Life Insurance

Life insurance is a protection cum savings financial tool to achieve long term financial goals of life...

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Life Insurance

"Human life is valuable and full of dreams, aspirations & responsibilities"

Life Insurance is a protection cum savings financial tool to achieve long term financial goals of life and to protect financial well being of family against any unfortunate death occurances of the bread winner.

In simple life insurance is a contract between insurer and the insured for the payment of sum assured to the nominee on any unfortunate event of death by getting regular premiums from the insured. The payment contract could be on the date of maturity or specified dates on periodic intervals or unfortunate death occurances.

Tax Advantage:

You can get tax benefits on premium paid towards Life Insurance policies under Section 80C, Pension policies under section 80CCC and Health policies under section 80D of Income Tax Act 1961. So, when you buy life insurance, you get protection over a long term basis and you also get tax benefits.

Types of Life Insurances

  •    Term Plans
  •    Endowment Plans
  •    Unit Linked Insurance Plan (ULIP)
  •    Child Plan
  •    Money Back Plan
  •    Whole Life Plan
  •    Retirement Plan or Annuity Plan

Why do we need Life Insurance ?

Life insurance is a great tool that will help your family in meeting their critical needs and lead a comfortable life even when you are not around. This is because the Insurer will pay the Beneficiary of your Policy a predetermined sum of money after your death. It could also be given if you are bedridden with a critical illness. Life insurance is therefore the most essential insurance Policy that you can have in your savings and investment portfolio.

Why Life Insurance ?

As a result it has become essential these days for you to have one or more insurance policies. Here are some important reasons as to why you should buy life insurance :

  •    Family's Financial Requirements
  •    Loans and Expenses Repayment
  •    Draw Loans Against Insurance
  •    Diverse Investment Options
  •    Illnesses and Accidents
  •    Tax Benefits

Term Plans

It is well known as pure protection plans. It is a contract between the insurer and the insured for a particular period of time for giving life insurance coverage. In the unfortunate event of death of the life assured during the policy term, the insurance company pays the death benefit (sum assured) to the nominee as a protection of family's future.

Endowment Plans

A. Participating Endowment Plans :

This insurance plans provides both guaranteed and non guaranteed benefits. The life cover is guaranteed benefit and it is paid upon death of the insured. Participating policy holders are allowed to participate or share in the profits of the insurance company's participating fund. This is paid in the form of bonuses which are non guaranteed benefits.

B. Non Participating Endownment Plans :

This insurance plan provides just the life cover upon the death of the insured. The policy holder doesnt participate or share in the profits of the insurance companys participating fund and is not entitled to any non guaranteed benefits.

Unit Linked Insurance Plan (ULIP)

In ULIP's a part of the premium that the policy holder pays goes toward providing life cover and the remaining is invested in different funds like equity and debt. So in ULIPS policy holders money is invested in capital markets for higher returns in long term to attain future financial goals.

Apart from benefits like disciplined savings, tax deductions and life cover, ULIPs are ideal wealth creation instruments which provide:

  • a. Provides investment option with respect to debt & equity exposure ie potential for good returns through investment in equity and debt markets.
  • b. Option to alter debt & equity exposures at any time during the policy term.
  • c. Charges associated with the plan are specified.
  • d. High liquidity, as most plans offer 100% surrender option after 5 years.
  • e. Fund switch (movement of money between funds).
  • f. Partial withdrawals (withdrawal of a specific amount from the complete investment in case of emergencies)
  • g. Top-ups (increase of existing investment if you have liquid funds)

Child Plan

Child plans objective is to secure child future in any unfortunate event of the parent. Child plans are available in both traditional and unit linked categories. However, unitlinked plans are preferred over traditional plans because of its flexibility.

In addition to the features offered under investment plan, child plan offers the following features. Double benefit and waiver of premium benefits are built in with child plans.

Double Benefit : In case of eventuality during the policy term, sum assured is paid to the beneficiary [child] Policy continues and policy value is paid at the end of the policy duration.

Waiver of Premium Benefit : In case of eventuality, future premium is waived and premium due is paid by the insurer throughout the policy duration. This option is inbuilt in most of the child plans.

Money Back Plan

A money back policy is a variant of the endowment plan. Premium is paid every year throughout the plan duration. A portion of the sum assured is paid at pre determined intervals as survival benefit during the policy term. Sum assured net of survival benefits and bonus declared is paid at the end of the policy term. Sum assured Plus bonus declared is paid in case of eventuality during the policy term irrespective of the survival benefits.

Whole Life Plan

Whole life is an extended endowment plan. While endowment plans are designed for a specific duration, whole life plans extend till age 80 or 100.

Retirement Plan or Annuity Plan

Pension plans are designed to provide regular income after they retire. In these plans, the policy holder has to invest either lump sum amount or regular premiums during the payment term. In return, the policy holder will get regular income as pension. There are several types of pensions payable to the policy holder.

We have two types of pension plans at present in market ie Immediate Annuity and Deferred Annuity Plans.