Life Insurance is a traditional concept which is a legal contract between the Insurer or Insurance Company and the Insured to provide a certain designated sum of money as a benefit to the Insured family on occurrence of any event. It’s a guarantee provided by the Insurer to pay Insured’s beneficiaries a certain sum of money (sum assured) against the premium payments paid in case of any loss to Insured’s life. There are different policies available in the market provided by various insurance companies in India as per individual requirements like LIC, ICICI Prudential, Max Life, Bajaj Allianz etc.
The concept of insurance is very old and dates back to 1750 BC. Life insurance policy is one of those vital investments that helps in achieving financial security to the dependents and family along with fulfillment of major objectives in life. The life insurance policy is a tool that helps the Insured’s family to get financial protection in case of any event. There are various life insurance products that are offered by a number of noted companies to the people in India. One can even customize based on the requirements, future goals, family needs etc and proceed further to reap the benefits in future.
Let’s get a fair idea on the terminology or jargon used in Life Insurance, Advantages, Types of life insurance, Important points to remember while purchasing insurance, Online and Offline policies etc.
Here is a list of few terms that are widely used in the world of life insurance.
Now a person can choose the insurance policy from a wide variety of options provided by various insurance providers in the market. One can do a thorough research before opting a particular policy based on his requirements, family needs and future goals. Few insurance companies also customise the policy as per the client requirement.
The life insurance policies are of two categories – Policies that cover purely life and Policies that provide risk coverage for life along with investments growth. Let’s have a look at different types of insurance policies available in India.
|Term Insurance Plans||Risk Cover|
|Whole Life Policies||Insurance Cover for whole life|
|Endowment Policies||Insurance Cover and Savings|
|Money Back Plans||Insurance Cover and Periodical benefits|
|Child Plans||Policies that suits for Children|
|Unit Linked Insurance Plans (ULIPS)||Insurance Cover and Investment|
|Retirement / Pension Plans||Corpus generation post retirement|
Term Insurance plan provides a life cover based on the duration of the policy. It can be taken for a period ranging from 5 to 60 years based on the plan conditions where the insured has a life protection cover. The amount will be paid to his nominees or family on occurrence of an event only and doesn’t carry any maturity benefits. Terms insurance plans are the basic simple and cheaper plans useful only in case of any event. There is no protection cover after the completion of policy term to the policy holder.
Normally the insurance policies expire once the term comes to an end like 5, 10, 20 years etc. But a whole life policy provides cover to the insured throughout his/her life. The insured will also receive a survival/maturity benefit based on the policy and his beneficiaries receive death benefit in case of any event to the policy holder.
Here the endowment policy offers both life cover as well as maturity benefit to the insured once the policy term comes to an end.
The premium amount will be higher compared to other policies, and the policy holder is assured of a certain amount upon maturity of the policy. Unlike in term insurance policy, the insured gets a certain sum assured upon maturity of the policy in case of endowment policies.
There are certain percentage of sum assured amount that is paid to the policy holder at pre-decided intervals in case of money back policies. A survival benefit will also be paid upon maturity or a death benefit whichever is earlier. These are one of the preferred policies due to regular source of income. Money back policies can be opted when one wants to have liquidity along with building their investments.
The child policies acts as a best source to generate funds for their secured future. The corpus can be built and utilized for education, wedding or any other major events. In case of any event to the child’s parent, the immediate premium payment will be made by the insurance company in most cases. And later though there is no payment of premium, the policy continues till maturity.
ULIPs would assist the policy holder to generate returns along with protection cover. The premium amount paid is divided and invested in certain market products like stocks, bonds, mutual funds and the other portion into life insurance. There are dedicated fund managers who monitors the funds along with market conditions. A partial withdrawal option is also available here to the policy holder.
The insured pays a one-time premium or at regular intervals which is accumulated and paid to him as per his instruction at the time of retirement. Pension or annuity plans help in generating the corpus and have the financial independence post retirement. The payout can be made throughout his life time or a lump sum amount that gets credited to his account. Also, the death benefit is provided which is either 105% of the premiums paid by the Insured or the fund value.
The Insurance Regulatory and Development Authority (IRDA) has laid our certain regulations which has to be followed by all the insurance companies which aims to provide benefit to the end user or the policy holder. However, there are certain aspects which needs to be verified by the applicant before buying an insurance policy.
The main objective of the insurance company is to provide safety and security to the policy holders in exchange of premium making profits at the same time.
In this internet age and e-commerce, there are many insurance providers who are selling their insurance products online in India.
There are many key players in the market who cater to the needs of people like Bajaj Allianz, ICICI Prudential, HDFC life, Max Life etc.
At the same time, certain providers provide various services offline to the customers like the largest insurance provider in India – Life Insurance Corporation (LIC) offers certain plans offline to its customers. There are certain benefits attached when we buy the insurance policy online as below:
Today we have more than 50 insurance companies operating in India providing their services to a wide variety of clients. IRDA is the body that regulates all the life insurance as well as general insurance companies in India. Here are few insurance companies as below:
All the insurance policies will come to an end as per their tenure or in case of any event or loss of life of Insured. They can be either Maturity Claims or Death Claims.
Based on the category whether it’s a maturity or a death claim, the settlement of claim has to be done to the Insured by the Insurer / Insurance company within stipulated time.
The insured should submit relevant documents to the Insurer to take the process ahead and settle the payment.
We have got a fair idea by now on the basic concept of life insurance, benefits, types of insurance, few companies in India that provide the insurance-based services etc. Life insurance is a vast sector that provides services to the citizens of India through their wide range of products based on different requirements of customers. Nothing is predictable, and the only way to secure the future is by taking appropriate steps in that manner. Life insurance is the simple form to get prepared financially in case of any unforeseen event, accident or retirement. One needs to appreciate the importance of life insurance in their life and consider it as back-up plan and have peace of mind for the rest of life.
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