Looking for Investing in a Life Insurance product? But not sure exactly how it works?& Which is a product that suits your need?
Well this page is aimed to give you a complete understanding on how it works and what you need to understand to choose the products that suits you the best. As at every life stage, everyone has a set of primary needs that requires sufficient funds to fulfill them. This is where life insurance comes into the picture- as it offers tailor made products to secure every aspect at different stages of life. There is no doubt that life insurance is a must have for everyone. Hence its very crucial to have a complete understanding of the value a life insurance policy can bring into your life and that of your loved ones. A life insurance policy is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured. While choosing a life insurance, we will help you to map your needs & goals and show how life insurance will help you to facilitate & secure them. We will help you pick out the option that suits you the best.
Why is it important?
The purpose of life insurance is to provide financial protection to surviving dependents after the death of an insured. It is essential for applicants to analyze their financial situation and determine the standard of living needed for their surviving dependents before purchasing a life insurance policy. We will help you in assessing your needs and establishing the type of life insurance most suitable to address those needs. Several life insurance channels are available which includes Term Plans, ULIP’s (Unit Linked Life Insurance Plan), Endowment Plans, Money back Plans, & Whole Life Insurance Plans. It is prudent to re-evaluate life insurance needs annually, or after significant life events like marriage, divorce, the birth or adoption of a child and major purchases, like a house.
Life Insurance is not an expense, many people think of it as one & choose to completely ignore its importance. It’s a very essential tool that will help you secure and built wealth and at the same time offer complete protection to you and your family.
Importance of Life Insurance for Single Individual
Even if you have no immediate dependents relying on you financially, it doesn’t mean that you don’t need a life insurance. There are many costs that you need to factor in and which needs additional income to fulfill them. Life insurance helps you meet such expenses while safeguarding your current income.
Importance of Life Insurance for Family
Unexpected passing of an individual leaves a lot of void and the surviving members are left to cope with a lot of stress and trauma. And no matter what, expenses never ceases to exist; it just piles on- be it rent, childcare expenses, loans, etc. In such scenario, loss of income would cause an immediate financial hardship and your loved ones are left struggling. Nobody wishes this upon their family; hence life insurance needs to be seriously considered.
Benefits of Life Insurance Plans
“Who will get the benefit of your life insurance?
How Life Insurance will help if anything happens to me?”
Such questions usually cross one’s mind when they plan to buy life insurance
The perks of buying a life insurance plan are beyond protecting policy holder’s family in tough time. Undoubtedly, it is a necessity for a bread winner to safeguard their dependents in case of their unfortunate and untimely demise, accident or physical disabilities that lead to a loss of income. Having said that there is a long list of other benefits that make life insurance plans a must have.
Most people are not aware of the many benefits offered by a life plans, there is plenty of other benefits offered by life policies such as maturity benefits, tax benefits etc.
1. Death Benefit
The death benefit is the primary feature of a life insurance plan, and regardless of which type of plan you invest in, the death benefit remains integral. You should ensure that your family has adequate death benefit cover to take care of the household expenses, as well as future financial goals.
2. Investment benefits
In general, life insurance plans not only serve as financial instruments to provide a replacement for income loss, but they also function as an investment opportunity. Throughout the policy tenure, you can avail significant returns on your investment. Moreover, there are various life insurance plans available that provide considerable returns on the completion of the policy term; thus, helping you meet your investment goals while protecting your family against an unexpected income loss.
3. Create wealth to fulfil your life goals
When it comes to financial planning, life insurance is one of the options to provide risk protection and steady pay-outs. Be it securing your child’s future or planning for your retirement, buying a life insurance plan can help you take care of important life goals, while ensuring financial security for yourself and your family.
4. Act as a loan collateral
Life Insurance policies can be also used as a loan collateral, predominantly this facility is used during purchase of a house / flat were the housing loan provider i.e. Bank or NBFC (Non-Banking Finance company) insist on you having life insurance if you don’t have one or have insufficient cover compared to the loan amount and attach the same to house / flat loan taken.
Also based on the type of the life insurance policy and the surrender value, the policy holder can opt for a loan from a Bank or NBFC as per applicable terms and condition.
5. Taking care of business
Life insurance that provide an option for policy holder’s who own a business. In the case of policy holders’ demise, their business partner’s can purchase the policy holder’s share without any hassles. In this scenario, the business partner’s will simply have to sign an agreement with the life insurer and the pay out received after selling the policy holder’s share without any hassles. In this scenario, the business partner’s will simply have to sign an agreement with the life insurer and the pay out received after selling the policy holder’s share will be given to their dependents.
However, it’s important to understand that the nominee or the dependents of the policyholder won’t get a stake in the company
6. Tax Benefits
For paying a life policy premium, a policy holder is eligible for a tax rebate under section 80(C) of the Income Tax Act 1961. Irrespective for oneself, their spouse or their children, the premium paid for parents and in laws is exempted. This benefit is offered by all the life insurers be it private sector life insurer’s or public sector life insurers. Additionally, the maturity benefits of life policies also qualify for tax deductions under section 10(10) D of the Income Tax Act, 1961.
7. Protection from critical illnesses
Life insurance plans help protect your savings in case you are diagnosed with a severe health condition. Life insurance plans offer protection cover against named critical illnesses, including kidney failure, cancer, heart attack, and stroke, through its Critical Illness (CI) Benefit / Rider. Thus, the policyholder will receive a lump sum if he or she is diagnosed with any critical health conditions as outlined by the rider.
Types of Life Insurance policies we can offer;
Types of Life Insurance Policies
|Term Plans||Pure Risk Cover|
|ULIPs||Insurance + Investment Benefits|
|Endowment Plans||Insurance Cover + Savings|
|Money Back Plans||Insurance Cover with Periodic Return|
|Whole Life Insurance Plans||Cover age for a Lifetime|
|Child Plans||To create corpus for children for children education, marriage etc.|
|Retirement Plans||Financial Independence post retirement (Retirement Corpus)|
|Pension Plans||Utilization of Retirement Corpus using hassle free process.|
Key points to be noted while choosing Life Insurance Plan,
1. Sum Insured by the Policy.
2. Premium to be paid for the cover.
3. What is the Claim Settlement Ratio?
4. What Riders are available?
5. Payment Terms
1. Tax Rebate specified is subjected to change as per rules and regulations changes under Income Tax Act, 1961 & Government Budget Announcement.
2. Above mentioned benefits are for illustration purpose, actual benefits will vary depending on the Life Insurance Policy selected by the Individual. Hence, read the policy documents carefully.