Life Insurance

Life Insurance is a contract between an insurance policyholder and an insurer, where the insurer promises to pay a sum of money to the beneficiary when the insured person dies or after a pre-determined period in exchange for the premiums paid by the policyholder.

There are 4 main advantages of getting a life insurance policy.
1. Financial Security
2. Long-Term Savings
3. Investment Options
4. Tax Benefits

img Endowment Plan

This is undoubtedly the most popular form of life insurance plan at the present time. This type of policy is really a combination of life insurance and investment. Under this class of contract, the sum assured is payable at the expiration of a fixed term of years or at death, shall that occur previously.

This plan is an ideal combination of both family protection and the savings elements and answers most of the problems of the insuring public, especially persons with families. It provides cover for a family during the selected term, normally corresponding to the active years of the bread winner in service or in business. Its other advantage is the compulsion to save during working years, the accumulated saving being available on retirement.

In the case of policies running for long term, the insurance element predominates while in the case of insurance maturing at the end of comparatively shorter terms the actual cost of the life insurance is very small the bulk of the premium being required for the investment portion.

img Child Plan

Child Education Insurance Plans are insurance plans that take care of your protection and savings needs for securing the future of your children. As a parent, one of your most important goals would be to make sure that your children have a bright future and lead their lives comfortably. These plans can help you achieve this by saving for your children’s higher education at a prestigious university.

In our Child Education Insurance Plan, you pay premiums for a specified period (monthly, half-yearly, yearly or single pay). Once the policy term ends, you receive a lump-sum amount called the Maturity Benefit. In case of an unfortunate event during the policy term, the company offers your nominee the life cover amount. The company also waives the future premium payments for the remaining policy term to ensure that your children’s future is always secure. This benefit is available, provided all due premiums are paid.

img Pension Plan

Pension Plans are a category of life/annuity plans that are specially designed to meet your post-retirement needs such as medical and living expenses. You would want to maintain the same lifestyle post-retirement. There could be an increase in your day-to-day expenses due to an increase in inflation. You would also have post-retirement dreams such as travelling the world, pursuing a hobby, starting a new venture, and more. By planning in advance, you can be financially prepared for your retirement.

This is where pension plans/retirement plans come in. Both pension plans and retirement plans are a category of life insurance plans that are specially designed to meet your post-retirement needs. To ensure that you can enjoy your golden years with financial independence, these plans help cover your expenses and secure your future.

img Money Back Plan

This plan is suitable for those who, besides providing for their old age and family, need lump sum benefits at periodic intervals.

Main features of this plan are:
• The sum assured is paid in suitable installments.
• The dependents are guaranteed the benefit of the full sum assured protection in the event of the death of the assured, irrespective of the installments that might have been paid, throughout the period of insurance.
• The policy is available for various terms like 12 years, 15 years, 20 years, 25 years etc. to suit one’s best convenience.
• No loan is granted under this plan.

img Whole Life Plan

This is the purest form of a permanent contract. Whole life insurance provides a larger amount of “life cover” than any other permanent type of life insurance and it is, therefore, the most inexpensive form of permanent protection for dependents.

The main features of this plan are:
• Premiums are payable throughout the lifetime of the life assured.
• The sum assured is payable only on the death of the life assured.
• The element of protection for dependents is the dominating element.
• Provision for old age is totally absent.
Whole life insurance has the disadvantage that premiums continue in old age when the ability to pay them may be lessened by a contraction of income. To obviate this difficulty the LIC limits the maximum number of premiums that are payable either till age 80 or till 35 annual premiums are paid whichever is later.

img Group Term Plan

A term life insurance policy refers to the insurance coverage provided to a group of people. Group-term life insurance schemes offer financial independence to the concerned employee’s family in the event of death. It is intended to provide a monetary guarantee to the beneficiary of the covered under the group term life insurance plan in the case of death of the insured.

Group term life insurance is a type of term insurance in which one contract is issued to cover multiple people. The most common group is a company where the contract is issued to the employer, who then offers employee coverage as a benefit. Many employers provide, at no cost, a base amount of group coverage as well as the ability to purchase supplemental coverage and coverage for employees’ spouses and children.

Group-term life insurance schemes have become a fundamental constituent in benefit packages presented to employees by employers. In fact, most fraternal providers offer group term life insurance to its members.
Life insurance is an essential product for persons who have financial dependents.

However, a community insurance scheme is not limited to only employer-employee groups but also includes bank clients, NGOs, professional organizations, non-banking financial institutions, and microfinance institutions.

Features of Group Term Life Insurance Plans
• Premium is either paid entirely or the large sum is paid by the employer.
• The group term life insurance plans are renewable on an annual basis.
• As all the employees get free life cover, the actual cover becomes limited and depends on factors such as risk class and group size.
• The sum assured is paid to the nominee on the death of the covered individual.
• Other than a death benefit, no other benefits such as maturity and survival benefits are provided.
• The individual has the option to cover spouse and dependent children under the same policy.
• It is a cost-effective option as the life coverage is available at lower premium rates.
• Simple and hassle-free process of adding and deleting the members into the policy.
• Add-on riders such as critical illnesses, accidental deaths, and disabilities can opt at a nominal extra premium cost.
• Minimum of 10 members are required to apply for the group term insurance plan in case of a formal group (employer-employee), and a minimum group of 50 members can apply for this plan in case of an informal group (non-employer-employee).

Types of Riders
The common form of riders that are offered by life insurance companies are:
• Waiver of premium (WoP) rider or Premium Waiver Benefit Rider
• Accidental death benefit (ADB) rider or accidental death and dismemberment benefit rider (ADDB)
• Total Permanent disability benefit rider (TPD)
• Term Rider
• Critical illness rider (C.I. Rider)

a) Waiver of premium rider
Waiver of premium rider (WoP) is also known as premium waiver benefit (PWB). Here, on happening of an event as defined in the policy contract, future premiums are waived till the end of the policy term or a defined period. The event and the eligibility criteria (e.g., In case of waiver of premium due to disability, the extent and period of disability) are defined by the insurance company).

Waiver of premium rider is more popularly used with child plans, where premium payments due in future are waived off by the insurance company. Some events for waiver of future premiums are as below.

• Permanent disability of the parent paying a premium in children’s plans
• Death of the life insured (parent) in children’s plans.
• If there is a disablement of the life-assured which prevents him/her from gainful employment after a pre-defined deferment period

Some products could have a waiver of future premiums feature on the diagnosis of critical illness.
In the case of the death of the life insured (child plan), some products not only waive off the premium but also might pay the future premiums till the maturity of the policy.

Types of Life Insurance
Frequently Asked Questions

You have Questions?

  • Q-1 What is Life Insurance?

    Life Insurance is a contract between an insurance policyholder and a life insurance company, where the insurer promises to pay a designated beneficiary a sum of money (sum assured) in exchange for a premium, upon the death of an insured person or maturity of the policy (depending on the policy contract). Other events such as terminal illness or critical illness can also trigger payment.

  • Q-2 Why is Life Insurance useful?

    Life Insurance is useful to provide your family with financial security in case circumstance throws you into a situation where you cannot earn or in case of early demise. It helps keep your family financially protected even in your absence. Life insurance policies also help you save on a regular basis which provides you with financial stability.

  • Q-3 Is Life Insurance necessary?

    Life Insurance is not necessary but is a smart decision to make, especially if you have a dependent spouse and children. It offers your family financial support even after your death. In addition to this, it offers a number of advantages and provides a lot of flexibility in your investment. For example, you can add a critical illness benefit to cover the cost of expenses for surgeries and operations; you can withdraw a part of your maturity benefit in case of an emergency.

  • Q-4 How does the life insurance company determine my premium?

    Premium rates are typically based on factors such as age, gender, height, weight, health status (including whether or not you use tobacco), and if you participate in high-risk activities or occupations.

  • Q-5 What if I don't pay my premium on time?

    You usually get a grace period of up to 30 days (15 days for monthly mode) to pay your premium once it falls overdue. If you still don’t pay your premium after the grace period your policy stands defunct and you cannot claim any benefits from your policy. However, you can revive your policy once you pay all your overdue premiums subject to certain terms and conditions as per the policy and you will again start receiving the benefits of the policy.

  • Q-6 Am I still eligible for coverage if I have a serious health condition?

    Most plans do require medical testing and charge premiums based on the level of risk they assign to you based on the testing. However, even if you are not in top health or have a serious health condition, there are still some options available with guaranteed issue plans, although this comes at the cost of a higher monthly premium and a lower death benefit.

  • Q-7 What Is a Death Benefit?

    Life insurance death benefit is the amount of money the insurance company pays the designated beneficiaries upon the insured’s death, provided the policy was in force at the time of the incident.

  • Q-8 What Is a Beneficiary?

    A life insurance beneficiary is an individual, entity, trustee, or estate named by the policy owner to collect the death benefit proceeds upon the insured’s death. There are two types of beneficiaries: 1. Primary beneficiary: The first one in line to collect the death benefit upon the insured’s death. 2. Contingent beneficiary: Also known as a secondary beneficiary, is the second one in line to collect the benefit if the primary beneficiary is deceased.

  • Q-9 Can I Buy Life Insurance on Anyone I Choose?

    Sure, provided there is an insurable interest in a relationship and with the insured’s consent. Insurable interest is a reason to buy life insurance for someone else because you could undergo a financial disaster if they die. A relationship can be: 1. Husbands, wives, or children 2. A business owner can buy life insurance on his key employees. 3. Creditors are allowed to take a policy on their borrowers.

  • Q-10 Can I Buy More Than One Policy?

    Sure, you can, provided there is a financial need for it. You may want to supplement your current policy from work or add another term life insurance because you just had a new addition to the family. The insurance company is more interested in the total death benefit amount you currently hold rather than in how many policies you have.

  • Q-11 What do you mean by ‘Insured’ and ‘Insurer’?

    The insurer is the party in the insurance contract undertaking to pay compensation. The insured is the one who holds the policy, and the insurer covers the same.

  • Q-12 Can a Person Take Two Life Insurance Policies and Claim for Both?

    Yes, a person can take two life insurance policies and claim for both of them.

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