Life Insurance

What is Life Insurance ?

Life Insurance is a contract between the insurance company and the person who is insured. The contract states that the company has to pay a lump sum amount to the nominee, which is selected by the insured person when any kind of mishap takes place with the insured. The policy is a protection for the family or the loved ones who are dependent on you for financial needs after you are no more. The insured has to pay a small amount for the specified amount of time and then the company pays a lump sum amount to the family of the insured person if the mishap takes place.

Individual lives have become risk prone because today's race has made life uncertain and thus people have become helpless from a financial point of view. To support their risk leading lives they take a life insurance. People are approaching for these insurance policies, but there is an additional policy that would help them ease their costs after death. It is a life insurance.

Life insurance is a brilliant facility or perquisite for any employee which provides them with varieties of supplemental insurance coverages. It turns out to be a good offering to take extra or additional protection for their families. These policies can be available to cover the major expenses and will mitigate to preserve your regular life insurance policy. This type of policy is aimed for only specific expenses. If the employee takes this policy, then he becomes eligible to receive more coverage. There is also a designated limit to the extent of the additional coverage. This limit varies from one policy to another.

As already mentioned above, one needs to have supplemental life insurance to cover certain expenses. This policy makes sure the employees aren't burdened during any type of financial entanglement. When the debt is paid by supplemental policy, the basic insurance policy will cover other aspects. An employee is able to buy a low cost or free additional policy if the life insurance he gets isn't enough.

This life insurance policy is best suited for those employees who have the responsibility to manage a large family and thus they require a comparable huge amount of coverage to take care of a spouse or a family. Supplemental insurance stands a good choice as it is a cost-effective solution or option and it helps to fill in the gaps of an employer sponsored plan. It is created to supplement and not replace. It makes the employee aware and ready against any future loss or uncertainty i.e for "what if's".

Types of Life Insurance

Term Insurance

It is a type of life insurance policy that falls into the complete protection category. It provides pure protection. Basically, it covers the risk of dying. In this plan, the sum assured amount which the insurer promises to pay would be provided to the nominee or beneficiary as stated in the policy document in case of insured's death. If you survive in the policy term period, then you will get nothing or can get your premium back which basically varies from insurer to insurer.If you are planning to buy pure life risk cover, then term insurance is the best and cheapest form of life insurance policies.

Whole Life insurance

Rest of the plans that come under life insurance such as endowment plan, money back plans, ULIP, etc. provides coverage to the insured for a specific age- majorly 65 to 70 years, whereas a whole life plan provides coverage for the entire life. In this plan, generally the insured is given a choice to pay a premium amount till the specified time which is also known as maturity period. If the insured person reaches maturity, then he/she has the option to continue the same till death without paying any additional premium and encashing the sum assured or bonuses.

Endowment Plan

Unlike Term Plan, endowment plan pays you out the sum assured along with the profits in both the cases- death and survival. This plan charges a higher premium which is being invested in the asset market- Equity and Debt. An endowment is a form of life insurance in which the insurer promises to pay the lump sum amount at the time of maturity. Majorly maturities are ten, fifteen or twenty years up to a definite age limit. Some plans also pay an amount in case of critical illness. Endowments amounts can be cashed early and the insured will receive the surrender value which would be determined basis how long the policy has been running and how much has been invested in it.

Child Plans

Provides financial coverage to your child's future needs and allows you to plan his/her future in a better way and stabilize way.

Retirement plans

This plan assists you in securing your post retirement life financially. Choose from multiple options.

Investment plans

This plan helps you in enhancing your wealth, savings and get an insurance coverage as well.

Unit-Linked Plan

In all the above plans you don't have any option to select where you want to invest your money. For securing your capital most of these plans invest in debts, whereas Unit-linked insurance plan (ULIP) provides complete authority to you in choosing the best way to invest your money which you can invest in debt and equity as well. If you want to switch the current investment method, then you can do the same easily. Those who have good knowledge about the stock market can understand this easily.

Money back Plan

Money-back plans are just like endowment plan with only a single difference that the payout can be staggered with the policy term period. In this, some part will be returned to the insured on time to time basis as per the policy tenure. In case of death full sum assured amount will be paid out. It also includes bonus. Because of these additional features, the premiums of this plan are higher than the normal life insurance plans.

Documents Required for Life Insurance Policy

If you have decided to buy life insurance online, then there are few documents that you need to provide such as:

Age proof : Any one of Birth Certificate, 10th or 12th mark sheet, Driving License, Passport, Voter ID, etc.

Identity proof : Driving License, Passport, Voter ID, PAN Card, Aadhar Card, which proves one's citizenship

Address proof : Electricity Bill, Telephone Bill, Ration Card, Driving License, Passport, should clearly mention the permanent address.

Some plans require a medical check-up usually for elder people above the age of 45 years in order to make sure that the insured does not suffer from any chronic illness.

Passport Size Photo to have a record of the insured person`s identity for future references

Life Insurance - FAQ's

Why buy a Life Insurance Policy?

Life Insurance Policy is the best means to fulfil the goal which has been set by you. In the case of any tragedy to the policyholder, life insurance serves as the best way to help the families. Even the needs of the children are secure as the policy can help when the main bread owner dies. These policies protect you from taxes which are a great benefit. Premiums which are paid get a tax deduction. The policy can be taken for a special motive like the wedding of children or their education. Even the retirement life can be secured by taking the policy. Thus taking life insurance policy is beneficial.

When to buy Life Insurance Policy?

The very moment when you feel that your family or loved ones are dependent on you for their needs without even thinking for a minute you should buy the policy. As there is no age limit so it's better to get it the moment you think the requirement arises.

How much life insurance you require?

The policy you require depends on the needs. To the more when you are young needs are limited but as you grow you have more responsibly and more people attached to you. So you should choose the best one keeping in mind your future needs.

What are the immediate financial expenses which your family may require immediately after your death?

When a person dies the family is in a state of grief and it takes months to come out from this shock. It is disheartening as you have lost your loved one but there are expenses such as for cremation and then other ceremonies which are to be done. Taking a life insurance which covers all aspects will provide you with money to fulfil the immediate expenses which will be there after death.

How to know your present expenses to get the best life insurance plan?

Before buying a life insurance policy think about the liabilities which are there. From the loans of the banks to the credit card bills keep everything in mind. If your family is living in a rented accommodation think about the rent that the policy should be able to give till your children grow up and earn. Groceries, school fees, other expenses of families, taxes etc, keeping in mind all these then only select a policy.

How to know future expenses to get the best life insurance plan?

Future expenses basically help you to get a vision of your needs in future. From settling the children, health issues to the retirement living, you need to think about all the expenses to get the best life insurance plan.

How long will your dependents need support in case of your sudden demise?

This is a critical question as you never know when you are going to leave for your heavenly abode. Before buying a policy think about the support your family may require. Maybe you leave the world early and your children are small. So, till the time they grow up and settle the policy should be such that it supports them. Even till your wife starts working or arranges some other income source policy should be there to help them. Thus this all depends upon what your family plans for their future and then only you can take a policy.

How to buy the best life insurance policy in India?

The simple way to choose a policy is to do it when you are young, thus you could increase coverage the amount. Research about your needs and then imply on the tools which life insurance policy providers gave you. Taking a note on them, choose the best policy.