A life insurance policy is a type of contract that provides financial protection to a person and their family by making a certain amount of money available to them upon the death of the insured. The policy’s death benefit is a specified amount that the named beneficiary receives when the insured dies. People must have life insurance to ensure that their financial situation is secure. There are various types of life insurance policies that are available to individuals, such as term plans and investment plans.
Life Insurance Plans
- Term Life Insurance: Term life insurance assures a high amount at affordable premiums. The financial benefit of the term life insurance policy is available to the surviving family members of the insured person. The beneficiary receives a specified amount upon the insured’s death.
- Health Insurance: Health insurance is a type of contract between the insured and the insurance company. It provides medical coverage for the insured up to the limit specified by the insurer. There are various benefits associated with this type of insurance, such as pre-and post-hospitalization, coverage for medical check-ups, and a variety of other benefits.
- Unit Linked Insurance: Unit-linked insurance is a type of life insurance that provides both market-linked returns and a full life cover. A portion of the premium is used to fund different fund options, while the rest is used to provide insurance.
- Child Insurance plan: A child plan is a type of ULIP that allows parents to create wealth for their child’s higher education. It allows them to invest their money into various funds depending on their long-term goals.
- Endowment plan: An endowment plan is a type of insurance that combines savings and life insurance. It can be used to fund various types of investments, such as retirement plans. You will get a variety of benefits, such as the maturity benefit, which can be used to outlive the plan’s term.
- Retirement Plan: A deferred pension product is a type of retirement savings that can help you build wealth for your later life. It can be used to fund your desired retirement lifestyle. If you die during the policy term, your nominee will receive a lump sum payment immediately. If you survive the term, you will receive a higher benefit.
Benefits of life Insurance
- Financial protection: The life insurance policy can protect your family. It can help your family avoid financial problems in case something unfortunate happens to you. Having a large amount of insurance can provide a good quality of life for your loved ones in the long run. It can also help them manage their financial liabilities.
- Wealth generation: One of the most important factors that you should consider when it comes to choosing a life insurance policy is the type that you want to use. It can help you build a savings account for the future. With a variety of life insurance policies, you can choose the amount that you want to spend on various expenses such as education.
- Savings on Tax: Life insurance policies can be considered tax-deductible if the premiums are paid under Section 80 C and 80 D of the Internal Revenue Code of the Income tax act (1961). In most cases, the benefits at maturity are also tax-free.
- Retirement planning: With the right life insurance policies, you can easily fund your retirement. Some of the most common types of plans that can help you build a savings account are an endowment and an annuity.
- Planned investments: Most life insurance policies guarantee a fixed amount of money after every year. This type of predictability helps people manage their financial situation and brings out financial stability.
Life Insurance Premium
A life insurance premium is a monthly payment that you make to your insurance company in exchange for the coverage that you have. If you die, your insurance company will pay your beneficiaries the benefits that you set at the time of purchase. Your premium additionally contributes to the cash value of your policy over time.
Some types of life insurance policies allow you to contribute a portion of your premium to the cash value of your policy, which can be used to pay for other expenses. It will remain in place until the payments are made on time.
Life insurance policies typically come with a monthly or quarterly premium. You can set up the policy with your insurer to pay the premiums according to your needs.
Eligibility & Documents to Buy a Life Insurance Plan
Although the exact eligibility criteria for different plans vary from one insurer to another, the general rule is that the buyer or the policyholder of a term insurance policy should be Indian citizens.
Non-resident Indians (NRIs) and permanent residents can also buy term insurance policies in India. For most insurance companies, it is mandatory for an insured to undergo a medical test before they can purchase a policy. This ensures that they are aware of the potential risks associated with the policy and the premium amount. In general, the premiums for a term plan are higher for smokers.
A person must submit all of the necessary documents. Ensure the availability of documents that meet the underwriting guidelines. These can be submitted online, or they can be sent directly to the insurer. Some of the documents that you can upload include a photo ID, proof of residence, and proof of income.