Life Insurance

What is Life Insurance?

Life insurance is a contract between a life insurance company and a policy buyer in which the insurance company commits to provide compensation to the selected beneficiaries as a death benefit if the insured dies within the policy's term. The life insurance business promises a death benefit in exchange for the premiums paid by policyholders.

The safest and most secure approach to protect your family or dependents from numerous financial contingencies that may arise as a result of your untimely death is to purchase a life insurance policy. In India, a Life Insurance Plan assures that the insurance company would pay a set amount to the policyholder's family in the event of his or her death.

If added to the contract, a life insurance policy can also compensate for additional scenarios such as a terminal disease or a critical sickness. Other benefits, including as burial fees, can be received as part of life insurance payouts if they are specified in the contract.

A Life Insurance policy in India also provides maturity rewards in addition to death benefits. These benefits are usually provided in the form of a payment if the insured lives to the end of the life insurance policy's term. Furthermore, under Section 80C of the Income Tax Act of 1961, life insurance plans provide a range of tax benefits.

Why is it necessary to purchase a life insurance policy in India?

A life insurance policy serves as a financial safety net in the event of a life-altering event, such as disability, retirement, death, or an accident. You can't truly foresee what will happen next in life because it's such a wild adventure. Aside from the emotional turmoil that comes with the abrupt death of a family's primary pay earner, his or her family faces a financial disadvantage.

If this person is the family's sole breadwinner, his or her dependents will suffer a financial loss. To ensure that your family does not have to make any sacrifices due to financial constraints, you should consider purchasing an appropriate life insurance plan.

Benefits of Life Insurance Plans

Types of Life Insurance Plans in India

Term Life Insurance

Term insurance is the most basic type of life insurance policy. Simple to grasp and inexpensive to purchase. A term insurance policy covers the risk of death for a set length of time. If the life assured dies during the policy period, the death benefit is paid to the nominee by the life insurance company. It is a pure risk insurance policy that provides comprehensive coverage at a cheap cost.

Unit Linked Insurance Plans

A unit-linked insurance plan, or ULIP, is a type of life insurance plan that combines insurance with investing. It includes a long-term investment opportunity as well as great investing flexibility. The premium paid for a ULIP is used to partially cover the risk of a life insurance policy, with the remaining invested in market funds such as loans, shares, bonds, market funds, hybrid funds, and so on. The market funds are chosen solely based on the risk tolerance of the insurance customer. Based on this, the insurer invests the funds in the capital market in accordance with the insured's preferences.

Endowment Plans

Endowment plans are a sort of life insurance plan that combines insurance with savings. A portion is preserved for life insurance, while the remainder is invested by the life insurance company. If the life guaranteed outlives the policy term in an endowment plan, the insurance company pays him the maturity benefit. Furthermore, Endowment Plans may occasionally offer incentives, which are paid either on maturity or to the nominee under a death claim. The candidate receives the death benefit in the event of death. These plans are also known as traditional life insurance because, while there is an investment component, the risk and returns are lower than those of other investment products.

Whole Life Insurance Plans

A whole life insurance policy is intended to provide coverage for the duration of the insured's life. There are, however, numbered insurers in the market who provide coverage for people up to the age of 100. Whole life insurance policies, as opposed to term life insurance plans, provide comprehensive insurance coverage. The sum assured is computed at the time of policy purchase and is paid to the nominee upon the insured's death, together with any bonuses (if any). Because the policy is available at such a low rate, it might be regarded the greatest life insurance plan.

Money Back Life Insurance

Money back plans are a one-of-a-kind life insurance policy since they provide a unique sort of life insurance coverage. Under a money back life insurance plan, a fixed percentage of the sum assured is paid back to the policyholder at predetermined periods. This reimbursement benefit is referred to as a survival benefit. Money back life insurance is the perfect insurance coverage for people who wish their investments to be accompanied by a liquidity component. Furthermore, money back life insurance plans are eligible for bonuses as announced by the insurance company (if any).

Retirement Plans

A retirement plan aids in the accumulation of funds for your retirement. Assisting you in being financially self-sufficient and worry-free. After the age of 60, the majority of retirement plans offer annual instalments or a one-time payoff. A retirement plan provides a death benefit in the event that the insured dies and a vesting benefit in the event that the insured outlives the policy period.

Child Plans

A child plan is a combination investment and insurance plan that assists you in meeting your child's financial needs. A child insurance plan will assist you in building wealth for your child's future requirements, such as education. You can begin investing in these programmes as soon as your child is born. You have the option of investing your hard-earned money in a variety of funds based on your financial situation and ambitions. In general, child plans either give annual instalments or a one-time payout when the covered child reaches the age of 18. God forbid, if the insured’s parent dies during the policy term, the insurance provider will make an immediate payment. Some child plans forgo future premiums upon the death of the life insured, and the policy remains in effect until maturity.

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Life Insurance Plans Pure Risk Cover
Unit Linked Insurance Plans Insurance & Investments benefits
Endowment Plant Insurance Coverage + Savings Benefit
Whole Life Insurance Plans Lifetime Coverage
Money Back Plans Insurance Cover with period returns
Child Plans To accumulate corpus for child’s future
Retirement Plans Aiding Financial Independence post retirement

If you think you don’t need a health insurance, read the fact below:

  • Health costs in India are rising at double the inflation rate and making the treatment unaffordable.
  • India’s COVID situation is amongst the worst in the world.
  • 95% of young Indians’ food habits are bad & unhealthy.
  • Increasing pollution level is increasing the critical diseases.
  • According to WHO, in next 10 years over 60 million people will die from a chronic disease in India.
  • Overweight people percentage has increases in last 10 years.
  • Heart Disease is the number one killer disease in India.
  • Mental Health Issues are on rise in India.

Required Documents for buying a Life Insurance Policy

Income Certificate: To estimate the sum assured or coverage
  • Salary Slips (as per the insurer)
  • Income Tax Returns of last 2-3 years
  • Bank Statements
  • If person owns a business or self-employed, then a certificate by CA
  • Latest Form 16
Address Proof – The following documents can be used as address proof
  • Voter ID Card
  • Aadhar Card
  • Bank Passbook
  • Driving License
  • Utility Bills of last 3 months
  • Passport
  • Ration Card
Identity Proof & Age Proof
  • Passport
  • PAN Card
  • Voter ID card
  • Aadhar Card
  • Birth Certificate
  • School Leaving Certificates
Other Documents as per IRDAI guidelines

How to file a Life Insurance Claim

Our dedicated claim assistance team is there to help you with all what you need to file a claim. With the legacy of 12+ years we have a claim settlement ratio of 97%. Reach out to us at claims@zoominsurancebrokers.com or apply for the claim by signing in into your account or you can directly call the customer care number of your respective insurer.

Frequently asked questions about Life Insurance

Anyone who supports a family or dependents and works as a breadwinner requires Life Insurance. Housewives, too, require life insurance coverage due to the economic worth of their contribution to the family. Even minors can acquire life insurance plans if their future earning potential is jeopardised.

The quantity of Life Insurance coverage you require is generally determined by a variety of criteria, including:

  • How many children do you have?
  • How much you want to save for your children’s education
  • What kind of lifestyle do you want to provide your family?
  • What your investing requirements are
  • What your financial situation is

It is usually advisable to purchase a life insurance policy at a young age in order to assure a financially secure future for a longer period of time and at a reduced premium rate. The policy's premium rises in tandem with the policyholder's age. As a result, the best time to purchase a life insurance coverage is when you are young.

According to a typical rule of thumb, one should buy a life insurance policy that is at least 12-15 times their yearly income. With rising inflation and the rising cost of living, the life insurance policy you purchase now may not be adequate to meet the family's future financial needs. Taking all of this into account, you should opt for a larger level of life insurance.

If the policyholder survives the policy's whole term, the premium paid is returned to the life assured in the form of a maturity benefit, coupled with any benefits, if any, in the form of a sum assured amount.

There is no legal limit to the number of life insurance plans a person may own. Even though many life insurance carriers are less concerned with the number of policies a person can buy, they may attentively examine the overall amount of benefits you have.

Under Section 80C of the Income Tax, the premium paid towards life insurance policies up to the maximum limit of ₹ 1,50,000 is eligible for a tax deduction. Such deductions are applicable on condition that the amount of premium paid in a financial year is 20% of the Sum Assured amount of the policy. Under Section 10(10D) of Income Tax Act, the Sum Assured amount as well as bonus (if any) paid on maturity or surrender of the policy or in the event of the death of the insured is completely tax-free for the beneficiary.