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Life Insurance

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What is Life Insurance Plan?

Life sometimes brings unannounced uncertainties and hardships. Some events may have an irreparable impact on your life and may leave your family in a turmoil both financial and emotional. To reduce the financial worries that may erupt due to the unpredictable and untimely demise of the earning member of the family, the life insurance comes to the rescue. Life insurance is a vital form of investment that will act as financial aid or assistance to your family when you are not around.

Life insurance plans are of various types out of which a few plans are pure protection plans offering a death benefit, whereas the others are saving or investment plans offering death and maturity benefit (whichever occurs first).

Why should I buy Life Insurance?

Life Insurance primarily covers the risk of ‘Dying too early’ or ‘Living too long’. The listed reasons will highlight the need for life insurance for you and your family:

  1. Financial Protection

    2. A life insurance policy assures that your loved ones are financially covered in the event of your untimely demise and to maintain the same lifestyle which they are used to even when you are not around.

  2. Meet Financial Obligation

    3. A life insurance policy ensures that your children’s education, their marriage, and other financial obligations like home loans, car loans, etc. are taken care of in your absence.

  3. Retirement

    4. A life insurance policy helps you to gather a corpus for your better future and to attain a regular source of income post-retirement and lead an independent life.

  4. Ensure Guaranteed Income

    5. It helps you and your family to possess a guaranteed income in case your regular inflow of earnings are disrupted due to a severe illness or an accident.

  5. Peace of Mind

    6. A life insurance policy provides you the assured peace of mind. By buying the right life insurance plan, your family’s financial needs are taken care of even when you are not around.

What kinds of Life Insurance Plans can I opt from?

There is a bundle of life insurance plans available in the market. It purely depends on which one suits your need and requirement basis the benefits accrued or attached to a plan.

  1. Term Insurance Plans

    2. The term plan is a pure protection plan which covers the risk of ‘dying too early’. Term plans provide the nominee with the sum assured as a financial indemnification in the unfortunate event of your demise during the policy term and policy then terminates. A term insurance plan safeguards your loved ones in your absence by shielding them with financial backing as planned by you.

  2. Whole Life Plans

    3. The whole life plan is an insurance plan which covers your life against the risk of “dying too early” and “living too long” both, as the life cover is provided for the whole life keeping maximum maturity age as 100 in most of the plans. This insurance company pays the policy proceeds to your nominee in the event of your death during a policy term, but if you survive till the maximum maturity age, the company will provide the maturity benefit as well.

  3. Endowment Plans

    4. Endowment plan comes with the component of saving and insurance making it a twin benefit plan under the policy. Endowment plans offer lump sum payout in the event of death or maturity, whichever happens first. This life insurance plan can be opted to ensure a robust corpus and regular savings to meet financial objectives in the future.

  4. Money Back Plans

    5. This policy offers a portion of the sum assured payout on regular intervals during the policy term in terms of money backs or survival benefits, while the insured is alive. Once the insured survives through the entire policy term, the remaining sum assured is paid back as maturity benefit. In case the insured dies during the term of the policy, apart from the money backs, the lump sum payout is given to the nominee also known as survival benefits.

  5. Child Plans

    6. Child plans are a type of life insurance plans, which are taken with a specific objective of giving unperturbed financial support to the child in terms of education, higher education, marriage, etc. Child plans also offer death and maturity benefits (whichever happens earlier). Usually, such plans come with an inbuilt waiver of premium benefit to continue the policy to ensure coverage for your child.

  6. ULIPs

    7. ULIPs (Unit Linked Insurance Plans) provide the twin benefit of insurance and investment opportunities under one umbrella. ULIPs are linked to the market, and the insured’s money is invested in various funds (based on equities, debts, government bonds) as per the risk-taking capacity of the insured. The lump-sum payout is given to the nominee in the event of death, and the entire value of the fund is given to the insured if he survives the policy term.

  7. Pension Plans

    8. Such plans cover the risk of ‘Living too Long’. Pension plans enable to survive the same lifestyle and allow financial independence after the retirement age. Regular payment of premiums builds a financial corpus, which can be withdrawn partly and the remaining can be utilized to provide pensions to the insured as stated in the policy.

What are the Benefits of Buying a Life Insurance?

  1. Death Benefit

    2. Life Insurance provides financial protection to your family in your absence by giving death claim payout which is a lump sum Sum Assured plus accrued benefits/bonus basis the life insurance plan opted.

  2. Maturity Benefit

    3. Life Insurance provides the insured a lump sum payout as applicable under the policy conditions on the completion of the policy term as Maturity claim payout. The maturity benefit is payable if the insured survives the policy term.

  3. Rider Benefit

    4. With your Life Insurance plan, you may opt for additional coverage or riders like Accidental Death Benefit, Disability rider, Income benefit rider, Critical Illness rider, etc. to give you added protection along with your base policy.

  4. Surrender Benefit

    5. Life insurance provides you the option to surrender your policy partially or fully in the event of any urgent fund requirements. However, the surrender value is very less as compared to the premiums paid till that time.

  5. Loan Benefit

    6. Some of the endowment life insurance policies offer the loan facility. The insured has to pay the applicable interest and repay the loan amount as per policy conditions.

  6. Tax Benefit

    7. Premium paid towards the insurance policy taken for yourself, spouse or kids avail tax benefits under section 80C, and the proceeds of the insurance policy are tax-free as per section 10(10) D of the Income Tax Act,1961 as per the conditions laid.