What is Life Insurance?
Life insurance is like an agreement you make with an insurance company. You give them money regularly, called a premium. In exchange, they promise to give a sum of money to your family if something happens to you or after a certain time. This helps make sure your loved ones are taken care of. Some plans also give you a payout, called Maturity Benefit, when the policy term ends.
Benefits of Life Insurance
- Insurance offers financial protection to the insured person’s family by providing monetary compensation in exchange for the paid premiums.
- Different life cover insurance plans fulfil various needs, offering more benefits with higher premiums.
- These policies cover medical expenses, including hospitalization and other illness treatments.
- Insurance policies not only provide coverage but also include a savings component by investing money in profitable ventures.
- A guaranteed sum assured amount is provided in the event of a claim.
- Certain insurance policies allow policyholders to borrow a specific sum, though this feature is limited to selected plans.
- Paying insurance premiums can be tax-deductible under section 80C of the Income Tax Act, 1961.
Types of Life Insurance Policies
Inshobunny is here to let you know about the different types of life insurance policies.
1. Term Insurance Plan
Term insurance plans are like a safety net for a set time, like 10, 20, or 30 years. They are more affordable because they don’t build up cash value or offer maturity benefits. These plans only pay out if the insured event occurs.
2. Endowment Policy
Like term insurance, endowment policies also offer coverage for a set duration. The key difference is that if you survive until the end of the policy, you receive a lump sum amount on top of the regular benefits.
3. Unit Linked Insurance Plan
These plans not only provide life coverage but also help you grow wealth. Your premium is split into two parts—one for life insurance and the other for building wealth. You can make partial withdrawals from the wealth-building part.
4. Money Back Policy
This policy is akin to an endowment plan but with added survival benefits distributed periodically throughout the policy term.
5. Whole Life Policy
Unlike policies with a fixed term, this one lasts throughout the insured person’s life. It offers survival benefits, and the policyholder can make partial withdrawals or borrow against the policy.
6. Annuity/Pension Plan
In this plan, the premiums collected turn into assets, providing the policyholder income in the form of an annuity or a lump sum, depending on their preference.
Factors to Consider Before Buying Life Insurance Coverage
When you’re getting life insurance in India, remember these points.
Figure Out Financial Need
Everyone’s financial situation is different, so don’t just go for a life insurance plan because it’s popular among your friends. Understand your own needs and why you’re investing before choosing a plan.
Different Life Insurance Plans
It’s crucial to know the different types of life insurance plans out there to pick the one that fits your needs and budget. Check out the different choices and pick the one that seems best for you.
Life Insurance Company Background
Life insurance is a big decision. It’s there to support your family in case something happens to you. So, choose a trustworthy and financially stable company for peace of mind.
Clients' Words
Checking what other customers say about an insurance company and their plans can help you choose the right one. It also gives you an idea of how open the company is and how well it cares for its customers.
How To Buy Life Insurance Online?
Below mentioned steps will help you buy the life insurance plan wisely.
Get Instant Quotes
Tap ‘View Instant Quotes’ to see life insurance plans that match your needs.
Share Details
Share your name, date of birth, and phone number, and choose your gender. Compare them and pick the one that suits you best.
Select and Payment
Once you’ve selected a plan, adjust the coverage amount and policy duration. Then, pay money online using net banking or your debit/credit card.
How Much Life Insurance Cover You Need?
Taking the right amount of life insurance is important, and it is not as complicated as it seems. When deciding how much coverage you need, consider these points:
Consider Your Family's Needs
Everyone’s first priority is to consider their family’s needs. So, it should cover your family’s financial needs, whether it is big or small and it is responsible for their decisions. It will help them to achieve their goals and fulfil their dreams even when you are not around by assessing death benefits.
Assess Your Financial Situation
It is mandatory first to assess your current income, as it plays an essential role in deciding the coverage. Try to get insurance that’s 10 to 20 times your yearly earnings. Make sure it is manageable for you to pay in premium payments.
Replace Your Income
If your family relies on your income, your life insurance should provide financial support equivalent to what you contribute monthly. This helps them maintain their financial stability if something happens to them.
Consider Debts
If you owe a lot of money, paying it off is a good idea. However, life insurance can benefit to ensure that these debts don’t become a burden on your family if you pass away.
Plan for Critical Illness
Set aside some coverage for potential medical emergencies your family might face. This ensures they can access quality healthcare even without your financial support. Take into account potential inflation in healthcare costs.
Adapt to Life Changes
Your life-assured insurance should be flexible enough to adjust to major life events like marriage or having children. This way, it continues to provide sufficient support during different stages of your life.
How to Claim Life Insurance Premium Payment Term
If the person with insurance dies, the chosen beneficiary needs to:
- Notify the insurance company about the sad event through the website, a phone call, email, or visit them in person.
- Provide essential documents like the death certificate, the life insurance policy certificate, hospital records, and the nominee’s identification proofs, such as a PAN or Aadhaar card. In case of suicide or accidental death, include the FIR papers. Also, submit a cancelled cheque.
- The insurance company will examine the documents and process the claim settlement under section 10 10d.
