With 24 companies currently offering life insurance in India, the insurance sector has surely come of age. The technology has also played a key role in making the lives of both insurers and policyholders easier. This has happened through easy availability of all the information, easy renewal processes and improved customer support. Even the government constantly introduces new guidelines to help the industry grow and protect the policyholders. That’s why more and more individuals from every nook and corner of the nation prefer buying a life insurance.
Why is insurance important?
The very first reason an individual should choose a life insurance is to secure financial requirements of the family. This means, if the policyholder dies, his/her family will be able to fulfill their needs through the claim received from the insurer. The insurance also helps the beneficiary to repay the loan that benefactor might have taken during his/her lifetime.
A lot of times, your life insurance policy can help get a fresh loan from a bank, thereby helping meet your essential requirements. Though the general benefits vary from plan to plan, each policy helps save taxes. An individual is eligible to get a benefit of Rs. 1.5 lakh as per Section 80C of Income Tax Act.
Types of Life Insurance Plans
To analyze the benefits of life insurance, it is first necessary to know about different types of plans available in the market.
Term insurance policies
In these policies, the insured individual is protected for a specific duration of time. This duration can be 5, 10 and 15 years or more. If the insured person survives the specified period, then the premiums are not returned by the life insurance company. The premium of this plan is quite less than other variants.
Whole Life Policy
As the name suggests, Whole Life Policy offers death cover throughout the life term of the policyholder. Several insurance companies combine this policy with other products to help individuals meet their specific needs. Premiums paid in this policy are exempted from income tax.
It is a combination of insurance and investment plan. In the event of the death of insured person, the beneficiary receives the assured sum. If the policyholder survives the tenure of policy, the premiums are returned to the individual, along with some additional bonuses.
Money back policy
It also possesses features of both insurance and investment. In this policy, the money back plan starts after a certain period of time, unlike endowment in which the money back is received after the policy is matured. In the case of death of an individual, the dependents receive the sum assured, but if the individual survives, the premiums are returned by the insurer in the form of regular payouts.
ULIPs or unit-linked investment plans offer life insurance and allows the policyholder to invest in different types of funds. They are usually preferred for long-term goals like child marriage, retirement plan and child education.
Benefits of Term Life Insurance
When we consider the financial security of the loved ones, term life insurance appears most beneficial. With the premium in the range of Rs. 4000-6000, an individual can receive a life cover of up to one year. If the premium is calculated on a per-day basis, it becomes turns out to be merely Rs. 13 to 16. Various companies also allow the beneficiary to choose if they want the sum assured as an immediate payout or in the form of recurring payments.
The life insurance companies also offer a facility to insert riders to the existing term plan, which can boost the policy’s utility. For example, Accidental Disability rider offers a percentage of Sum Assured for a specific period of time in case of total permanent disability caused due to an accident. Similarly, Critical Illness Rider offers a benefit in case the insured person is diagnosed with a critical illness. The companies usually provide the list of critical illnesses on their website or brochure. These illnesses include benign brain tumor, apallic syndrome, kidney failure, loss sight, loss of limbs, etc. The premiums paid under term life insurance are exempted from income tax.
Various companies do not ask the insured individual to go through medical tests before choosing the plan. This usually happens if an individual below the age specified by the insurer or/and is a non-smoker.
- Customisation of the Policy:
A lot of companies also allow the individuals to increase the life cover during some major phases of their life, like marriage and child birth. You may opt the policy term as per your requirement. The premium payment can be done as per your suitable premium frequency like monthly, quarterly, half yearly or annually.
For choosing higher sum assured, insurance companies offer you additional rebate on premium, making the term plan all the more affordable
- Discounts on Buying Policy Online:
If you buy a term plan online, the premium will be 10 to 20% cheaper than the offline way of buying. The procedure is also hassle free requiring least documentation.
All these features and benefits show term life insurance is one of the most secure and economical ways to protect the future of your family members. Make sure to go through the brochures of all leading term insurance policy providers to choose the best one. You can also rely on policy comparison sites to ease up the process of screening the insurance plans.