Life Insurance:
Life Insurance:
Life insurance policy
is a legal agreement between a person and an insurance company, in which the
insurance provider guarantees the policyholder's financial security in return
for a set amount of money paid each month.
According to the definition
of life insurance, in exchange for the premium payments made toward a life
insurance policy, the insurer (insurance company) pays a sum insured to the
policyholder or to the designated nominees in the event that the policyholder
passes away unexpectedly.
According to the
agreement, the insurance company will give the individual or his family a lump
sum payment in the case of the policyholder's death or if the policy matures
after a specific amount of time.
What Are the Advantages of Life Insurance?
There are three key
benefits to purchasing the greatest life insurance policy that you should be
aware of. The three main advantages that each form of life insurance policy
provides are as follows:
1. Stability financially
Because of how
unpredictable and uncertain life may be. A terrible occurrence like death is
tough to make less likely. In this case, the family's financial struggles are
brought on by the lack of a reliable source of income.
Early life investment
in the best life insurance coverage serves as a safety net in such a situation.
The insurance company is required by the definition of life insurance to pay
the nominee or beneficiary the pre-specified sum assured. As a result, his
family is safeguarded even when the policyholder is not present.
2. Long-Term Investments
It's crucial to
consider the purpose of life insurance while making long-term investments. Such
insurance policies assist you in systematic saving and corpus creation, which
can be used for many purposes, including the construction of a new home, paying
for your child's quality education, and covering a child's wedding costs.
Additionally, if you
understand the meaning of life insurance, you'll realize that certain types of
policies frequently include annuities, which are a great method to plan for and
reach retirement goals.
3.Financial Options
Your ability to
effectively plan your investments will depend on your ability to comprehend the
significance of life insurance in the context of your finances. Unit-Linked
Investment Plans (ULIPs), which are primarily investment instruments based on
market-linked returns and life insurance, are offered by life insurance
companies. This allows you to obtain two financial benefits from a single
product.
These market-linked
life insurance plans yield sizable gains at maturity, making ULIPs a
trustworthy tool for investing.
4.The Tax Benefits
You must continue to
make premium payments in order to maintain the policy's validity, as stated
under the definition of life insurance. In accordance with current regulations
and the Income Tax Act of 1961, life insurance plans also provide tax
advantages. Under Section 80C of the Income Tax Act of 1961, the life insurance
premium payment may be claimed as a tax deduction. Section 80C allows you to deduct
up to Rs. 1.5 lakh.
Types of Life Insurance policy
1.Term Life Insurance plans
The most
straightforward and basic type of life insurance is term insurance. It offers
the most cost-effective family financial safety. With term insurance, you can
obtain a sizable amount of life insurance (also known as the sum assured) for a
relatively small premium cost. In the event of the insured person's passing
while the policy is in effect, the benefit amount is paid to the nominee.
2.Endowment policy
An endowment policy
is made to pay out a lump amount when it matures or when the insured person
passes away. Building a risk-free savings fund with the help of an endowment
policy can also secure your family's finances in case of an unlucky event.
3.Unit Linked Insurance Plans [ULIP]
A ULIP is a type of
insurance plan that combines life insurance and investment opportunities to
help you achieve your long-term objectives and provide for your family
financially in the event of the unthinkable. There are two portions to the
premium paid for a ULIP.
4.Money Back Policy
A form of life
insurance plan called a money-back policy, it offers both investment and
protection. With a money-back policy, you can get pay-outs periodically
throughout the policy term. It also offers a life insurance component, keeping
your loved ones financially secure in the event of an unforeseen circumstance.
5.Whole Life Insurance
Whole life insurance
is also known as permanent life insurance, in exchange for timely premium
payments, the insurance policy remains in effect for the whole policy duration.
An entire life insurance policy offers both life coverage and a maturity
benefit. In this way, you can safeguard your loved ones in your absence and
establish a savings account to achieve your long-term objectives.
6.Annuity/Pension Plans
After investing a
lump sum, an annuity plan is a financial contract that offers you guaranteed
recurring payments for the rest of your life. Your money is invested by the
life insurance company, which then returns the profits. You may compare it to a
pension Payout that you receive.
Comparison of Different Types of Life Insurance Plans| Basis | Term Life | Endowment Policies | ULIP | Money Back
Policies | Whole Life Policy | Annuity/ Pension
Plans |
| Policy Length | 5-85 Years | 5-35 Years | 10-20 Years | 5-65 Years | Till You Turn 100 Yrs. Old | Whole Life |
| Premiums | Single, Quarterly, Monthly, Semi-Annually &
Annually | Lumpsum, Monthly, Quarterly, Half Yearly &
Annually | Single, Monthly, Quarterly, Half Yearly &
Annually | Monthly, Quarterly, Semi-Annually & Annually | Single, Monthly, Quarterly, Semi Annually &
Annually | Monthly, Quarterly, Semi Annually & Annually |
| Death Benefit | Life Cover | Sum Assured | Sum Assured | Life Cover | Life Cover | Offered by few plans |
Maturity
Benefits | Maturity benefit is available only if return of
premium is chosen | Yes, when the policy expires. | Yes, when the policy expires. | Benefits of Survival on Maturity | Plan matures when you reach 100 years of age | Regular income until "survivor". |
| Ideal for People who want | Financial security for the family at an
affordable price | To leave a legacy for their family | Safe and guaranteed returns for a stress-free
investment | A diversified investment portfolio provides good
returns and life insurance | Guaranteed benefit at maturity + life insurance | To secure retirement through regular income. |
Documents Required for Buying a Life Insurance Policy
Following is the list of documents required while
applying for life insurance policy:
v Duly filled Proposal Form
v Photograph of the Proposer/Life Assured
v Age Proof of the Proposer/Life Assured [Driving
License, 10th or 12th Mark Sheet, Birth Certificate,
Passport, Voter ID, etc.…]
v Photo Identity Proof of the Proposer/Life Assured
[Aadhar Card, Voter ID Card, Passport, Driving License, etc...]
v Address Proof of the Proposer/Life Assured
[Electricity Bill, Telephone Bill, Ration Card, Driving License & Passport]
v Medical Examination Report of the Proposer/Life
Assured
v Income Proof of the Proposer/Life Assured [Latest form
16, Salary Slips of Last 3-6 Months, ITR (2-3 Years), etc.…]
v PAN Card of the Proposer/Life Assured
How to Buy Life Insurance Policy Offline?
1. Visit the Nearest branch or contact a Life Insurance
Agent.
2. Select the Policy of Your Choice and fill the Proposal
Form.
3. Pay the first premium through any accepted mode of
payment like check or demand draft.
4. A staff member or agent at the branch will help you
complete the rest of the process.
How to Claim Life Insurance
Life Insurance Claim Can be Classified into Two
Categories: -
1. Maturity Claim
2. Death Claim
Steps Involved in Life Insurance Claim:
Step1: Intimation of Claim
Step2: Submit Proper Documentation
Step3: Claim Settlement
Formalities for a Death Claim:
When a person holding a life insurance policy - called
the life assured - dies, a claim must be sent to the insurance company as soon
as possible. This can be done by an assignee or nominee under the policy. So,
any close relative or agent handling the policy can do so.
The claim notice should include information such as
date, place and cause of death. The insurance agent should help the
family/assignee of the life insured to complete the formalities for the claim
by contacting the insurance company.
The insurance company will respond to this notice and
ask for the following documents:
v Filled-up claim form (provided by the insurance
company)
v Certificate of death
v Policy document
v Deeds of assignments/ re-assignments if any
v Legal evidence of title, if the policy is not assigned
or nominated
v Form of discharge executed and witnessed
Other documents such as Medical Assistant Certificate,
Hospital Certificate, Employer's Certificate, Police Investigation Report,
Postmortem Report are applicable.
Formalities for a Maturity Claim:
When a life insurance policy matures, the insurance
company usually informs the policyholder about the maturity amount payable
along with the discharge voucher two or three months before the maturity date.
The policyholder has to sign the discharge voucher -
which is like a receipt - his signature attested and returned to the insurance
company along with the original policy deed.
If the policy is assigned in favor of any other person
or entity – such as a home loan company – the claim amount is paid only to the
discharging assignee.
Documents Required for Beneficiaries Claiming Life Insurance:
The following documents are generally required to file
maturity claim:
v Policy discharge form
v Original policy document
v Your ID and age proof
v Proof of your bank account and details (submit
passbook copy or cancelled check)
If you have taken out the policy for loan, also submit
details of the assignment.
Have you lost your life insurance policy?
v As a policyholder, it’s your right to obtain a
duplicate copy of your policy document if you lose the original policy.
v You should inform your insurer about the loss of the
original policy document as soon as possible
v submit the application to your insurer asking for a
duplicate copy of your Policy bond
Let’s take an example:
Mr. Akhil was living with his loving wife and two children. He was in service
and getting a salary of Rs 1,00,000/- per month. He was fulfilling his family’s
requirements to the fullest and enjoying every moment of their lives.
Unfortunately he expired at age of 35. The surviving member did
not have any source of income after his death, but fortunately he had a Life
Insurance Cover. So his wife got the money (Sum Assured) from the insurance
which she wisely invested. The loss of her husband cannot be compensated but
with the money she got from the insurance company she was able to run her house
smoothly.
Mr. Bhaskar whose income and family circumstances were the same as Mr. Akhil’s.
Mr. Bhaskar expired at age of 35, but unfortunately he did not have a Life
Insurance Policy. So their situation was completely opposite. His wife and
children had to face a lot of problems with no such income. They had compromise
with the many important things in life like studies, children’s marriage, their
health, standard of living etc.
The fact is, it is always a loss which you suffer when you lose someone you
love. But your emotional struggles do not need to be compounded by financial
difficulties. Life insurance helps make sure that the people you care about
will be provided for financially, even if you are not there to care for them
yourself.
In short, Life Insurance is the way to keep your family independent with you
and after you.
Take your very first step towards financial security and secure
your family today with premium insurance plans available. Insurance companies
in India offers various life insurance plans to meet individuals goals and
needs. Choose from a range of best Life Insurance Policies available and
invest. Birght Vision are reputed as best Life Insurance Plans & Insurance
Policy Advisor in Delhi NCR.
