Secure Your Future and Your Loved Ones with Life Insurance. Learn about various Life policies, Tax Benefits & coverage options.
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A life insurance policy is a contract-based promise established between the policyholder, who is the insured individual, and the insurer. Under this agreement, the policyholder is required to make periodic premium payments to the insurer. In return for these premiums, the insurer commits to providing a sum of money, known as the death benefit, to the beneficiary chosen by the policyholder, in case of the policyholder's demise.
The primary purpose of life insurance is to secure the financial well-being of the policyholder's family after their passing. This financial protection can be utilised to cover various expenses, such as paying for funeral costs, clearing loans, and other ongoing living expenses.
Life insurance policies come in different types, with Whole Life and Term Life being prominent options. In the case of Term Life insurance, coverage is provided for a predetermined term. If the insured person passes away during this period, the selected beneficiaries receive the death benefit. However, if the person survives beyond the term, no payout is made. On the other hand, Whole Life insurance offers a cover for the entire life of the insured person, and regular premiums are paid by the policyholder throughout their lifetime.
Life insurance operates on a simple concept.
When you purchase a life insurance policy, you enter into a contract with an insurance company.
In this contract, you agree to pay regular premiums for the duration of the policy.
In return, the insurance company promises to pay a lump sum amount, known as the death benefit, to your beneficiaries if you pass away during the policy term.
Meet Mr. Kumar, a 35-year-old married man with two young children. Concerned about the financial well-being of his family in case of his untimely demise, Mr. Kumar decided to go for a Term Life Insurance policy.
Choosing the right policy: Mr. Kumar assesses his family's needs, including outstanding debts, future financial goals, and his children's education expenses. Based on his analysis, he decided to opt for a Term Life insurance policy with a coverage amount of INR 1 crore and a policy term of 25 years.
Premium payments: The insurance company calculates Mr. Kumar's premium based on various factors, such as his age, health condition, lifestyle, and the chosen coverage amount. He chooses to pay an annual premium of INR 10,000.
Coverage period: In this scenario, Mr. Kumar's policy is valid for 25 years. If he passes away during this period, his chosen beneficiaries, typically his wife and children, will receive INR 1 crore.
Peace of mind: With the life insurance policy in place, Mr. Kumar gains peace of mind, knowing that his family will be financially secure even if he is no longer around to support them.
Here’s a list of different types of life insurance policies in India.
Here, the policyholder pays a fixed premium for a specific term. If the policyholder does not survive this period, the insurer offers the death benefit to the assigned beneficiary. However, if the insured person survives the policy term, they do not receive any payout. This type of life insurance plan is the most straightforward and cost-effective option available.
Under this type of policy, the policyholder makes consistent premium payments throughout their lifetime in exchange for lifetime coverage. Upon the policyholder's passing, the designated beneficiary receives the death benefit as per the terms of the policy.
This plan offers both savings and financial support. Throughout the policy tenure, the policyholder pays regular premiums. If the insured person survives the policy duration, the insurer pays a lump sum amount at the end of the term. However, if the policyholder passes away before the maturity date, the designated beneficiaries will receive the death benefit.
ULIPs provide a combination of investment opportunities and life insurance coverage. The policyholder's premium payments are allocated to different funds, which they can choose according to their investment goals and risk tolerance.
This type of policy focuses on the pension element. Throughout their working career, the insured pays regular premiums, and after retirement, the insurance company provides the policyholder with a consistent income. In the event of the policyholder's demise, either before or after retirement, the designated beneficiaries will receive the death benefit.
In this type of policy, premiums are refunded when the policy term ends. Thus, it comes with survival benefits and can be an inclusion in some other type of plan as well.
At ACKO, we understand that discussing life insurance can be a serious matter, but we're here to make it as easy and smooth as possible. Our Flexi Life Insurance Plan offers death benefits and the flexibility to customise the plan to suit your unique needs and preferences. Let's take a look at the details of ACKO Flexi Life Insurance Plan.
The features of a life insurance policy refer to the benefits you receive for buying the insurance policy. The ACKO Flexi Life Plan has the following features.
Death benefit The amount of death benefit your loved ones will receive, depends on the sum assured you choose while buying your ACKO Flexi Life Plan. As the name suggests, the death benefit will be paid when you face the most unfortunate event. This sum can help your family build a better and a financially stable future for themselves, without depending upon loans or asking for financial help from other people.
Flexi Coverage Benefit
We understand that buying a life insurance policy is a long-term commitment. ACKO will be associated with you throughout major changes that happen in your life. We want you to get the best life insurance coverage in every situation of your life. Thus we have introduced the Flexi Coverage Benefit. Under this benefit, you have the option to change certain parameters of your life insurance plan. Here are the details.
Sum assured: You can increase or decrease the sum assured of this plan as per your requirement. For example, you get a promotion at work, and now you earn more. You can increase the sum assured of your plan as you can afford a higher premium for that added protection.
Policy term: As life progresses, you may realise that you need to either increase or decrease the policy duration of your life insurance plan. The Flexi Benefit helps you add a layer of customization to the policy duration.
Payment frequency: You can change the frequency of premium payments as per needs. We have four options: monthly, quarterly, half-yearly, and yearly. You can switch between these options as necessary by notifying us about the change.
Payout options: If you are in charge of how the claim amount will be disbursed to your nominee. You can choose between lump sum or monthly payments.
Will creation services
When you have a life insurance policy, it means you're thinking about your family's or beneficiaries' financial well-being after you're no longer around. This is where the will comes in handy. With ACKO Flexi Life Plan, we will help you create a will. We can help you with guidance on how to draft it, connect you with legal experts, or offer templates to make the process easier.
When you create a will with the help of these services, you can specify who should receive the proceeds from your life insurance policy. This ensures that your loved ones get the financial support you intended for them.
Life insurance riders are very helpful for enhancing the coverage of your insurance policy. At ACKO, we offer some of the most useful add-on riders that can help extend the scope of your life insurance plan. Here are the details.
Accidental Death Rider
An Accidental Death Rider is like an extra layer of protection you can add to your regular life insurance policy. It's like having a safety net for unexpected accidents. Here's how it works:
Life Insurance Policy without the Accidental Death Rider: Your regular life insurance policy pays out a sum of money to your family or beneficiaries if you pass away due to natural causes, like illness or old age.
Accidental Death Rider Benefit: Now, when you add the Accidental Death Rider to your policy, it means that if you were to meet with an accident and unfortunately lose your life because of it, your family would receive an additional amount of money on top of what your regular policy covers.
This extra money from the Accidental Death Rider can be really helpful for your family during a tough time. It can help them with immediate expenses, like medical bills or funeral costs, and it can also provide some financial support for the future, like paying off loans or helping with daily expenses.
Critical Illness Rider
If you get really sick with a specific serious illness (like cancer, heart disease, or stroke), the rider kicks in. It pays you a lump sum of money, kind of like a bonus, to help cover your medical bills and other expenses while you're fighting the illness.
Accidental Total Permanent Disability Rider
A basic life insurance policy pays if something happens to you. Here your family gets the death benefit to help them financially. But what if you also want to make sure you're covered if you have a terrible accident that leaves you permanently disabled and unable to work? That's where ACKO's Accidental Total Permanent Disability (ATPD) rider comes in. The ATPD rider is like an extra layer of protection you can add to your regular life insurance policy. It's like having a safety net for accidents. Let's break the Accidental Total Permanent Disability rider for better understanding.
Accidental: This part of the rider means that the disability must happen because of an accident, not an illness. So, if you're in a car crash or something similar, and it leaves you disabled, the ATPD rider kicks in.
Total Permanent Disability: This is the key part. "Total" means that your disability is so severe that you can't work anymore. "Permanent" means it's not something that will get better over time. It's long-lasting or forever. For example, if you lose a hand or become paralyzed due to the accident, that could be considered a total permanent disability. We do understand that discussing this is not the easiest thing. But being prepared for the worst is the only way of ensuring a financially stable future for your loved ones.
So, if you have the ATPD rider, and you meet these conditions because of an accident, you can make a claim. This money can be really helpful because you may need it for medical bills, rehabilitation, or just to cover your regular expenses since you can't work anymore.
Here’s a table designed to provide you with a snapshot of different Life Insurance Plans in India.
Parameter | Term Plan | Whole Life Plan | Endowment Plan | ULIP | Return of Premium | Pension Plan |
---|---|---|---|---|---|---|
Duration in years | 5 to 85 | Till the time you cross 100 years of age | 5 to 35 | 10 to 20 | 5 to 65 | Entire life |
Availability of maturity benefit | Conditional upon the inclusion of Return of Premium option | Maturity on completing 100 years of age | When policy term ends | When policy term ends | Survival benefit | Income at periodic intervals till policyholder is alive |
Here are some prominent benefits of having a life insurance policy in India.
Life insurance offers financial security to the insured person's family in the event of the policyholder's death. This support can help cover outstanding debts, daily living expenses, children's education, and other financial obligations, ensuring that the family's financial well-being is protected.
Life is unpredictable, and uncertainties are part of life's journey. Having a life insurance policy gives policyholders peace of mind, knowing that their family will be taken care of financially even if they are not around to provide support. This sense of security allows individuals to focus on their daily lives and future goals without worrying about financial uncertainties.
Certain types of life insurance policies, such as Endowment Plans and Whole Life Insurance, come with a savings component. Over time, these policies build cash value, which can be leveraged through policy loans or withdrawals. This accumulated savings can be utilised to meet various financial needs, such as funding a child's higher education or planning for retirement.
Life insurance policies offer tax advantages, making them an attractive investment option. The premiums for life insurance policies are eligible for tax deductions. Additionally, the death benefit received by the beneficiaries is usually tax-free.
Life insurance policies with a savings component can serve as an extra source of income during retirement. Depending upon the chosen policy, the accumulated cash value can be withdrawn or received as regular payouts to supplement retirement income, providing financial independence in the golden years.
Many life insurance policies allow policyholders to avail loans against the cash value of the policy. This loan can be utilised during emergencies or to meet any financial requirements without surrendering the policy.
Business owners can purchase a suitable life insurance policy to financially protect their companies from financial losses in the event of the death of a key employee or business partner.
Life insurance allows individuals to create an inheritance for their heirs and leave a financial legacy for the family’s future.
Apart from the benefits stated in the previous section, here’s why buying life insurance is a good idea.
If you have significant debts, such as a home loan, car loan, or personal loans, the death benefit received by your beneficiaries can be used to pay off these debts, preventing them from inheriting financial liabilities.
Life insurance is a tool to protect your family's future financial goals and aspirations. Whether it's funding your children's education or ensuring a comfortable retirement for your spouse, a life insurance policy provides a way to secure your family's long-term financial well-being.
Life insurance policies come in various types and coverage amounts, making them affordable and accessible to people from all walks of life.
Purchasing life insurance early in life allows you to lock in lower premiums. Premiums tend to increase with age and health conditions, so buying a policy when you are young and healthy can save you money in the long run.
Let's explore the most significant elements that impact the cost of life insurance in India.
Age at the time of purchasing the policy: The age at which an individual purchases a life insurance policy plays a crucial role in determining the premium. Generally, younger policyholders pay lower premiums as they are considered less risky to insure.
Sum assured: The sum assured, which is the amount the insurance company agrees to pay upon the policyholder's death, directly affects the premium. A higher sum assured leads to a higher premium.
Policy term: The policy term, i.e., the duration for which the policy provides coverage, influences the premium amount. Longer policy terms may result in higher premiums.
Type of policy: The type of policy chosen impacts the premium.
Medical history and health condition: Insurers assess the applicant's medical history and current health condition to determine the risk involved. Individuals with pre-existing medical conditions may face higher premiums.
Lifestyle habits: Certain habits, such as smoking or excessive alcohol consumption, can increase the risk factor and, consequently, the premium amount.
Occupation: The nature of the policyholder's occupation is taken into account. For example, individuals in hazardous professions may pay higher premiums.
Family medical history: The presence of a family medical history of hereditary diseases may raise the premium amount.
Rider add-ons: Policyholders can opt for additional riders like critical illness cover or accidental death benefit, which can increase the premium.
Premium payment mode: Whether premiums are paid monthly, quarterly, annually, or as a lump sum, can affect the premium amount.
Geographical location: The city or region where the policyholder resides may influence the premium due to varying risk factors.
Compounding in life insurance refers to the accumulation of bonuses and returns on the policy's sum assured and any accumulated earnings from previous years. As these bonuses and returns are added back to the policy's value, they grow further and generate more returns in subsequent years.
Life insurance is not just about providing a financial safety net to your family in your absence; it is also an investment for the future.
In India, where life insurance policies often come with additional benefits such as annual bonuses, loyalty additions, and compounding growth, understanding the potential returns over the long term becomes crucial.
The power of compounding can significantly increase the payout or maturity amount of a life insurance policy, ensuring your family's financial security in the face of uncertainties.
To fully comprehend the potential growth of a life insurance policy with compounding benefits, an Investment Return Calculator becomes an invaluable tool.
This calculator allows you to input various policy details, such as the sum assured, premium amount, policy term, expected rate of return, and compounding frequency.
By doing so, the calculator provides an estimate of the policy's future value, empowering you to make well-informed decisions and tailor the policy to meet your family's financial goals.
Several life insurance policies in India come with compounding benefits to help policyholders maximise their returns. Some of the most popular options include the following.
Endowment Plans: These plans provide both insurance coverage and savings, allowing the policyholder to build a corpus overtime with bonuses and returns.
Unit-linked Insurance Plans (ULIPs): They offer the flexibility to invest in various market-linked funds while providing life insurance coverage. The compounding effect helps grow the investment component over time.
Whole Life Insurance Plans: These plans offer lifelong coverage and accumulate cash value that grows with time, leading to substantial compounding benefits.
The premium you pay for Term Insurance depends on several factors, including age, sum assured, policy term, health condition, and lifestyle habits. Accurately calculating the premium ensures that you get sufficient coverage without overburdening your finances.
Here’s an example explaining how to calculate Term Insurance premium.
Meet Rahul, a 30-year-old software engineer, who is keen on securing his family's financial future with a Term Insurance plan.
Rahul assesses his family's financial requirements, which include clearing outstanding loans, supporting his children's education, and ensuring a comfortable lifestyle for his family. After thorough consideration, he arrives at a sum assured of INR 2 Crore.
To get an estimated premium amount, Rahul uses an online premium calculator. He inputs his age (30 years), the sum assured (INR 2 Crore), and selects a policy term of 30 years. As Rahul leads a healthy lifestyle without any smoking or alcohol consumption, the calculator provides him with an estimated premium of INR 15,000 per year.
With the estimated premium in mind, Rahul begins comparing various term insurance plans offered by different insurers. He carefully reviews the features, additional riders, and customer reviews to shortlist the plans that align with his needs. After conducting thorough research, he narrows down the choices to a few promising policies, and purchases the most suitable one.
Here’s how you can buy the best life insurance policy that suits your requirements from ACKO via our seamless online process using our website/app.
Step 1: Initiate the purchase journey via the widget on the website/app.
Step 2: Select the plan and coverages.
Step 3: Answer the questions to determine eligibility and premium.
Step 4: Pay the premium online.
Step 5: Receive the policy via email or download it from the app.
Note that this is a generic process, and the exact steps can vary depending upon the chosen plan and other details.
Yes, a lot of insurance providers offer life insurance coverage online. From the convenience of your home, you can compare policies, determine rates, and purchase policies online.
You can add a rider to increase your Life Insurance policy’s coverage. Riders offer extra benefits such as Critical Illness coverage, Disability coverage, Accidental Death compensation, and Premium Waivers.
Yes, several types of Life Insurance plans, including Whole Life and Endowment Policies, let policyholders borrow a loan against them. The loan amount is typically limited to a portion of the policy payout and has an interest charge.
The minimum age to buy a life insurance policy in India is 18 years.
Yes, a person can have multiple life insurance policies in India, subject to the insurer's terms and conditions.
Yes, premiums paid towards life insurance policies are eligible for tax benefits under Section 80C of the Income Tax Act, up to a maximum limit of Rs. 1.5 lakh.
It depends on the age and sum assured of the policy. For higher sum assured or older age, a medical examination may be required.
Yes, many life insurance companies in India offer the option to buy policies online through their websites or mobile apps.
Here are some common questions about Life Insurance Plans in India.
Yes, life insurance is worth considering in India. It provides a safety net for your family, replaces your income, and helps achieve future goals. Premiums are affordable, and there are tax benefits too. It's an investment in your family's security and peace of mind.
To determine your life insurance coverage, consider your family's daily expenses, outstanding debts, future goals, income replacement, and potential medical/funeral costs. Add these up for a good estimate of the sum assured you need to set while buying the policy.
A life insurance premium is the money you pay regularly to your insurance company. It's like a safeguard for your family. If something happens to you, they get financial help.
Here are a few things that you should and should not do during your life insurance journey,
Do's:
Assess Needs: Understand your financial goals.
Compare Plans: Research before choosing.
Know Policy Details: Read and ask questions.
Choose Right Type: Match policy to your goals.
Honest Information: Truthful health and habits.
Pay Premiums On Time: Avoid lapses.
Nominate Beneficiary: Ensure smooth claims.
Review Regularly: Update as life changes.
Don'ts:
Avoid Unnecessary Riders: Choose relevant ones.
No False Information: Be truthful.
Not Just for Tax: Focus on coverage.
Avoid Over-Insuring: Get needed coverage.
Think Before Cancel: Consider implications.
Update Nomination: Reflect life changes.
Renew Timely: Prevent policy lapse.
Supplement Employer's Cover: Get personal policy too.
Keep these tips in mind when navigating life insurance options in India.
Life insurance is super important in India. It's like a safety cushion for your family. If something happens to you, they get money to help with expenses and future plans. It's a way of showing love and responsibility. Plus, it can give you tax benefits. Stay smart, get life insurance!
Yes, in India, life insurance benefits are usually paid as a lump sum amount. This means your loved ones receive a single, larger payment all at once, providing them financial support when needed most.
In an unfortunate event where your life insurance nominee passes away before you, you need to appoint another nominee. You can easily update your nominee by contacting your insurance company. They'll guide you through the process so that your family is financially protected against the worst.
When it comes to life insurance and critical illness cover in India, think of them as different types of protection.
Life insurance helps secure your family's financial future if something happens to you. It gives them a payout to cover expenses.
Critical illness cover, on the other hand, offers a lump sum if you're diagnosed with a major illness. It helps you manage medical costs and recovery.
Having both adds extra security, like having two safety nets. It's a personal choice based on your needs and peace of mind. Chat with a financial advisor to decide what's best for you!
In India, most life insurance companies offer policies up to around 70-80 years old. It's smart to consider it sooner for better rates.
In India, there's no specific limit to how many life insurance policies you can buy. It's up to you and what you need. Just remember, while it's okay to have more than one policy, it's important to choose wisely and consider your budget. If you're unsure, it's a good idea to talk to a financial advisor for guidance.
Here's a quick guide on how to file a life insurance claim in India:
Collect Documents: Gather the policy document, death certificate, and ID proofs.
Notify Insurer: Inform the insurance company about the policyholder's passing.
Get Forms: Obtain claim forms from the company, or download them from their website.
Complete Forms: Fill the forms accurately, including nominee details.
Attach Documents: Submit the forms with death certificate and ID proofs.
Review Process: The company will review the claim and documents.
Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.
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