IN UNIT LINKED POLICIES, INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
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.
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.
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.
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.
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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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.
There are several life insurance benefits that you can avail by purchasing the best suitable policy.
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-
Usually, premiums of the life insurance policy include all the processing fees and charges such as premium allocation charges, fund management fees, paperwork, etc.
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.
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.
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.
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.
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