Life insurance in India has been made a national matter by Insurance Action, 1938 and Insurance Regulatory and Development Authority Action 1999. Therefore, all the life span insurance firms in India have to adhere to strict regulations laid out by the mentioned works, irrespective of whether these are state-owned (LIC) or private (Bajaj Allianz Life Insurance Company, HDFC Standard Life Insurance Company Ltd, ICICI Prudential LIFE INSURANCE COVERAGE etc. ).
Life insurance increases self-confidence in the insured, offers satisfaction to be covered for life, any condition or financial loss. The advantage for the policy owner is the "satisfaction" in understanding that, the fatality of insured person will not result in monetaray hardship for family members. Uncertainties of life can't be controlled but, the risks encircling us can be definitely looked after like ensuring financial safety on automobile accident or death. Life insurance also defends us from those contingencies that could influence us in a big way and enable the beneficiaries to keep the same lifestyle even after the regrettable demise of themselves.
Any basic life insurance coverage works as under :
To cover the risk of untimely demise of the covered by insurance, small sums (every month/ quarterly/ annual) are paid to the insurer by the policyholder, called prices, during the tenure of the coverage. In case there is loss of life of the covered by insurance, the family (or the beneficiaries, as called in the policy) will get a lump total amount. In case of maturity of the insurance plan, with respect to the kind of the policy chosen; profits will be received, which it could have earned over the years. Today, there are many variations to this basic theme and plans cater to a multitude of needs.
Coverage of loss of life or any critical condition (as mentioned in the 'insuring arrangement').
Coverage of financial interests/ needs of the family/ beneficiaries on the death of the policyholder.
Specific customized products for wedding caterers to different life stage needs (refer section 8 for different kinds of needs and their computations).
Inbuilt riches creation propositions under several products, providing dual gain to the customer.
Availability of different kinds of retirement programs.
Loan facilities against various programs.
Life insurance costs offer tax saving benefits.
Hence, life insurance occupies a unique space in the surroundings of investment options to a customer and various life stage advantages to the beneficiaries.
As we've seen, life insurance plays a very important part in anybody's life as it protects the risk of dying early on and helps to protect the family in case there is demise. The covered by insurance money will save the family in several levels of life, either it is for educating the kids or daughter's marriage etc. Non-earning years of life to create pension is also covered by the insurance. Plans fall into many categories (see display 1 & 2), hence, choosing the right insurance policy type with the right amount of coverage becomes very critical. A number of the parameters for classifying them include high quality amount, benefits protected, period of time and other polices which govern the insurance policy.
Life insurance policies change from company to company but, do not require will be contradicting the concepts of life insurance coverage contract, however, the amount of variance is little. Given below are the basic types of life insurance policies, whereby, all other policies are designed up by mixture of various features considering major causes of fatalities in India (see display 3) :
Term Life Insurance Policy
Permanent Life Insurance
Variable General Life
Money Again Policy
Annuities and Pension
Group Insurance Policies
Coronary Center Disease
Road Traffic Accidents
Influenza & Pneumonia
Peptic Ulcer Disease
Source : worldlifeexpectancy. com/country-health-profile/India
"A term insurance coverage is a natural risk cover insurance plan that protects the individual insured for a specific period of time".
A kind of insurance policy, in which, the insured gives a fixed total for a particular term. This amount remains constant and the coverage does not gather any cash value. 'Term' is generally considered 'clean insurance', where the premium purchases only protection in case of death and nothing is received on the maturity, hence, the high grade charged is very nominal. While purchasing this insurance plan, the insured has to go through various medical checkups and in case there is any hazards like; health hazard (increased BP, heart disease etc. ), the superior will be costed extra by the name 'health extra'. In case there is occupation hazard (risky jobs), again the premium is charged extra by the name 'occupation extra'. It really is to be observed that the excess charged prices will be strictly at the discretion of the underwriter. The policy can be restored when expired but at revised rates of premium that can be too high. The insurance plan is highly recommended for the salaried youngsters and middle men. Another classification in term life insurance is 'complete term insurance plan' where in fact the insured compensates the set amount throughout his life. There are three key factors to be looked at in term insurance :
Face amount (protection or death benefit),
Premium to be paid (cost to the covered by insurance) and
Length of coverage (term)
The objective of this policy is to safeguard the insurance policy holder's family in case of loss of life. Here, the predetermined sum of money called the 'sum assured' and it is paid to the designated beneficiary. For instance; in case a person buys a policy of Rs. 2 lacs for 15 years, his family is entitled to the amount of Rs 2 lacs if he dies within that 15 calendar year period. If he survives beyond 15 years, he will not get any amount from the insurance provider and the premiums paid are not returned back.
which will be comparatively lower, as now it covers only risk element and not personal savings/ investment)
Some term insurance policies also hold convertible option, known as 'convertible Term Insurance Regulations'. Here, the insurer gets the option of changing the term policy on track endowment policy (described under the head 'endowment regulations' later in this chapter) after having a certain time period say 5 or 6 years (the clause will depend on company to company). As the policyholder is getting the policy converted to normal endowment plan, now the new top quality will be determined as per endowment coverage. The good thing about this insurance policy is that when the insurance policy gets turned, the insured does not undergoes any medical checkup even if the his present health condition is not good.
'Suicide' used to be excluded from all plans. However, after a number of court docket judgements, many insurers started awarding payouts in the event of suicide (aside from cases where it can be shown that the covered committed suicide only to access the insurance policy payout). Generally, if an insured person commits suicide within the first two insurance plan years, the insurance company will simply gain the monthly premiums paid as a bargain, but, following this period, the full death advantage may be paid.
Group Term Life Insurance - Insuring a group of individuals together. This can be done because of their working in specific group such as associates, employees of the same corporation or being members of a specific organization developed for a particular purpose. In case the insurance is used for the employees by their employers, the company is supposed to will pay the payments either from his pool or by deducting the right amount from the salary of individual employees. In group insurance you contain the facility of converting your policy to another which is not available with other insurance policies. So as an insurer you receive the freedom to find the policy according to your decision. Group term life provides great deal of benefits but it cannot be solely relied to meet one's insurance needs. Plan is gaining value in the many producing countries.
Level term Life Insurance - An insurance which asks to choose a specific period and then prices are paid for that period. The plan, by design matures on the attainment of that period. Once the term is decided on say 5, 10 or 15 years, it cannot be revoked. The policy is well suited for those, who do not make long-term financial strategies.
Merits of the word LIFE INSURANCE COVERAGE Policy
Financial security of any person.
Payments (payments) are set and don't increase during the term period.
A low salaried person can also go for high value insurance policies as the premium is affordable.
The policy is intended to provide hundred percent risk coverage; no additional charges other than the essential ones. Hence, the payments are lowest in the life span insurance category.
The insurance policy can be customised with the addition of different riders (discussed later in this chapter), such as waiver of top quality or accidental loss of life.
Can be kept as collateral/ home loan with the lenders in case there is loan.
The rates paid are exempt from taxes.
Drawbacks of the word Life Insurance Policy
Covers risk only through the preferred term period.
No survival profit, only death benefit.
The premiums are directly proportional to get older of the individual. They get increased with this and become unaffordable over 60 years.
If the high quality is not paid within the elegance period (as per the standards of the insurance - explained later in the section), the policy could lapse without acquiring any paid-up value.
The revised rates (in case there is renewal of insurance policy) of superior are incredibly high.
Policy is not ideal for cost savings or investment.
We are highly educated with honours from esteemed colleges but nonetheless bad managers of your money because the majority of the days we have a tendency to rely on "someone else" for our financial planning and investment funds. This "someone else" in insurance industry can be directly related to a realtor or so-called insurance planner of XYZ company while choosing Insurance. Most of the time these agents exploit our financial illiteracy with their benefit, they tend to capture us by advising procedures which earn them higher commission payment and completely disregard our needs. If we have to avoid being victim for their snare, financial literacy is most significant for each and every and all of us. Upon this note, answer to the 10 amazing facts being presented below which must know about the word insurance :
Which is the simplest form of life insurance ?
Which is best form of life insurance coverage ?
Which is the most basic and purest form of life insurance coverage ?
Which is the least expensive form of life insurance coverage cover ?
Which life insurance coverage plan is easiest to compare ?
Which is the most affordable form of life insurance coverage ?
Which life insurance coverage packages your agent or advisor won't discuss or discourages anyone to buy ?
Which life insurance coverage plan is easiest to terminate ?
Which insurance plan is the least sold ?
Which is the greatest gift idea you can ever give to your loved ones ?
Interestingly, answers to all the above 10 questions is 'Term Plan'.
Isn't it amazing? So, despite being the best form of life insurance coverage, why the term policies are least sold ? Why just a few people are aware of them ? The only drawback is, there is absolutely no survival profit. This fact is difficult to process and consequently used benefit of by the insurance agencies to misguide people about the real purpose of life insurance.
The decision should be made considering whether the person expects to get the money back on the detailed insurance cover bought for his/her car or motorcycle ? It is likewise with the real form of life insurance coverage. It is to be observed that life insurance coverage is basically for eventuality and not for certainty. Now, the individual should thoughtfully determine which life insurance plan should he/ she select for ?