What is Life Insurance?
In simple words, Life Insurance plan is a contract between an individual (the one who is insured) and an insurance company (insurer). As per this contract, the insured pays a certain sum of money as a premium to the insurer.
In return to the premium paid, the insurer promises to pay a specific sum of money which is known as sum assured. This amount helps in covering all financial expenses in case the policyholder (life assured) experiences any unforeseen situation.
Life Insurance is one of the simple and efficient ways to offer financial support during any unforeseen contingency like sudden disability, hospitalization or death.
If the insured dies during the term of the plan, the insurance money (or death benefit) paid by the insurer will offer financial aid to the insured’s family. This amount can be used in a number of ways by the beneficiaries such as for child’s marriage, child’s higher education, other expenses etc.
One of the primary benefits of the life insurance plan is the death benefit, however, you can add many other benefits such as health cover and disability cover to your plan.
How Life Insurance Plan Works?
It is important to understand why life insurance policy is a must and how it works before buying the life insurance plan. In-Depth knowledge of the policy will help you make an informed decision. Also, one must see to it that the policy is purchased from a reliable insurer or not.
As you move down the page, you will get the chance to have a look at how the life insurance policy works.
• One must ensure timely payments of the predetermined premium, as mutually decided between the insured and the insurer.
• If the insured does not wants to go with the lump sum amount, he or she can get this amount paid in the form of instalments to the nominee or nominees after her or his demise
• Bonuses can also be paid by the insurer. However, this is based on the amount that has been accumulated over the tenure of the policy.
• The payments of the premium of the policy throughout the policy tenure ensure that the insured’s nominee or nominees will receive the pre-decided lump sum from the insurer if the insured passes away during the policy tenure
Loan against the policy on hospitalization or critical illnesses:
• There are few insurers that offer the option of withdrawing cash against the life insurance policy for certain emergencies. This includes the treatment of critical illnesses or any sort of emergency wherein immediate hospitalization is required.
• Insured also have the flexibility to take a loan by submitting the required documents along with a letter that specifies the reason behind opting for a loan.
Delay or rejection in claim settlement:
There could be instances wherein there are chances of the claim to get reject. Such instances include:
• Incorrect information
• Incomplete information while buying the policy
• Fraudulent practices
• Cause of death from suicide
• Death due to the factors or medical and health conditions excluded in the policy
• The relative or the nominee of the insured has to get in touch with the insurer to initiate the claim settlement process after the death of the insured.
• It is mandated to submit a copy of the policyholder’s death certificate as proof, along with other necessary documents as demanded by the insurer.
• Usually, it takes a week or fortnight or even a month to review the claim and accept/reject as per the evaluation of the claim.
• Talking about the entire claim settlement, the process usually takes 1 to 2 month or in some cases even less.
Why Buy Life Insurance Plan?
In India, there are more than twenty thousand people who lose their life every single day; that makes it around 900 people each hour. Since birth and death are like the two essential phases of life, it is uncontrollable. One cannot fill the void of the loved ones by any means. But one can ensure to fill certain aspects of this void by ensuring to keep their family financially equipped by opting for an optimum life insurance plan.
Even though the penetration of insurance in India has risen to a certain extent, still the percentage of life covered is low. Hence, it is very important for one to understand the importance of life insurance. Following are the reasons why one must buy a life insurance plan.
One of the good saving options
There are a few types of life insurance plans that are the most convenient way to save and invest your money. Unit Linked Life Insurance Policy, one such plan allows you to invest in equity and debt markets. Under the current tax laws (which are subject to future amendment), you also get tax deductions for investment in life insurance policies and on the maturity amounts of such policies.
Offers financial support to your family/dependants
If you have dependents such as spouse (non-working), partners or kids, it becomes a vital part to safeguard their future and ensure a safety measure for their expenses. By opting for a life insurance plan, you can protect your family from financial hardship in case of your untimely demise. Also, you can good returns with life insurance by investing in certain policies.
Helping aid to recover debts
When it comes to buying a house, we often take large loans. Suppose, in case you are the only breadwinner in the family and you already have a considerable amount of home loan, your sudden death due to any unforeseen situation will leave you behind with huge economic instability. Under such cases, the life insurance plan comes as the recovery aid to overcome these debts.
Provides illness protection:
As you grow older, so is the increase in the number of diseases. If you are incurred with any critical illness, the life insurance policy gives you an umbrella of financial protection under such cases. There are certain life insurance plans which are designed such that it covers diseases such as heart attack and cancer.
Benefits of Life Insurance Plan
One of the primary features of the life insurance plan is the death benefit. The death benefit is an integral part of the entire life insurance plan regardless of which plan you opt for.
Survival benefits are the benefits that are given to the insured during or upon completion of the policy tenure. For money back policies, there is a certain predetermined amount which is paid to the insured after regular intervals. This type of benefits re only applicable if the policyholder is alive. In case the insured is not alive, it is entitled to receive death benefits.
Many of the policyholders opt for a life insurance plan with the intention of getting tax benefits. Under Section 80C and 10D of the Income Tax Act, there are income tax benefits under the life insurance plan. Under section 80C, the premiums qualify for a deduction up to ₹1.5 lakh, on the other hand, Section 10(10D) makes income on maturity tax-free if the premium is not more than 10% of the sum assured or the sum assured is at least 10 times the premium. On the death of the insured, the sum assured paid to the nominee continues to be tax-free. If the policy doesn’t meet the qualifying criterion for income tax benefit on maturity, the income will be taxed at the marginal tax rate.
After all the working years, there comes the retirement phase. It is important to save or build a solid corpus during active life in order to maintain our lifestyle for the long post-retirement life. Pension Plans helps you to live the life you always dreamt of after retirement. The amount paid during the working years can help in benefitting returns in the form of the lump-sum amount that can then provide us with a retirement income by investing in an annuity.
Post Retirement Income
As it is rightly said, “Prevention is better than cure”. Similarly, investing in a life insurance plan can help you to run out of funds during your retirement stage. The annuities bought from the retirement corpus can either be used to provide regular post-retirement income for a fixed term or for the entire life.
Who Should Buy Life Insurance?
People usually ignore the importance of buying insurance and buy it for the sake of tax benefits. On the other hand, buying a life insurance plan can be an option of financial security for people of different ages. However, it is better to understand who should buy a life insurance policy and how much should invest at each stage of your life in order to make an informed decision of how the insurance can benefit you. Also, it is important to understand the amount you invest and the returns you earn vary from one age group to another. Moreover, the benefits that come along with the plan can help you in different ways at a different phase of life.
One the ones who have started with new families
For people who are planning for starting with a family or already have too young kids, life insurance is an apt pick to secure their child’s future. It acts as a security treasure to overcome the future expenses of their kids.
The amount which is received from this life insurance plan can help to cover any immediate expenses after death. Some emergency situations such as debts, loans, other expenses can be covered with the amount received.
People nowadays prefer insuring both the parents even if one parent is not working full time as this money adds value in handling other expenses and ensuring financial stability.
Helps single parents in handling expenses in case of emergencies
Handling both work and family is a very challenging task for single parents as you have to play the role of both the parents and at the same time.
What if the single parent goes through some unforeseen situation or something happens to the parent?
Life Insurance acts as a rescue under such stressful situations.
By opting for a life insurance policy, the parents can be assured of handling the expenses with the amount one receives through this plan.
Also, this plan can act as a source of income for single parents, if the parent is not working or couldn’t work due to any circumstances.
For Families with Grown Children
As the children grow up there are added responsibilities of getting the child married, expenses of higher education, and many more. Life insurance plan can be a source of income to handle a number of expenses at various functions.
Also, if you are the breadwinner of the family and you lose your life due to any unpredictable situation, then this insurance plan can help your children to pay the tuition fees, or can help your partner to get your child married or can even help as an immediate income in case of emergency of any of the family member. This plan can also help the children to recover their educational loans if any or invest in some courses if they are looking to opt for. It can also help the partner if he or she retires or loses income due to any situation. The amount can also be used for investment as it will help maximize the existing investments.
Types of Life Insurance
There are two basic types of life insurance; the first one is the traditional whole life insurance plan and the other one is the term life insurance plan. Under the whole life insurance plan, the insured has to pay until his or her death; on the other hand, the term life insurance plan is for a specified time span.
As you scroll down the page, you will find some of the basic types of life insurance plan in India.
1. Term Insurance
The term insurance plan is one of the most basic types of life insurance plan. It is one of the easiest and simplest plans to understand. Moreover, it comes with economical premium rates that add to its plus factor. This plan provides life cover with no saving or profits components.
Talking about the online term insurance plans, this plan provides pure risk cover with low premium rates. In case of the death of the insured during the policy term, the sum assured is paid to the dependant (beneficiaries). However, if the insured survives there won’t be any payout.
However, one can enhance this plan by adding riders to its current plan; this will help to increase the coverage of the plan.
Also, these days there are certain insurers that offer Term Plans with Return of Premiums (TROPs) wherein the insurance companies pay back all the premiums if the life assured outlives the term period. However, such plans might be a little expensive than the plain term insurance plan.
Let us take an example to understand this plan better. Suppose, Rajesh who is 27 years old opt for a term insurance plan with a sum assured of Rs. 1 crore. Under this case, Rajesh will have to pay premiums annually in the range of Rs. 6,000 to Rs. 12,000 depending on the plan and riders he opts for.
There are certain benefits to this term insurance plan. This includes:
• Offers financial support to the family in the insured’s absence
• Comes with unchanged renewal premiums
• There is no surrender value under this plan
• The policy is valid for a specific term
• Comes with high coverage in low premium rates
• One of the pure insurance products
2. Unit Linked Insurance Plan (ULIP)
A comprehensive amalgamation of insurance and investment is the unit-linked insurance plan. Under this plan, the premium is partly used as a risk cover and partly is invested in funds.
If you wish to invest in such a plan you can invest in different funds offered by the insurance company depending on your budget and risk appetite.
One of the distinct features of this plan is that this plan differs from other traditional endowment plans in some ways. The performance of this plan is linked to markets. Here, the individuals have the option to choose the allocations for investments in stock, debts, equities etc. The Unit Linked Insurance plan is a combination of investment and insurance, on the other hand, the mutual funds are a pure investment avenue.
One of the key features of the Unit Linked Insurance Plan is that the plan comes with a much more flexible option for investment.
Some of the benefits of the Unit Linked Insurance include:
• The plan is the best option for long term wealth creation
• It comes with guaranteed capital returns
• The plan comes with flexible options are per your risk appetite
• Offers better returns
• It helps in balancing portfolios
• The plan is a mixture of investment and insurance products
3. Whole Life
One of the key features of the whole life insurance policy is that it covers the insured for the entire life. Here, the validity of the plan is not defined and hence individuals can enjoy the life cover throughout life. Under this plan, the policyholder pays regular premiums till his death, upon which the corpus is paid out to the family.
For the whole life insurance plan, the coverage or the sum assured is decided while buying the policy. This amount is paid to the nominee during the death claim of the insured with bonuses if any.
Suppose if the insured outlives 100 years, the insurer pays the matured endowment coverage to the life insured.
Although the premiums of the whole life insurance plan are quite higher, this plan offers partial withdrawals after the completion of the premium payment term.
This plan is best for entire life coverage. Also, it comes with lifelong protection to the insured and an opportunity to leave behind a legacy for heirs.
Benefits of the whole life insurance plan include:
• It offers entire life coverage
• The maturity age for this plan is till 100 years
• It comes with healthy returns
• The plan features guaranteed sum assured
• Comes with the death benefit
• The option of partial withdrawal
4. Money Back
The money back life insurance is a variant of the endowment plan. The plan gives periodic payments over the policy term. In this plan, a portion of the sum assured is paid out at regular intervals. Also, if the insured survives the term, he gets the balance sum assured and if the insured dies during the term plan, the beneficiary gets the whole sum assured.
This plan is best known for short term investment product to meet short term financial goals. Some of the benefits of this plan include:
• The plan comes with whole life coverage
• Features death benefit
• Comes with partial withdrawal
• The plan comes with maturity age till 100 years
• Offers healthy returns
• Guaranteed sum assured
5. Child Plan
The child insurance plan offers financial coverage to secure your kid’s future needs and help you to ensure that your child’s future is not compromised owing to other responsibilities or expenses or situations.
The child plan helps to secure your child at different stages and gives you a lump sum amount at the end of the policy which can help you to cover your child’s higher education, child’s marriage or other expenses.
One of the best features of this plan is that you get the flexibility of planning around the plan at various stages of your child’s growth. In addition to this, the partial withdrawals allow you to withdraw money to meet your child’s needs or for educational purposes.
This plan is best for parents especially for single parents as it does not allow your child to suffer in terms of finance and ensures that your child receives the best.
Below are some of the common benefits of this plan:
• Provides financial coverage to your child’s future needs
• Life cover for the child
• Death benefit
• Maturity benefits
• Riders can help enhance the plan
• Fulfils your child’s future investment
• Waiver of premium rider
• Partial withdrawals are allowed
• Plan can be planned as and when required
6. Endowment Plan
One of the distinct features of the endowment plan is that this plan pays out the sum assured along with the profits during both the survival and the death stage. This plan charges a higher premium which is invested in debt and equity.
The policies come with both “with profit” and ‘without profit” plans. Under this plan, the bonus for the full term is payable during the maturity date or during the death whichever is earlier.
Premiums can either be paid to shorter-term or can be paid as a single premium. The premiums cease either on death or on expiry of the term depending on which one is earlier.
The three types of endowment plans include unit linked endowment, full endowment and low-cost endowment. One can select as per one’s needs and preferences.
Few of the benefits of the endowment plan include:
• Serves as a long term investment
• Pays a lump sum amount at the end of the policy term
• Offers the cover during the term of the policy
7. Retirement Plan
The retirement plan is a perk for your retirement days. There are various plans already available in the market but what makes this plan stand out from the rest is the distinct benefits, exclusions, features and also fulfills your future retirement requirements.
Here, the sum assured is divided into two main parts. The first is the accumulation where the insured pays the premium whereas on the other hand the second which is referred to as distribution.
What are Riders in Life Insurance Plan?
You can enhance your life insurance plan by adding it with additional riders. These riders come with benefits that can suit your distinct or unique needs. There are some riders which can really enhance your overall vanilla plan and help you some really good added benefits.
Some of such riders include:
• Critical Illness Rider
There are certain critical illnesses such as heart attack, cancer, kidney failure etc which are usually not covered in the normal life insurance plans. Moreover, the medical expenses behind this critical illness are huge and can put you under tremendous debts or financial instability.
Hence, it is highly recommended to be prepared for such situations in order to suffer any financial challenges. Moreover, such a plan offers you the peace of mind and let you focus on the treatment process. The critical illness rider offers you a lump sum amount that can be availed if the insured is diagnosed with any sort of illness.
• Accidental Death Rider
If the insured passes away due to an accident, the insured’s family get the amount as mentioned in the plan under this rider. The additional amount which is offered to the beneficiary by such riders enables the family to meet both short and long term financial objectives.
Moreover, the plan acts as emotional support and saves the family from an impending debt burden.
• Income Benefit Rider
Under the income benefit rider, the insured’s family gets a reliable and steady source of income after her or his demise. Also, this rider is best for the insured who is the breadwinner of the family as the rider helps to overcome the financial stress and instability thereby securing their lives.
• Waiver of Premium Rider
If there arises a situation wherein the policyholder dies or incurs disability and is not in a state to pay the premiums (where the insured and policyholder are different). this rider prevents the life insurance policy from lapsing and ensures that the policyholder can avail the pre-decided maturity benefits.
• Partial and Permanent Disability Rider
Life comes with loads of surprises and those can always be not good. Hence, one needs to be well prepared to face situations.
A partial or permanent disability rider serves as a most wanted financial support for the policyholder and his/her family when there is a lack of a steady source of income due to the disability.
It is recommended to go with this rider as per your needs and research well before adding this under your plan.
Life Insurance Policy Exclusions
There are many benefits which come along with the life insurance plan; however, it is also important to understand there are certain factors which are not covered under this plan.
The insurance company pays the sum assured when the insured pays the premium regularly. However, this happens only during the occurrence of an insured event; not all situations are covered in a life insurance plan. The insurance provider would examine in case of unnatural death of a policyholder. The sum assured is not paid if a death occurs due to any of the below reasons:
• Participation of the insured in any dangerous activity
• Participation in a criminal act
• Due to pregnancy or childbirth
• Due to war
• Due to self-inflicted injuries or suicide
• Consumption of any kind of drugs, alcohol or any intoxicating stuff
• Due to pre-existing diseases
• Excessive smoking leading to lifestyle diseases
How to Buy Life Insurance Policy Online
There are two different way of buying the life insurance plan, one is through the online mode whereas another is through the offline mode.
In India, buying an insurance plan online is the most convenient way of buying an insurance plan. You can find the best fit by visiting the online portal of the respective insurance company or by logging into a web aggregator online portal/insurance broker just at the comfort of your house.
The process of buying online life insurance might vary from one insurer to another; however, the below-mentioned steps are the most common ones:
• Log on to the company website
• Enter the sum assured
• Choose the policy term you wish to pay the premiums for
• Choose the premium paying term (it could be monthly, quarterly, half-yearly or annually depending on the type of plan you opt for)
• You will see the premium amount based on your inputs
• Select your bank to make the premium payment
• You will see an acknowledgement on a successful transaction
• Within a period of usually three weeks, the insurer will come back to you on whether or not your insurance policy has been approved by its underwriting team
• Subject to approval you will receive a soft copy of the policy which will be followed by a hard copy
This process is the most convenient and the fewer clicks and website speed, the better the experience. The lesser the number of clicks necessary to buy insurance, the simpler it becomes for users. And slow website speed with higher response time while navigating to the bank website for premium payment, can be a turn-off.
Benefits of Buying Life Insurance Online
Buying a life insurance plan is the easiest and efficient way as it saves a lot of times and efforts. Moreover, you can find the best pick that suits your requirement just by resting on the couch.
Some of the benefits of buying life insurance online are:
• An easy and convenient way to buy
• The option of comparing with various plans offered by different insurers
• Saves on time
• Saves on money (no underlying agent commissions)
• Quick procedure
• Quick payment option
• Hassle-free claim settlements
• Reviews on various plans
• Reaching out to a brand
• No fraud
• Claim settlement ratio
Apply for a Life Insurance Plan Offline
For someone, who is not comfortable with the online method can go with the offline mode of buying the life insurance plan. Through this mode, you can simply download the form and fill the required details along with the necessary documents and submit them to the insurer company.
If you are the one who is not comfortable with buying the insurance policy online, then you can check the details online and clarify your doubts and queries by calling to the insurer or online broker/web aggregator in their toll-free number. Once your doubts are clarified you will be in a better position to make an informed decision.
Life Insurance Claim Process
If the insured dies during the policy term due to any unforeseen situation, your beneficiary or beneficiaries can claim for your life insurance policy. In such cases, this kind of claim can be either be a ‘death claim’ or a ‘life insurance claim’. If it is a death claim, the insured’s family member or family member must inform the insurer about the death.
There are certain documents which are required to be submitted during the claim process:
• Completely filled the claim form
• Death certificate of the insured
• Post-mortem report
• Police inquiry report
• Identity proof of beneficiary or beneficiaries
• Age proof of the policyholder
• Life insurance policy details
• Assignment deeds
• Legal evidence of title in case the policy is not nominated
• Medical reports and doctors certificate
Why Life Insurance Claim can get rejected?
One must ensure that while buying the life insurance policy, she or he must avoid making any errors during the time of the proposal form. As any mistake made from your end might hamper the life insurance claim. Some of the common reasons for getting your life insurance claim rejected are listed below:
• Hiding information about pre-existing diseases.
• Delay in claim filing
• Providing incorrect information
• Hiding lifestyle or family information
• If your policy gets lapsed
Hence, once must be vigilant to provide all the required and correct information to the insured prior in order to avoid any unpleasant surprises during the claim process.
Life Insurance Tax Benefits
By opting for a life insurance plan, you can save on taxes in a number of ways.
1. Tax Deductions on Premiums Paid for a Life Insurance Policy under Section 80C
Under this, the insured can avail tax benefits on premiums paid for a life insurance policy. Tax deduction under Section 80C of the Income Tax Act, 1961, allows exemption up to Rs.1.5 lakh per annum.
You can claim deductions for premiums paid towards life insurance policies of yourself, your spouse or your dependent children
2. Tax Deductions on Payouts of a Life Insurance Policy under Section 10(10D)
The Life insurance payouts received as a death benefit to the nominee or on maturity as a survival benefit to the insured, including bonuses if any is exempted from tax under Section 10 (10D) of the Income Tax Act, 1961.
3. Tax Deductions on Premiums Paid for Life Insurance under Section 80D
Under Section 80D of the Income Tax Act, 1961 allows tax benefits on health insurance premium. If your plan has add-on cover such as Critical Illness Rider, Surgical Care Rider, Hospital Care Rider, etc. or any health-related built up you can avail tax benefits.
You can claim deductions for premiums paid towards health insurance policies of yourself, your spouse, your dependent children and parents (whether dependent or not).
Handpicked Guide to Buy Right Life Insurance Plan at the Right Time
There are a number of insurance companies offering a life insurance policy. Selecting the best one could be very difficult especially when you have multiple options available. Here are certain questions which you must ask yourself before opting for any insurance plan:
• Which Life Insurance plan suits your need?
• What is the purpose behind buying the plan (child’s marriage, retirement, child’s education etc)?
• What period of Coverage should you choose?
• Why Should You Purchase Life Insurance?
• What is the right time to buy the life insurance plan (when you are a young professional, newly married, a young parent, or nearing retirement)
These questions will help you to pick the plan as per your need. Also, there are certain online calculators which will assist in finding the premiums as per your desired amount and time duration.
In addition to this, one of the most common questions is whether a disabled person buys Life Insurance?
A disabled can purchase life insurance; however, there are certain factors that need to be considered.
1. You will have to submit documents to establish their paid employment and the number of dependents)
2. There are insurers that ask the individuals to undergo medical evaluations to calculate the premium the disabled individual may need to pay for the life coverage
What Happens on Cancelling a Life Insurance Policy?
If anytime in the mid of your policy tenure, you cancel your life insurance policy it will only lead to wastage of your hard-earned money. People usually go with the term insurance plan which offers benefits to the beneficiary by paying either the complete amount or partial amount after the demise of the policyholder provided the insured dies during the term of the policy.
If you plan to cancel the policy during the term of the policy, it is sure that you won’t receive any money for all your paid premiums. On the other hand, a whole life insurance policy is quite different as there is no investment factor associated with it. In simple words, a term life insurance policy is an inexpensive and simple choice.
In case you cancel or discontinue a life insurance policy, it completely depends on you. However, it is highly suggested that you find another alternative instead of terminating your policy.
If there are situations wherein you find it hard to pay the premiums, all you can do is speak to the concerned company and opt for a cheaper policy or find out other ways to help yourself. If you come across the thought of quitting the plan, focus on the reason why you opted for a life insurance cover at the first place.
How to Cancel Life Insurance Policy?
There can be certain circumstances or situation wherein the insured feels the need to cancel the life insurance policy. Under such cases, the insured can contact the insurance provider and tell him about his or her reasons for cancelling the life insurance plan. Generally, the insurer offers alternate options and solutions as of how one can handle the situation and avoid such cancellations. Even after this, if the insurer wishes to cancel the policy, all they can do is download the cancellation form from the online website and fill up the required details.
After the submission of the cancellation form, the insurer will start the process of cancellation of the policy. There would be no refunds if the policy is cancelled outside the cooling-off period.
How to get Life Insurance of 1 crore sum assured (Explain Term Insurance: with 1 crore cover and requires least premium payment)
There are certain factors that you must consider before buying a plan insurance plan of Rs.1 crore. This includes how many of would be you able to earn and save Rs. 1 crore in life? This method could be a good option/way to ensure you can leave something for your loved ones so that they are financially independent. However, with the increasing Inflation would Rs. 1 crore be a sufficient amount?
Moreover, the coverage or the sum assured is basically limited to 20-25 times of your annual income. If your income is not eligible to get a cover of Rs. 1 crore, you can opt for Rs.50 Lakhs or Rs. 75 Lakhs and later when your income increases, you can increase term life cover by opting to another optimum policy.
Top Life Insurance Plans in India (2019)
1. Life Insurance Corporation of India Statistics:
This company is one of the oldest state-owned insurance company in India.
• Total individual death claims for year 2017-18: 98.04%.
• Total premium collected for year 2017-18: Rs.318223.21 crore.
• Total linked premium collected for 2017-18: Rs.889.75 crore.
• Total non-linked premium collected during the year 2017-18: Rs.317333.46 crore.
This company offers 15% discount and other benefits at leading restaurants across India. The total new business premium collected by LIC during the year 2017-18 stands at Rs.134671.70 crore.
2. ICICI Prudential Life Insurance
The ICICI Prudential Life Insurance is one of the most widely recognized insurance companies operating in India in today’s date.
For year 2017-18:
• Total individual death claims: 97.88%.
• Total premium collected: Rs.27068.77 crore.
• Total linked premium collected: Rs.20387.49 crore.
• Total non-linked premium collected: Rs.6681.28 crore.
ICICI Prudential Life Insurance usually offers 15% discount and other benefits at leading restaurants across India. The total new business premium collected by ICICI Prudential during the year 2017-18 stands at Rs.9211.75 crore.
SBI Life Insurance Statistics
The SBI Life Insurance is responsible for providing life insurance policies to more than a million Indians in today’s date.
For year 2017-18:
• Total individual death claims: 96.76%
• Total linked premium collected: Rs.14114.43 crore
• Total premium collected: Rs.25354.19 crore.
• Total non-linked premium collected: Rs.11239.76 crore.
• Total new business premium collected: Rs.10966.14 crore.
HDFC Standard Life Insurance Statistics
The HDFC Standard Life Insurance is a highly reputed private insurance company operating in India today.
For year 2017-18:
• Total individual death claims: 97.80%.
• Total premium collected: Rs.23564.41 crore.
• Total linked premium collected: Rs.10267.91 crore.
• Total non-linked premium collected by: Rs.13296.50 crore.
• Total new business premium collected: Rs.11349.61 crore.
Max Life Insurance Statistics
The Max Life Insurance is a well-known general insurance company currently offering policies to millions of Indians.
For year 2017-18:
• Total individual death claims: 98.26%
• Total premium collected: Rs.12500.89 crore
• Total linked premium collected: Rs.3562.48 crore
• Total non-linked premium collected: Rs.8938.42 crore
• Total new business premium collected: Rs.4348.59 crore
Bajaj Allianz Life Insurance Statistics
The company is a well-known and reputed that provides the best deals on policies.
For year 2017-18:
• Total individual death claims: 92.04%.
• Total premium collected: Rs.7,578.37 crore
• Total linked premium collected: Rs.2,950.88 crore
• Total non-linked premium collected: Rs.4,627.49 crore
• Total new business premium collected: Rs.4,291.14 crore
Kotak Mahindra Life Insurance Statistics
One of the leading insurance companies which is currently operating in India with millions of customers is the Kotak Mahindra Life Insurance
For year 2017-18:
• Total individual death claims: 3.72%.
• Total premium collected: Rs. 6,598.67 crores.
• Total linked premium collected: Rs.2,309.27 crore
• Total non-linked premium collected: Rs.4,289.41 crore
• Total new business premium collected: Rs.3,404.21 crore
Tata AIA Life Insurance Statistics
The Tata AIA Life Insurance is responsible for providing comprehensive life covers to more than a million people in India in today’s date.
For year 2017-18:
• Total Individual death claims: 98.00%.
• Total premium collected: Rs.4,162.95 crore.
• Total linked premium collected: Rs.1,313.55 crore
• Total non-linked premium collected: Rs.2,849.40 crore
• Total business premium collected: Rs.1,488.42 crore
Life Insurance Calculator: Compare Premiums Online
Generally, the premium rates of life insurance policies might vary from one insurer to another. Also, factors such as age of the applicant, their income, sum assured, etc have a huge impact on the cost of the premiums. As we know, the cost is a major factor of determining the right policy, it is vital to know the premium rates before buying a plan.
The premium calculators are one of the most handy and efficient tool provided by most insurers. With the help of this tool, the customers can get an accurate quote on their desired plan by just entering a few basic details. Many insurance companies offer premium calculators on their website. Also, the best part is you can compare the policy at the comfort of your house.
Individual Life Insurance vs. Group Life Insurance
Individual Life Insurance
Individual Life Insurance is a policy that is owned by the individual and can be taken with you into retirement. Here, the payment rate is based on your age at the time of application. The premiums might be quite higher at the beginning, however, they do not increase due to age, nor does your coverage reduce due to age.
One of the potential ways of saving money with this plan is to keep it for a considerable number of years. So it’s ideal to purchase individual life insurance earlier on when the premiums are affordable, and then keep it into retirement.
Also, the best part is you do not have to apply for coverage in order to apply for a spouse, child or grandchild policy. The insurer cannot cancel your policy unless you stop paying the premium or else it can cancel the plan.]
Group Term Life Insurance
This life insurance policy is intended to last during your working years only. It is a policy that is not an individual contract but one that is owned by your employer and you will be covered if you are eligible for it.
Even though the plan inexpensive initially, your costs increase at each new attained age bracket which is typically every 5 years which means that your premium rates will increase as you grow older.
The plan comes with low cost and higher benefit amounts, however, the exception is that it is only present in your working years. There can be a reduction of benefits reach a certain age which is around 60 to 70 years of age.
A group contract can be either cancelled by the insurance company or by your employer. If you leave the job, the coverage of the plan will also stop at the same time.
There are certain policies offered by insurers which come with portability options but contain exclusions or restrictions and premiums will increase. The option ends when you reach a certain age, and your coverage will cancel at that time. Some group policies have the conversion to individual whole life, if available. However, premiums will increase significantly, so this option can often be unaffordable.
Claim Settlement Ratio in Life Insurance?
The claim settlement ratio of an insurer is defined as the number of claims settled against the number of claims filed. The higher value of the ratio, the better is the insurer. This value helps you to check the credibility of the insurer.
As per the IRDAI Report on Insurers’ Claim Settlement Ratio, the following table shows the claim settlement ratio of life insurers for the FY 2017-18:
Number of Claims Filed
Claim Settlement Ratio 2017-18
LIC of India
Tata AIA Life
HDFC Standard Life
Bharti Axa Life
DHFL Pramerica Life
Aditya Birla Sun Life
Edelweiss Tokio Life
ICICI Prudential Life
Reliance Nippon Life
Kotak Mahindra Life
Future Generali Life
Star Union Daichi Life
Bajaj Allianz Life
PNB Met Life
IDBI Federal Life
Life Insurance for an NRI
You can purchase life insurance plans which are designed specifically for people who reside outside India if you are a non-resident Indian (NRI).
This plan will help you to secure the future of your loved ones and protect them in your absence.
The plan has been a traditional investment in India.
There are certain factors which you need to consider before buying a life insurance policy you need to be aware of the following:
• A person of Indian origin or an NRI are allowed to take life insurance policy in India.
• You needn’t be present in India during the policy purchase, written communication is sufficient.
• The report needs to be sent to the insurance company in India.
• The medical test needs to be taken care of by the NRI himself if the test were done in India the cost would’ve been inbuilt with the policy.
• Premiums are higher if the insured is living in a high-risk country.
• The plan covers death occurring anywhere in the world
• The policies can be issued in denomination of the foreign currency and the premiums are collected out of NRE/FCNR accounts of the insured or of the insured family members held in India. All companies do not offer foreign currency-denominated policies.
• For the policies issues in Indian currency, the premiums are paid through the funds held in NRO accounts.
• There might be a certain additional cost and a medical examination needs to be done and the
• Maturity and death proceeds are repatriable to the extent of premium being paid in foreign currency. If the premiums are paid in Indian currency, the death and maturity proceeds are not repatriable.
• There is a good chance that the cost of the policy is cheaper in the country of residence.
Some of the examples of such companies include Max Life Insurance, Birla Sun Life Insurance and Kotak Life Insurance
Life Insurance FAQs
Most frequent questions and answers about life insurance
1. Basic Life Insurance Terminologies (Two lines for each. Refer:
• Life assured:
The life assured is the insured person, the one for whom the life insurance plan is purchased to cover the risk of untimely death. Life assured may or may not be the policyholder.
• Sum assured (coverage):
Sum assured is the term used for an amount that the insurer agrees to pay on death of the insured person or occurrence of any other insured event.
You may come across the term ‘sum assured’ at the time of comparing policies online when buying a life insurance plan, and in the policy document. The sum assured is chosen by the policyholder at the time of purchase.
The policyholder is the one who proposes the purchase of the life insurance policy and pays the premium. The policyholder is the owner of the policy and may or may not be the life assured.
Nominee is the person (legal heir) nominated by the policyholder to whom the sum assured and other benefits will be paid by the life insurance company in case of an unfortunate eventuality. The nominee could be the wife, child, parents, etc. of the policyholder.
• Policy tenure:
Policy tenure is the duration for which the policy provides life insurance coverage. The policy tenure can be any period ranging from 1 year to 100 years or whole life, depending on the type of life insurance plan and its terms and conditions. Many times, it is also referred to as policy term or policy duration.
• Maturity age:
Maturity age is the age of the life assured at which the policy ends or terminates. This is similar to policy tenure, but a different way to say how long the plan will be in force. Basically, the insurer declares the maximum age till which the life insurance coverage will be provided to the life insured.
The premium is the amount you pay to keep the life insurance plan active and enjoy continued coverage. The policy might terminate if you are fail to pay the premium before the payment due date and even during the grace period.
Riders are an additional paid-up feature to widen up the scope of the base life insurance policy. Riders are bought at the time of purchase or on the policy anniversary. There are different types of riders that can be bought along with the base plan. However, the number and type of riders will differ from insurer to insurer.
• Death Benefit:
You will come across ‘Death Benefit’ quite frequently whenever you are either planning to buy a life insurance plan or comparing different insurance plans online.
The ‘Death Benefit’ is what life insurance company pays to the nominee in case the life assured dies during the policy tenure.
• Survival/Maturity Benefit:
Maturity benefit is the amount that the life insurance company pays when the life assured outlives the policy tenure. Survival benefit is paid when the life assured completes the pre-defined number of years under the policy.
There is no survival or maturity benefit in term plans. However, in other life insurance policies, you may find survival benefit or the maturity benefit paid under the plan.
• Free-look Period:
It is applicable to all new life insurance policies purchased. Free-look period is a time frame during which one may choose to return the purchased policy.
If you are not comfortable with the terms and conditions, you can return the policy within the Free-look period. The insurance company after deducting the expenses incurred on medical examination, stamp duty charges and other charges will refund the remaining premium.
• Surrender Value:
If the policyholder decides to discontinue the plan before the maturity age, the life insurance company pays an amount to the policyholder, this is called Surrender Value. But you must clearly read the terms and conditions whether a plan offers any surrender value or not.
Before you buy any life insurance, read ‘Exclusions’ carefully. These are things that are not covered under a life insurance policy, and against which if claimed, the insurance company wouldn’t pay any benefit. For instance, Suicide is exclusion in any life insurance plan.
• Claim Process:
In case, the life assured passes away during the policy tenure, the nominee needs to lodge a claim to receive the death benefit as mentioned in the policy.
• Revival Period:
If the policyholder wants to continue after the policy lapses, the insurance company provides an option of re-activating the lapsed policy. This must be done within a specific period of time after the grace period ends. This specified period is known as a revival period.
• Tax benefits:
All the premiums paid towards the life insurance plan are eligible for deductions under Section 80 (C) of Income Tax Act, 1961. The maximum amount that one can claim as a deductible is Rs.1.5 lakh. The benefits paid to the policyholder/nominee are tax-free under Section 10 (10D) of Income Tax Act, 1961.