Life Insurance

Life Insurance is an arrangement between the Insurance company/Government which guarantees compensation for loss of life in return for payment of a specified premium. In Life Insurance, the beneficiary whose name has been mentioned in the contract receives the specified sum, from the insurer in case of the happening of the event i.e. Loss of Life.

Benefits of Life Insurance

• Risk Coverage: Insurance provides risk coverage to the insured family in form of monetary compensation in lieu of premium paid.
• Difference plans for different uses: Insurance companies offer a different type of plan to the insured depending on his need for insurance. More benefits come with more premium.
• Cover for Health Expenses: These policies also cover hospitalization expenses and critical illness treatment.
• Promotes Savings/Helps in Wealth creation: Insurance policies also come with the saving plan i.e. they invest your money in profitable ventures.
• Guaranteed Income: Insurance policies come with the guaranteed sum assured amount which is payable on the happening of the event.
• Loan Facility: Insurance companies provide the option to the insured that they can borrow a certain sum of amount. This option is available on selected policies only.
• Tax Benefits: Insurance premium is tax deductible under section 80C of the Income Tax Act, 1961.

Types of Life Insurance Policies

1. Term insurance plan
2. Endowment policy
3. Unit Linked Insurance Plan
4. Money Back Policy
5. Whole Life Policy
6. Annuity/Pension Plan

Claim Settlement Process

On the happening of the event, the beneficiary is required to send claim intimation form to the insurance company as soon as possible. Claim intimation should contain details such as Date, Place, and Cause of Death. On successful submission of claim intimation form, an insurance company can ask for additional information about:

• Certificate of Death
• Copy of Insurance Policy
• Legal Evidence of title in case insured has not appointed a beneficiary
• Deeds of assignment

On successful submission of all the documents, the insurance company shall verify the claim and settle the same.

Principles of Life Insurance

Life insurance is based on a number of principles that are tailored to meet market conditions and ensure insurance companies make profits while offering security policies to insured individuals.

• Insurable Interest
• Law of large numbers
• Good faith
• Risk & Minimal loss

Points to Consider for Life Insurance

• Research
• Read terms and conditions
• Remember lock-in period
• Consider premium payment options
• Don't Mask Information

Life Insurance Companies in India

• LIC – Life Insurance Corporation of India
• SBI Life Insurance
• ICICI Prudential Life Insurance
• HDFC Standard Life Insurance
• Bajaj Allianz Life Insurance
• Max Life Insurance
• Birla Sun Life Insurance
• Kotak Life Insurance

We all are uncertain of the future and although no one wishes anything unfortunate to happen to them, we should be prepared for unforeseen circumstances. Having a life insurance policy is a financial cushion that makes sure your family is well protected. A life insurance policy hence is a very small investment compared to the greater peace of mind it will bring you.