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Life Insurance Explained

Everything you should know about Life Insurance

#sabsepehlelifeinsurance


  • What is the Sabse Pehle Life Insurance campaign all about?

    India is one of the least insured countries in the world. Only 3.69% of Indians have a life insurance. IRDAI has launched the Sabse Pehle Life Insurance campaign to create awareness about the importance of taking a life insurance.

  • What is life insurance in simple words?
  • Why should I buy Life Insurance?
  • When is the best time to get life insurance?
  • What are the types of life insurance policies in India?
  • How much does life insurance cost?
  • What are the benefits of buying a Life Insurance plans online?
  • How much life cover do I need?
  • What are the benefits of buying a Life Insurance plan online?
  • What is a Term Plan?
  • What are ULIP Plans?
  • What are Pension Plans or Retirement Plans?
  • What are Money Back Plans?
  • What are Health Insurance plans?
  • What are Child Plans?
  • What is an insurance claim?

    A claim on an insurance policy is a formal notification to the insurance company that you have suffered a loss or damage that is covered by the policy and you are requesting action.
    The insurer reviews your claim and checks if the event or circumstances are risks covered by the policy.
    If your claim is accepted, the replacement or repair of your property or any payment by the insurer is called the benefit or payout.

  • What is claim settlement ratio in simple words?

    Claims Settlement Ratio is the total number of death claims approved by an insurance company divided by the total no. of death claim the insurance company receives. The balance claims are either rejected for impersonation, misrepresentation, fraud, etc. or pending for decision by the life insurance companies. This ratio is generally measured over a period of one financial year.

  • What can I do so that mine or my family member’s claim is not rejected?
    1. Make full disclosure about your previous medical condition or your smoking habit
    2. Fill in all the details yourself as agents might not be aware of your all personal details and thereby missing out on crucial information
    3. Make your nominee aware of claim filling process and the documentation part so that the claim settlement becomes easier for them
  • What is a Term Insurance Plan?

    Term plans offer you a life cover for a fixed period.
    If something unfortunate happens to you during this period, your nominee receives the sum assured.
    All Edelweiss Tokio Life term plans have unique benefits and advantages, click here for more details.

  • What are the benefits of buying a Term Life Insurance Plan?

    Besides the peace of mind which comes from knowing that your family would be financially secure even after you’ve passed on, buying a life insurance policy has many benefits.

    • HIGH LIFE COVER AT LOW COST
      Term Insurance Plans offer you the highest life cover for the lowest premium amount. For example, Edelweiss Tokio Life- Zindagi+ offers a 26-year-old non-smoker a life cover of Rs. 1 crore till the age of 60 for a premium of just Rs. 577 per month.
    • TAX BENEFIT U/S 80c
      Of course there are tax benefits! Life Insurance premiums paid are deductible from taxable income under Section 80C. The payment (maturity amount) received under an insurance policy is also exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961.
    • LONG TERM PROTECTION
      Term Insurance Plans offer you a life cover up to the age of 80. You read that right! Once you get a term life insurance plan, we’ll be there for you…
    • ADD ON BENEFITS
      Many term insurance plans offer a host of add on benefits and riders such as accidental cover, critical illness cover, etc. These modifications help you make the term plan stronger.
  • How to calculate term life insurance premium?

    First of all, put down your calculators, your abacuses and no, you can’t count it on your fingers and toes.

    Calculating your term life insurance premium is just a matter of a few clicks. To calculate your premium:

    1. Enter a few simple details
    2. Hit a button which says “Calculate Premium”
    3. C’mon now, give it a try. Click here.
  • Why is the premium of term insurance plan lesser than whole life insurance plan?

    Premium of any insurance policy is dependent on many factors like duration, age, sum assured, etc.
    A term plan offers a life cover for a specific time frame, whereas, a whole life insurance plan offers life cover for the duration of your life. Since the duration could be longer for a whole life insurance plan, the premium amount is also higher.

  • How to buy a Term Life Insurance plan online?

    Congratulations on your decision to secure your family’s future! Let’s get you insured, shall we?

    Step 1: Choose a plan
    Edelweiss Tokio Life - Zindagi Plus

    This term plan is an innovative and customisable term life insurance plan. It can offer double protection for your family with the Better Half Benefit option and also offers the below options:

    • Additional life cover for spouse
    • Top-up on premium
    • Increase in life cover as per life stages
    • Decrease in sum assured by 50% after turning 60
    • Lumpsum or monthly payout option
    • Waiver of premium for critical illnesses
    Edelweiss Tokio Life - Total Secure+

    This term plan is a comprehensive online term insurance plan which provides protection that secures your family and also fulfills your need for critical illness insurance. Choose from the following benefits:

    • Customisable plan options
    • Payout on diagnosis of critical illnesses
    • Flexible premium payment and payout options
    • Tax benefits u/s 80C
    • Life cover till 80 years of age
    Edelweiss Tokio Life - Total Secure+

    This term plan is a comprehensive online term insurance plan which provides protection that secures your family and also fulfills your need for critical illness insurance. Choose from the following benefits:

    • Customisable plan options
    • Payout on diagnosis of critical illnesses
    • Flexible premium payment and payout options
    • Tax benefits u/s 80C
    • Life cover till 80 years of age


    Step 2: Determine your life cover
    It is usually suggested that a term life insurance cover should be at least 10 to 15 times of your annual income. If you have loans such as home loans, car loans, etc. then you should factor that in too. Use this formula to know your ideal life cover:
    Life Cover = [10 x annual income + total outstanding loans + other liabilities]
    For instance, if your annual income is ₹ 15 Lakhs, it is ideal to buy term life insurance cover of at least ₹1.5 Crore, assuming that you do not have other liabilities. In case you have a home loan of ₹50 lakhs, include this amount in your life cover.

    Step 3: Calculate your premium

    And, that’s simple enough! Simply click here, enter a few details, select the amount and tenure of insurance cover and click on ‘Calculate Premium’

    Step 4: Make Payment

    You can opt to pay your premiums monthly, half-yearly or yearly through payment options like:

    • Credit Card
    • Debit Card
    • Netbanking
    • Online Wallets
    • Credit Card
    Step 5: Fill the proposal form

    You will be asked to fill out the proposal form with your details.

    Step 6: Submission of documents

    You will have to submit the following or more documents for issuance of policy

    • KYC documents such as proof of name, address, identification and photo
    • Income proof
  • Why is it important for you to get the best term insurance plan there is?
    • It Provides Financial Security
      Every person who has financial responsibilities towards their family should consider the fact that they may not always be around. From household expenses to children’s education, everything can take a hit if the earning member passes away and one must take precautions to avoid a financial crisis in such a situation.
    • It is Economical
      You can buy a simple life insurance plan for a fixed term at minimal premiums and if anything happens to you during the term of the plan, the nominee can either avail the sum assured as a lump sum amount, as monthly instalments or as a combination of both, depending upon the pay-out option chosen by the policyholder.

      It is also beneficial to get a life insurance policy at a younger age as your premium increases every year. For example, at 21 years of age, a non-smoker, a single individual would be paying a yearly premium of ₹7131 for a life cover of ₹1 crore whereas, a 25-year-old single individual with same lifestyle habits will be paying a yearly premium of ₹8186 for the same life cover.
    • Provides Tax Benefit
      All premiums are exempt from tax under Section 80C. The sum assured (maturity amount) received is also exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961.
    • Timely Payout
      Most of the term insurance policies are pretty simple and therefore the insurance companies don’t have to debate a lot about paying up the claims. If there is death during the term of the policy the nominee can get their claims easily without any hassles provided the nominee is done with the requisite claim formalities. IRDAI’s Insurance Laws (Amendment) Act 2015 also directs life insurance companies to compulsorily pay all claims made three years after the date of commencement of a policy.
    • Flexibility
      You can select how the policy proceeds can be disbursed in case of your death. Some term plans offer monthly payouts where the sum assured amount can be given as a family income benefit to provide the regular cash flow to your dependents.
    • Riders and Benefits
      Even though choosing the best term insurance policy is a simple process and most term plans provide basic life cover, some also come with the option of getting add-ons. For example, you can opt to add critical illness cover, accidental death benefit, accidental total and permanent disability cover, etc. to a basic term policy to make the plan even more robust and risk-free. Insurance plans like Edelweiss Tokio Life Zindagi Plus provide the Better half benefit that ensures enhanced financial security even in the absence of the main breadwinner. Under this benefit, after the death of the policyholder, a life cover will start in his/her spouse’s name. This will be 50% of the life cover of the policyholder, up to an amount of ₹1cr. The spouse won’t have to pay any premium and the nominee will also get the sum assured.
  • What are the tax benefits of term insurance plan?

    Apart from being a great way to make sure you save regularly for your family’s future, Life Insurance plans are also an efficient tax-saving instrument. You get tax exemptions on premiums as well as death benefits under section 80C and 10 (10D).

    Under Section 80C, premiums that you pay towards a life insurance policy qualifies for a deduction up to ₹1.5 lakh, while 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.

    But if the sum assured is less than 10 times the premium—for instance you pay ₹1 lakh as premium for a sum assured of ₹5 lakh—you will get a deduction on the premium up to 10% of the sum assured. In the example, your deduction will be ₹50,000 and not ₹1 lakh ( ₹50,000 is 10% of ₹ 5 lakh).

    Also, in case of death, the sum assured that’s paid to the nominee continues to be tax-free. But, on maturity, since the policy doesn’t meet the qualifying criterion for tax benefit, the income will be taxed at the marginal tax rate.

    It is still wise to consult a tax expert advisor and take an informed decision because the benefits can vary for your specific case and tax bracket.

    Note: We as Indians (brace yourself for a stereotype) pride ourselves in two things: 1. Jugaad
    2. Last-minute preparation

    Some ‘chatur’ people among us use these skills and buy insurance ONLY because it helps in saving tax. If you were planning to do just that or you’ve already done it, please make sure you know everything about the insurance plan. We write stuff like “Please read the sales brochure carefully before concluding a sale” in all our disclaimers for a reason.

  • How much life cover do you need?

    You should decide your life cover keeping in mind your income, the debts or loans you have and your financial dependents. It is usually suggested that your life cover should be at least 10 to 15 times your annual income. If you have loans such as home loans, car loans, etc. then you should factor that in too.

    Use this formula to know your ideal life cover:

    Life Cover = [10 x annual income + total outstanding loans + other liabilities]

  • What is an accidental death insurance benefit?

    Accidental death benefit is a rider you add to your base plan. If Accidental Death Benefit is included in your term plan, 100% of the rider sum assured is paid on top of the base sum assured in case of the policyholder’s unfortunate demise due to an accident.

  • What is critical illness insurance benefit?

    A critical illness insurance benefit offers an insurance cover to the policyholder against life threatening critical illnesses like cancer, heart-related illness, etc. It provides a lumpsum benefit on the diagnosis of any critical illness that is predefined in the plan.
    The health insurance plan you may have or the health insurance coverage which your employer provides, may not be sufficient. Because when it comes to critical illnesses, it’s not just hospital expenses, there’s doctor visits, medical expenses etc. So, it’s better to get an added critical illness benefit pay out to help you with the added expenses without dipping into your long-term savings.

  • Will my term life insurance cover my family members

    A term insurance plan offers a life cover to the policyholder only. But, you can ask your insurer for a plan which covers both you and your family member.
    If you ask us, we’ll tell you that Edelweiss Tokio Life Zindagi+ offers better half benefit which means, a single term life insurance plan can cover both you and your spouse. Click here for more details.

  • What are ULIP Plans?

    ULIPs or Unit linked Insurance plans are essentially life insurance policies which also help you create wealth over the long term.
    Part of the premium you pay for ULIP plans goes towards your life cover and the remaining amount goes into a fund which is then invested in the markets.
    If the fund you’re invested in does good, the returns you get on your investment would be good.
    Edelweiss Tokio Life has won the coveted Golden Peacock Award 2018 (Product Innovation) for its ULIP plan, check it out here.

  • Is ULIP a good option to create wealth?

    Yes.
    ULIPs help you build wealth over the long term thanks to the power of compounding, which means that even if you invest a small amount for several years consistently, it will grow into a large corpus.
    Unlike Mutual Funds, ULIPs offer benefits like tax exemption and returns generated is also tax free.

  • Why should you buy a ULIP plan as early as possible? / Why should you tell your kid to invest in a ULIP plan?
    The Power of Compounding

    The biggest benefit of starting early is the power of compounding which provides the foundation for time value for money. Even if you invest a small amount for several years consistently, it will grow into a large corpus.

    Balanced Investment Portfolio

    The other basic rule of sound investing is to have a balanced investment portfolio. This simply means that you need a mix of financial plans for both your long-term goals and short-term goals. This strategy attempts to balance risk versus rewards by adjusting and rebalancing each asset in an investment portfolio according to the investor’s risk appetite.

  • How to choose the best ULIP plan?

    Here are a few things you should keep in mind before choosing a ULIP:

    • Always good to have options
      Go for a ULIP plan which offers a wide range of fund options with varying allocation in equities. It’s better to diversify and have lower risk than to stick with one or two funds.
    • Switch karo, khush raho
      Always go for ULIP plans that offer the facility of switching between funds. This means you can, anytime, choose to stop investing in a fund and switch to another fund if you think that will be a more suitable option for you.
    • Don’t pay more than you have to
      Always choose a ULIP plan after looking over your financial position so that the premium doesn’t create a financial burden on you. Keep in mind that if you are unable to pay the premium your policy can lapse, which is never good.
    • Redirect at your will
      Go for a ULIP plan that offers the facility of redirecting your premium. This means that you can choose what percentage of your premium is invested in which fund and can anytime, reduce or increase that percentage as you deem fit.
    • Fund check
      Check the past performance of the individual funds and choose the plan which has high rated individual funds. This will ensure that your funds are comparatively safer in the volatile market.

    Edelweiss Tokio Life Wealth Plus provides you with features that make up for an ideal ULIP plan as it contains facilities like:

    1. Facility to switch your accumulated investment from one fund to another at the opportune time free of cost
    2. Option of redirecting your premium in funds of your choice
    3. Access to your wealth anytime, through facilities of loans and partial withdrawal
    4. You can choose to pay premium for a limited time, yet the wealth accumulation and insurance protection for a longer period of time
    5. Tax benefits under Section 80C and Section 10 (10D) of Income Tax Act, 1961
    6. Additional allocation and premium boosters will help in accumulating your wealth to a great extent
    7. Rising Star Benefit, under which if an unfortunate event occurs to the policyholder then all the future premiums will be immediately credited in the fund value. This acts like a child plan where the nominee receives a lumpsum amount and the investment grows as planned by the parent.
  • What are Death and Maturity Benefits in a ULIP?

    Death and maturity benefits are central to any ULIP policy irrespective of the insurance provider the scheme is availed from.

    Death Benefits

    Death benefits of ULIPs are offered in case of unfortunate demise of the policyholder. Generally, death benefit is equal to the sum assured plus fund value.

    Maturity Benefits

    Maturity benefits are offered to policyholders when the policyholder survives beyond the maturity period. Maturity benefits are equal to the amount of fund value.

  • Can I buy ULIP for 15 years?

    The best ULIP plans help you build wealth over the long term. Part of the premium you pay towards a ULIP plan goes into a fund which is invested in the markets. The returns you get from these plans depend on the fund performance. The longer you stay with the plan, better are the chances of building your wealth.

    Click here to check out how funds of Edelweiss Tokio Life have performed over the years.

  • What are the tax benefits of term insurance plan?

    Apart from being a great way to make sure you save regularly for your family’s future, Life Insurance plans are also an efficient tax-saving instrument. You get tax exemptions on premiums as well as death benefits under section 80C and 10 (10D).

  • Do I have to pay tax on life insurance premiums?

    You can avail an exemption of up to Rs 150,000 under Section 80C of the Income Tax Act, 1961 towards premium paid on life insurance policies. This also includes premium paid by you for life insurance for your spouse or your child.

  • Are life insurance proceeds or payouts taxable?

    Under Section 10(10D) of Income Tax Act, 1961 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.
    But if the sum assured is less than 10 times the premium—for instance you pay ₹1 lakh as premium for a sum assured of ₹5 lakh—you will get a deduction on the premium up to 10% of the sum assured. In the example, your deduction will be ₹50,000 and not ₹1 lakh ( ₹50,000 is 10% of ₹ 5 lakh).
    It is still wise to consult a tax expert advisor and take an informed decision because the benefits can vary for your specific case and tax bracket.

  • Can I buy life insurance policy for tax savings purpose only?

    We as Indians (brace yourself for a stereotype) pride ourselves in two things:
    1. Jugaad
    2. Last-minute preparation

    Some ‘chatur’ people among us use these skills and buy insurance ONLY because it helps in saving tax. If you were planning to do just that or you’ve already done it, please make sure you know everything about the insurance plan. We write stuff like “Please read the sales brochure carefully before concluding a sale” in all our disclaimers for a reason.

  • Do pension plans, term plans, endowment plans, ULIPs offer different tax benefits?

    For tax-saving purposes, all life insurance plans are equally beneficial as the application of tax laws are same for all plans.

  • Are Unit-linked Insurance Policies taxable?

    All premiums are deductible from taxable income under Section 80C. The maturity amount received is also exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961


    Tax Exemption under Section 80C on Premium Paid:
    The premium paid in a financial year is eligible for deduction under section 80C of the Income Tax Act. An individual or a HUF can claim this deduction under Section 80C.

    The premium paid by a tax payer is eligible for deduction irrespective of which Life Insurer you choose. Premium paid towards a life cover taken with any insurer that is approved by the Insurance Regulatory and Development Authority of India (IRDAI), is eligible for a Section 80C deduction.

    In order to claim deduction under section 80C, the premium paid should not exceed 10% of the sum assured. Further, here it is important to note that covering the life of an individual with a disability referred to under Section 80U or a disease referred to under Section 80DDB, the requirement to claim the deduction under Section 80C is that the premium should not exceed 15% of the sum assured.

    Tax Exemption under section 10(10D) on Maturity amount received
    The maturity amount in a ULIP is fully exempt from Income Tax under Section 10(10D).
    When the premium paid is more than 10% of the sum assured for policy issued after 1st April 2012 or more than 20% for policies issued prior to 1 April 2012, the maturity amount received from life insurance policy is fully taxable.

  • How is ULIP taxed on surrender?

    Before lock-in-period
    If the policy is surrendered before the lock-in-period of 5 years, then the entire surrender value will be treated as income for the current year and will be added in Gross Total Income and thus will be taxed as per applicable tax slab rate of the individual.

    For instance, if surrender value of ULIP is ₹3,00,000 and total income apart from surrender value is ₹15,00,000. Therefore, the total income will be Rs. 18 lacs and the entire income will be taxed as per slab rate.

    After lock-in-period
    If the policy is surrendered after the lock-in-period of 5 years, then the surrender value will be exempt from taxation and assured can avail the tax benefit. For instance, if surrender value of ULIP is ₹3,00,000 and total income apart from surrender value is ₹15,00,000. Therefore, the total income will be Rs. 15 lacs and the entire income is taxed as per slab rate.

  • Will my beneficiary or nominee have to pay tax on my insurance payout?

    No, life insurance proceeds including the maturity benefit is not taxable in accordance to Section 10(10D) of Income Tax Act, 1961.

Steps to buy Life Insurance online




Select Insurance
 

From multiple available Insurance plans, you select the one that suits your needs

Share details
 

You share some details like your date of birth, smoking habit, etc along with your Sum assured requirement

Generate Quote
 

Based on the information shared, you get an instant online quotation with details like sum assured, premium paying term etc.

Make Payment
 

With our flexible payment system, you can make the payment using any platform that is convenient to you

Plan Issued
 

Your plan is issued after your details and documentation is verified


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