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Life Insurance
- Term Insurance
- Endowment plan
- Retirement plan
- Child Insurance
What is Life Insurance?
Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money the benefit in exchange for a premium, upon the death of an insured person often the policy holder. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. Other expenses, such as funeral expenses, can also be included in the benefits Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Specific exclusions are often written into the contract to limit the liability of the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil commotion.
Why Life Insurance?
Your family enjoys financial security in your absence. Your wife gets the money to meet daily expenses and pay back loans like home loan, car loan and any other liability. Your children enjoy a quality education and there’s money for their marriage.
Life Insurance Overview
Life insurance serves as a contingency plan for death and provides financial security for the insured's family. It offers various benefits including risk protection, savings and investment plans, loan facilities, tax benefits, retirement annuity plans, and more.
Key Features of Life Insurance
- Risk Protection: Provides financial assistance to the insured's family in the event of the insured's unexpected demise.
- Savings and Investment Plans: Includes investment options in equity or fixed income along with insurance coverage.
- Loan Facility: Allows policyholders to avail loans against the life insurance plan by assigning it as collateral.
- Tax Benefits: Offers tax deductions under Section 80C of the Income Tax Act, providing financial relief to policyholders.
- Retirement Annuity Plans: Provides regular income post-retirement to ensure financial stability.
Terms of Life Insurance
- Insured: The person whose life is being insured under the plan.
- Term of the Contract: The duration of the life insurance plan specified by the life insurer.
- Sum Assured: The insured amount provided by the life insurance plan.
- Premium Paid: The amount paid by the policyholder towards the life insurance plan.
Bonus in Life Insurance
- Guaranteed Bonus: A bonus paid as a percentage of the sum assured, guaranteed for a specific period.
- Reversionary Bonus: A bonus declared by the insurer based on performance and discretion.
Surrender of a Life Insurance Plan
If a policyholder decides to surrender the life insurance plan before maturity, they receive a surrender value, which is a portion of the premiums paid minus certain charges.
Types of Life Insurance Plans
- Term Life Insurance: Pure risk cover with no survival benefits.
- Endowment Life Insurance: Combines savings with protection, offering maturity benefits.
- Money Back Plans: Provide periodic payouts along with life cover.
- Whole Life Insurance: Offers lifelong coverage with guaranteed additions.
- Unit Linked Insurance Plans (ULIPs): Combines insurance with investment in market-linked funds.
Riders on Life Insurance
- Accidental Death Benefit Rider
- Accelerated Death Benefit Rider
- Critical Illness Rider
- Accidental Disability Benefit Rider
- Waiver of Premium Rider
- Income Benefit Rider
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