What is Life Insurance and It’s Benefits Complete Guide in 2022

Benefits of Life Insurance

1. The insurance offers insurance coverage for the risk of the insured’s family members in the form of cash compensation instead of premiums paid.

2. Different plans to suit different needs Insurance companies provide different types of insurance plans to the insured, based on the requirement for insurance. Benefits are greater with a higher premium.

3. Insurance for health expenses Also, these policies provide coverage for hospitalization costs and critical illness treatment.

4. Aids in Savings/ the creation of wealth Insurance policies are also included with a saving plan, i.e., they put your money into profitable ventures.

5. Guaranteed Income Insurance policies include the guarantee of a certain amount due upon the incident’s occurrence.

6. A Loan Facility is a service offered by insurance companies. Give the insured the option that they may take out a loan for a specific amount. This feature is available only on specific policies.

7. Tax Benefits: The insurance premium can be tax-deductible per article 80C under the Income Tax Act 1961.

Types of Life Insurance Policies

Types of Life Insurance Policies

1. Term insurance plan, as the name suggests, The term insurance plan is a policy that is bought for a specific amount of time, for example, 10, 20, or 30 years. Because these policies don’t have any cash value, they do not come with any maturity benefit, making them more affordable than other insurance policies. The policy is a benefit only in the event of an incident.

2. Endowment policy. The only distinction in the terms insurance plan and endowment plan is that the policy has the added benefit that the insured will receive an amount in one lump sum in the event of his death up to the day of his maturity. The rest of the terms and conditions of the term policy are the same and relevant to an insurance policy.

3. Unit Linked Insurance Plan These plans enable policyholders to create wealth and wealth alongside life insurance. The premium paid is divided into two parts: one for life insurance and the other to help build wealth. The plan allows you to take the money partially.

4. Money Back Policy: This policy is comparable to the endowment policy. The sole difference with this one is that this program gives numerous benefits for survival that are allocated proportionally throughout the policy’s term.

5. Whole Life Policy differs from other policies that end after the specified period; this one is extended to the person insured’s entire existence. The policy also offers life-long benefits to the insured. In this policy, the insured can withdraw a portion of the amount. The policyholder is also able to take out a loan from the policy.

6. Annuity/Pension Plan In this insurance policy, money that is collected in the form of an annual premium is kept as assets that are distributed to the owner of the policy in the form of income, either in the form of a lump sum or annuity based on the direction of the insurance company.

Claim Settlement Process

In the event of an incident, the beneficiary must forward claim intimation forms to an insurance provider as quickly as possible. The claim intimation must include information like date, place, and the reason for death. If the claim is submitted successfully, in notification form, an insurance company could request additional details about:

1. Certificate of Death

2. Copy of Insurance Policy

3. Legal evidence of title in case the insured has not named an individual beneficiary.

Deeds of Assignment Upon submitting every document, the insurance company will examine and settle the claim.

Principles of Life Insurance?

Life insurance is founded upon a range of fundamentals adapted to market conditions and helps companies earn a profit and offer security plans to insured individuals. There are four primary principles of insurance that are used in India, which include:

  • Insurable Interest – This concept refers to the amount of interest an individual is required to show under a specific policy. The interest could come from the bond between a family member or a personal connection, and the list goes on. Based on the level of interest, an insurance company could decide whether or not to approve the application to prevent the risk of misuse in a policy.
  • Large numbers and the law This theory assures stability for the long term and reduces losses over the long term when experiments are conducted using large numbers.
  • Good faith – When purchasing an insurance policy is signing the contract between a business and an individual. This must be done with good faith and by giving all pertinent information integrity. Failing to disclose any information received from the insurance company can have serious consequences for the person later. In this regard, the insurance company should provide all the policy details. They should also ensure that there aren’t any unclear or unintentional clauses and the person applying for insurance is aware of the terms and conditions.
  • Minimal loss and Risk Insurance are risky, and firms must do business and generate profits bearing in mind the risk. Minimal risk stipulates that the insured must take the necessary steps to shield themselves from risks. This means living an active lifestyle, having regular health checks, and much more.

Points to Consider for Life Insurance

  • Research: If you are a prospective applicant for life insurance, you have various options for policy coverage available to pick from. Studying your options before making an informed decision about buying a life insurance policy is vital since it can aid in saving money and gaining the maximum benefit.
  • Learn about the terms and conditions. The terms and Conditions of the insurance policy include all pertinent information about the policy in question. It would be best if you went through the fine print thoroughly and thoroughly before purchasing an insurance plan that you like.
  • Be aware of the lock-in time frame: There are occasions when people make purchases of insurance without making an informed choice, only to discover that they’re not satisfied with their insurance coverage. In these instances, insurance companies provide the option of a lock-in period, which is a limited period of typically 15 days during which an insured can return their policy insurer and buy another if they are unhappy with their initial purchase.
  • Think about alternatives for paying premiums: Nearly all insurance companies provide premium payment options, which include quarterly, semi-annual, annual, or monthly basis. Choosing an Electronic Check System (ECS) payment that periodically debits your account of the amount of insurance required is crucial. You can also select from a plan which allows you to pay for premiums using the ease of regular payments.
  • Don’t hide information. Do not cover up information: There are occasions when people attempt to conceal details when filling out a request for insurance. All medical and personal information and any credentials you have in your information must be presented accurately to the insurer. Inaccurate information could cause problems when making claims later.

Life Insurance Companies in India

A few of India’s top Life insurance firms include

1. LIC Life insurance corporation of India

2. SBI Life Insurance

3. ICICI Prudential Life Insurance

4. HDFC Standard Life Insurance

5. Bajaj Allianz Life Insurance

6. Max Life Insurance

7. Birla Sun Life Insurance

8. Kotak Life Insurance We all are unsure of our future.

Even though everyone would like nothing bad to happen to them, we must be prepared for unexpected events. Life insurance is a financial security that ensures that your family is protected. Life insurance is a little investment compared to the security it can give you.

Also Read: Understand Easily About Life Insurance Policies
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