy at a younger age

It is good to start early for a life insurance plan. This is because higher the age, higher would be the premium. Also, the chances of death are less when you are young. You are also more likely to have problems with increasing age. Therefore, buy a life insurance policy at a younger age.

Watch out your outstanding liabilities

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.

How Much Life Insurance Cover Do You Need?

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.

How much life insurance cover do you need depends on:

  1. How many family members are financially dependent on you?
  2. How much is their financial dependency?
  3. At what age will you retire?
  4. Is your spouse working? If yes, then depending on the ratio of contribution to the family’s income you can plan accordingly.
  5. How much will your children’s education cost?
  6. Do you have any loan to be paid-off? You are likely to consider the loan amount as your life insurance cover. Because you do not want your family to suffer or undergo the hardship to repay in case of unfortunate eventuality.
  7. What are your retirement goals? How much money would you require once you retire?

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.

How is your Life Insurance Premium Determined?

Age

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!

Gender

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.

Smoking habits

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.

Duration of coverage

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.

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On What Basis You Should Compare Life Insurance Plans

Compare Life Insurance Plans Online to Buy the Best Life Insurance Policy:

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.

What are the Exclusions in a Life Insurance Plan?

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:

  • Consumption of drugs, alcohol or any intoxicated stuff
  • Participation in any dangerous activity
  • Participation in a criminal act
  • Due to war
  • Due to pre-existing diseases
  • Due to pregnancy or childbirth
  • Due to self-inflicted injuries or suicide
  • Excessive smoking leading to lifestyle diseases

Life Insurance Claim Process

Death Claim

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:

  • Completely filled claim form
  • Death certificate
  • Nominees id proof
  • Age proof of the policyholder
  • Life insurance policy details
  • Assignment deeds
  • Legal evidence of title in case the policy is not nominated
  • Medical reports and doctors certificate
  • Post-mortem report
  • Police inquiry report

Document Checklist - Life Insurance Policy

Natural Death

The below documents needs to be presented during a natural death claim:

  • Completely filled in Claim settlement form
  • Original death certificate issued by the local authority
  • Copy of medical reports, death certificate, and admission notes, test results, discharge summary, etc.
  • Policyholders age and identity proof
  • Claimants age and identity proof
  • Proof of the bank account of the claimant
  • Proof of the policyholders current address

Accidental or Unnatural Death (Including Suicide)

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:

  • Completely filled Accidental Death benefit form
  • Death certificate
  • Police FIR copy
  • Medical or the doctors report confirming the cause of death
  • A statement mentioning the date, location and situation of the accident occurred
  • Proof of identity and relationship of the beneficiary

Accidental Disability and Dismemberment Claim

The below documentation needs to be presented for processing the claim:

  • Original policy copy
  • Medical records like investigation reports, discharge summary, etc.
  • Policyholders age proof and identity proof
  • Claimants photo and identity proof
  • Bank account details of the claimant
  • Address proof of the policy holder

Critical Illness

The below documentation needs to be presented for processing the claim:

  • Original policy copy
  • Medical records like investigation reports, discharge summary, etc.
  • Policyholders age proof and identity proof
  • Claimants photo and identity proof
  • Bank account details of the claimant
  • Address proof of the policy holder

Terminal Illness

The below documentation needs to be presented for processing the claim:

  • Original policy copy
  • Medical records like investigation reports, discharge summary, etc.
  • Policyholders age proof and identity proof
  • Claimants photo and identity proof
  • Bank account details of the claimant
  • Address proof of the policy holder

Waiver of Premium

The below documentation needs to be presented for processing the claim:

  • Original policy copy
  • Medical records like investigation reports, discharge summary, etc.
  • Policyholders age proof and identity proof
  • Claimants photo and identity proof
  • Bank account details of the claimant
  • Address proof of the policy holder

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.

Best Life Insurance Plans in India

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.

  • AEGON Life – iTerm Plan(Term 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.

    Plan details:

    • iTerm plan can be opted up to the maturity age of 75 years
    • Offers five different types of optional riders
    • The policy term can be between 5 to 75 years
    • Instant and hassle-free claim support process
  • 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.

    Plan details:

    • Customize New Jeevan Anand plan with two optional riders – Accidental Death Benefit Rider and Accidental Total and Permanent Disability Rider.
    • The policy term can be between 15 to 35 years
    • Easy to apply and buy
  • 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.

    Plan details:

    • Life assured can be covered against the death risk for the entire life
    • Three types of optional riders to choose from
    • The policy term can be between 7 years to 30 years
    • Premium can be paid either as a single payment or regular payment
  • 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.

    Plan details:

    • A comprehensive pension plan
    • The policy term can be between 5 to 75 years
    • Saral Pension provides guaranteed bonus
  • 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.

    Plan details:

    • It offers comprehensive life coverage
    • You can purchase Click2Protect Plus online without any hassle
    • It offers four cover variants
    • You can choose policy term between 10 to 40 years
    • Premium payment can be regular, limited, and single premium
  • 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.

    Plan details:

    • Click2Invest offers 8 options to choose from
    • You can pay the premium as single payment, limited, and regular pay
    • The policy period can be of 5 to 20 years
  • 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.

    Plan details:

    • Provides life cover and an opportunity to build corpus
    • There is only single premium payment option
    • You can avail tax benefits
    • There are multiple fund options to choose from

Life Insurance Company Claim Settlement Ratio

Life Insurance CompanyAnnual New Business PremiumTotal Values of Claim SettledAverage Value of claimClaim Settlement Ratio
LICRs. 2,64,975 croreRs. 9,690 croresRs. 1.30 lakhs98%
Max LifeRs. 6,970 croresRs. 261 croresRs. 2.90 lakhs97%
Tata AIA LifeRs. 1,731 croresRs. 87 croresRs. 2.70 lakhs97%
ICICI Prudential LifeRs. 4,782 croresRs. 406 croresRs. 3.80 lakhs96%
Aegon LifeRs. 336 croresRs. 40 croresRs. 7.90 lakhs97.11%
HDFC LifeRs. 7,705 croresRs. 300 croresRs. 2.50 lakhs95%
Reliance NipponRs. 3,070 croresRs. 220 croresRs. 1.60 lakhs94%
SBI LifeRs. 8,930 croresRs. 390 croresRs. 2.60 lakhs93%
Canara HSBC LifeRs. 734 croresRs. 30 croresRs. 5.70 lakhs93%
Bajaj Allianz LifeRs. 4,166 croresRs. 352 croresRs. 2.10 lakhs91%
Sahara LifeRs. 146 croresRs. 7 croresRs. 1.00 lakhs90%
Future Generali LifeRs. 510 croresRs. 30 croresRs. 1.90 lakhs90%
Exide LifeRs. 1,835 croresRs. 52 croresRs. 1.80 lakhs89%
Kotak LifeRs. 2,674 croresRs. 94 croresRs. 3.80 lakhs89%
Birla SunlifeRs. 2,344 croresRs. 216 croresRs. 3.40 lakhs89%
PNB MetlifeRs. 1,905 croresRs. 125 croresRs. 4.70 lakhs85%
Edelweiss Tokio LifeRs. 251 croresRs. 14 croresRs. 11.80 lakhs85%
IDBI Federal LifeRs. 950 croresRs. 43 croresRs. 4.70 lakhs85%
DHFL PramericaRs. 858 croresRs. 14 croresRs. 3.00 lakhs84%
Aviva LifeRs. 883 croresRs. 101 croresRs. 8.10 lakhs82%
Star Union Dai-ichi LifeRs. 887 croresRs. 33 croresRs. 2.90 lakhs81%
Bharti Axa LifeRs. 1,043 croresRs. 50 croresRs. 5.00 lakhs80%
IndiaFirst LifeRs. 1,425 croresRs. 41 croresRs. 3.00 lakhs72%
Shriram LifeRs. 964 croresRs. 42 croresRs. 2.80 lakhs60%

"Source: IRDA Annual Report 2015-16"

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Life Insurance FAQ’s

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:

  • You have already planned your investments for your retirement life, yet looking out for more options to invest in. You should definitely buy a whole life insurance in this case.You are have just started your career and are sure enough to make regular premium payments ahead in the future
  • You are the owner of a property which you wish to transfer in the form of wealth to your family members or nominees

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:

  1. Accidental Death Benefit Rider
  2. Accidental Total and Permanent Disability Rider
  3. Critical Illness Rider
  4. Waiver of Premium Rider
  5. Hospital Care
  6. Surgical Rider To widen up the policy coverage, you can purchase a life insurance with riders, making it the best life insurance for you.

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.

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