IN UNIT LINKED POLICIES, INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

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What Is Life Insurance?



Life is beautiful, but also uncertain. We can never predict what could happen the very next moment. In such cases, the financial security of the family becomes most important. One such security medium is life insurance.

 

“Life Insurance” is defined as a financial product that pays you or your dependents a sum of money either after a set period or upon your death as the case may be. In other words, life insurance is an insurance tool or a provision that helps you secure your family’s financial future by getting adequate risk cover for your life. In return, you pay a particular premium amount to the insurance provider and can be rest assured that your family will be financially secured even in your absence.

Benefits of Life Insurance Plans

Financial Coverage
Financial Coverage
In any case of uncertainties, life insurance plans cover you against the unfortunate event of death and provide the entire sum assured to the nominees/beneficiaries of the policyholder. The inner-peace of knowing your loved ones’ financial future is secure, is unrivaled.
Source of Income
Source of Income
Annuity or pension life insurance plans help you maintain an income even after retirement. Importantly annuity plans safeguard against falling interest rates in a developing economy such as ours.
Risk Mitigation
Rider Benefits
Option of adding riders by paying additional premium to enhance protection.
Tax Benefits
Tax Benefits³
You can avail tax benefits³ on premium paid and death benefit received under the policy as per the Section 80C and Section 10(10D) of the Income Tax 1961 respectively.
Financial Coverage
Financial Coverage
In any case of uncertainties, life insurance plans cover you against the unfortunate event of death and provide the entire sum assured to the nominees/beneficiaries of the policyholder. The inner-peace of knowing your loved ones’ financial future is secure, is unrivaled.
Source of Income
Source of Income
Annuity or pension life insurance plans help you maintain an income even after retirement. Importantly annuity plans safeguard against falling interest rates in a developing economy such as ours.
Risk Mitigation
Rider Benefits
Option of adding riders by paying additional premium to enhance protection.
Tax Benefits
Tax Benefits³
You can avail tax benefits³ on premium paid and death benefit received under the policy as per the Section 80C and Section 10(10D) of the Income Tax 1961 respectively.

Why Should You Buy a Life Insurance Policy?

Financial Security
It is always better to secure your family’s financial future so that they would not face any financial crisis behind you. This makes it a perfect reason why you should buy a life insurance policy.
Backup Provision
Lifestyle and education costs are continually rising. Quality education nowadays needs a bunch of money, and the fees structure keeps going high for premium institutes. Money received through life insurance can be utilized for your child’s education, marriage, or purchasing new property etc.
Flexibility
Today, many life insurance policies, which are less complex to understand, are made available online. You need to get a suitable quote, pay the premium online and your policy is purchased. Also, premium payment options, payout options can be chosen as per your convenience.
Affordability
Life Insurance comes with competitive pricing and offers a lot of benefits within your budget. You can use the premium calculator to determine the premium amount you will be paying towards your policy.
Tax Benefits³
Premium amount paid of life insurance has tax benefits³ (under Section 80C and 10(10D)), which help you save money.
Benefit Payouts
In case of claims made on the demise of the life insured, or even at the end of the tenure, the policy benefits are paid to the respective person. In some cases, you can choose monthly payouts which can act as income for long term.
Riders
Some events may not be covered in the life insurance policy that you purchase. Here, Edelweiss Tokio helps you with the additional cover against certain instances through riders. You can choose riders to get protection against critical illness, accidental death, permanent or partial disablement, waiver of premium, and so on.

Steps to Buy Life Insurance Plans Online

Step 1 : Determine which plan you wish to buy

Depending on your need, you may buy any life insurance policy offered by insurers. For example, if you want a pure life cover, then you may buy a term insurance plan. If you need life cover and savings option in a single plan, then then you may think of buying a ULIP.

Step 2: Choose your life cover

Usually, life insurance premium needs to be at least 10 times your annual income, when it comes to term insurance plans. Else, you can choose the suitable sum assured, bearing in mind the death benefits you may need to safeguard your family’s financial interests.

Step 3: Calculate your premium

Today, premium calculators have made this task easy. You need to enter a few details as required, and the calculator will show you the exact premium amount you will have to pay towards the best suitable life insurance policy.

Step 4: Fill the proposal form

Fill the proposal form with the basic details that are required to issue a policy. Here your contact details, health-related information, as well as hobbies/habits need to be disclosed.

Step 5: Make payment

You have the flexibility of paying your premiums in different modes, such as- yearly, half-yearly, monthly, or one-time lump sum amount. The premium can be paid using a credit / debit card, net banking, or online wallets.

Step 6: Submit the documents

Proofs of your personal information, address, photo, along with medical documentation and income in some scenarios may be needed to purchase the policy.

How can you save tax³ with a Life Insurance Plan?

 

Life insurance is one of the primary and essential requirements of ensuring a financially balanced and comfortable life for your loved ones. The death benefits that come with life insurance help your family build a safe and safeguarded future, even in your absence. Moreover, under Section 80C and 10(10D) of the Income Tax Act, there are income tax benefits³ on life insurance. Under section 80C, premiums that you pay towards a life insurance policy qualify for a deduction up to ₹1.5 lakh, while Section 10(10D) makes income on maturity benefits³/death benefits³ if the premium is not more than 10% of the sum assured or the sum assured is at least 10 times the premium.

 

Premiums paid towards your life insurance policy are eligible for tax benefits³ up to Rs. 1.5 Lakhs. The maturity benefits are also eligible for tax benefits³ if the premium amount is 10% or less of the sum assured. In short, the sum assured must be at least 10 times the premium amount or more to avail the tax benefits³. If the premium amount is greater than 10% of the sum assured, the deduction will be applicable only on the amount equivalent to 10% of the sum assured.

Reasons Why Buying Life Insurance Online Is a Good Idea

 

The Internet has changed the world drastically and, due to the widespread connectivity, the number of people who buy insurance online is increasing. One of the primary reasons for purchasing insurance online is that communication between the Customer and Company is directly leading to transparency and clarity. The process of buying life insurance online is hassle-free, paperless, and usually cheaper.

 

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Why is it important to buy life insurance?

Need for life insurance is not just getting financial security to your family in the event of your unfortunate demise, but also a peace of mind in terms of the post-retirement life sustenance. The maturity benefits/death benefits received from a life insurance can be used to settle liabilities and take care of the family’s lifestyle. The corpus can also be utilized to finance your children’s education and other needs. Life insurance protects your family and lets you leave them a non-taxable³ amount at the time of death.

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What are the benefits of buying a life insurance policy?

There are several life insurance benefits that you can avail by purchasing the best suitable policy.

  • Pure life insurance like Term insurance plans come at considerably low cost but significant benefits in terms of death benefits. It is always advised to get a term insurance policy if you are on the threshold of your career and life. Couple term insurance policies are also good to have, especially to newly married youngsters.
  • Death benefits are paid in case of the demise of the life insured within the policy tenure. If the person survives the tenure, maturity benefits along with accrued investment corpus or bonus are paid, if any depending upon a plan selected.
  • Tax benefits³ of life insurance are also significant as you save on spending your hard-earned money on taxes. Tax benefits³ are applicable under Section 80C and Section 10(10D) of the Income Tax Act.
  • Basis of your risk appetite, you can purchase an endowment plan or a ULIP to get benefited from steady savings and investment plans. Pension plans also help you achieve long term financial goals as well as retirement goals.
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What is the average life insurance cost per month?

The average life insurance cost per month is subject to the plan you choose to buy. The premium cost also differs basis the life insurance amount you choose, i.e., the sum assured. Since all the policies, except term plans, offer cash-value benefits; the factors influencing the premium amount can be enlisted as-

  • Your age and gender
  • The amount of cover you need
  • Health conditions & medical history
  • Smoking/drinking habits
  • Hobbies, habits of life-threatening activities
  • Tenure of the policy
  • Riders you choose

Usually, premiums of the life insurance policy include all the processing fees and charges such as premium allocation charges, fund management fees, paperwork, etc.

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At what age should I buy a life insurance policy?

There is no specific age to buy a life insurance policy as there is nothing precious than life. However, it is more important to secure your loved ones' financial future if they were to live without you. The early you buy the life insurance policy, the more corpuses you can accrue.

  • Usually, term insurance is the best if you are looking for life insurance for youngsters, as it comes at affordable premiums and offers considerably high sum assured.
  • Life insurance for parents can also be chosen as soon as possible, as old age premiums are higher
  • If you are the sole breadwinner in the family, life insurance for working professionals is necessary to have. This not only secures your spouse’s financial future but also of your child and parents.
  • It is also advised to have more than one policy, especially if you have any liabilities to pay off. Buying term insurance as pure life insurance and any other cash-value policy will surely help you achieve your future financial goals along with adequate coverage.
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How will your family get claim money?

The process of claim settlement consists of three necessary steps.

On the demise of the life insured, in this case, to be specific- you; the family needs to inform us or the insurance company from which the life insurance policy had been purchased.

The proofs of the demise need to be provided to the insurer in terms of the death certificate or any equivalent document if required.

The insurance company then analyses the proofs submitted by the family, checks whether the claim made fulfills the policy terms and then insurance claim settlement happens by paying sum assured plus bonuses, along with return on investments.

Life insurance claim settlement is increasing nowadays, as awareness is being created to disclose all the facts related to health and habits.

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Why are life insurance riders important?

There are usually a few cases that are not covered under the base life policy. Here, life insurance riders help you get additional coverage against certain events.

What are the riders? It is nothing but a provision that helps people meeting specific or additional insurance needs at some extra premium. Usually, critical illnesses, permanent or partial disability etc. are not covered under the base plan. In such cases, riders help you get total coverage including a list of critical illnesses and partial disability occurring due to multiple accidents. The accidental death benefit or waiver of the premium rider also helps a lot in case of the unfortunate demise of the insured person or if he/she meets any severe accident, resulting in disability. In such cases, regular income needs to be processed to sustain the lifestyle of the insured’s family.

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How Much Life Insurance Should You Carry?

Life insurance coverage may depend on your financial goals and needs. While deciding the cover, it is important to remember that the objective of insurance is to provide financial support to your family and/or dependents, in case you (as the primary breadwinner) are no more or are unable to earn because of a permanent disability or illness. The life cover you decide on should be adequate to help your family maintain the standard of living you would have provided for them always.

 

So be sure to do your research and calculate well to ensure you acquire the best life insurance possible as per your needs.

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0 - Provided the premium paying term is more than or equal to 10 years.

1 - This is applicable only if all due premiums are paid and the policy is inforce.

3 - As per provisions of Income Tax Act, 1961. Tax benefits are subject to changes in tax laws.

The Linked Insurance Products do not offer any liquidity during the first five years of the contract. The policyholder will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of the fifth year.


Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors.  The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns. Please know the associated risks and the applicable charges from your Personal Financial Advisor or the Intermediary or policy document of the Insurer. The premium paid in unit linked life insurance policies are subject to investment risk associated with capital markets and the unit price of the units may go up or down based on the performance of investment fund and factors influencing the capital market and the policyholder is responsible for his/her decisions. For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.


ARN No: WP/1433/Feb/2021