INSURANCE
Life Insurance is a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period. Life Cover secures loved ones’ future by paying a lump sum amount in case of an unfortunate event. In some policies, Clients are paid an amount called Maturity Benefit at the end of the policy term.
There are two basic types of Life Insurance plans:
a. Pure Protection
b. Protection and Savings
What is Pure Protection Plan?
A Pure Protection plan is designed to secure your family’s future by providing a lump sum amount, in your absence.
What is Protection and Savings Plan?
A Protection and Savings plan is a financial tool that helps you plan for your long-term goals like purchasing a home, funding your children’s education, and more, while offering the benefits of a Life Cover.
Factors that affect life insurance premium
Now that you know what is life insurance and why you need it, find out the factors that can affect the life insurance premium:
Age: One of the prime factors that affect the premium for a life insurance plan is your age. The life insurance premium is lower for younger people and gradually increases with age
Gender: Studies have shown women live longer than men. Therefore, the life insurance premium is lower for women as compared to men
Health conditions: Your present and past health conditions can determine the premium for your life insurance plan. If you have any pre-existing illnesses or have suffered from an illness in the past that may resurface or affect your present health, you would be charged a higher premium
Family health history: The chances of suffering from a disease that runs in your family are considerably high. So, if any hereditary illnesses run in your family, you may have to pay a higher premium
Smoking and drinking alcohol: Lifestyle habits like smoking and drinking alcohol can impact your health and lead to multiple health issues. Therefore, insurance companies charge a high premium for individuals who smoke or drink alcohol
Type of coverage: The type of coverage you opt for can increase or decrease the life insurance plan’s premium. If you add any riders to your plan, the premium would increase. A longer policy term can also result in a higher premium compared to a shorter term. In addition to this, the type of life insurance plan you select also impacts the premium. For instance, term life insurance is the most affordable form of life insurance
Amount of coverage: A higher sum assured would result in a higher premium and vice versa
Occupation: If you work in a high-risk job, the premium for your life insurance plan would be higher than others. For example, if you work in construction or if your job puts you at any kind of risk, such as regular exposure to chemicals, the insurance company will charge a higher premium.
Benefits of Life Insurance: Life insurance can offer several benefits to you and your loved ones, including the following:
Financial Security: When you buy a life insurance policy, the insurance company charges a premium in exchange for providing financial security to your beneficiaries in case of an unfortunate event of death. The proceeds from life insurance can be used by the beneficiaries as an income replacement to cover day-to-day expenses.
Wealth Creation: Some life insurance plans offer you the option to invest and grow your money. This enables you to stay financially prepared for your future needs. Life insurance can offer good returns and income.
Tax benefits: Life insurance plans offer multiple tax benefits. The premiums paid towards a life insurance plan are deductible up to ₹ 1.5 lakh per annum under Section 80C and the maturity benefits are also tax-free subject to conditions prescribed under Section 10(10D) of The Income Tax Act, 1961.
Terms in Life Insurance:
Life Assured: It is the person who is covered under the insurance policy
Proposer: It is the person who pays the premiums of the policy. For example: If you have bought the policy for yourself, then you are both the Life Assured as well as the Proposer. Similarly, if you purchase an insurance policy for a family member, then you are the proposer and the family member is the Life Assured.
Nominee or Beneficiary: It is the person you appoint at the time of buying the policy to receive the benefits of your insurance policy, in your absence.
Insurer: The insurance company that sells the life insurance policy is called the Insurer (for example, LIC).
Life Cover: It is the amount that the Insurer will pay to your Nominee in case of an unfortunate event.
Maturity Benefit: For Protection + Savings policies, the Insurer pays a certain lump sum of money on completion of the policy term. This amount is known as the Maturity Amount.
Premium: A premium is the amount you pay to the insurer for receiving the benefits of the insurance policy. These payments can be made on a regular basis throughout the policy duration, for a limited number of years or just once, as per the options available under the policy you choose.
Premium Payment Term: The number of years for which you pay the premiums is known as the Premium Payment Term.
Policy Term: The number of years for which the Life Cover continues.
Role of “My Rupee Mantra”
“My Rupee Mantra” Experts are associated with different Life Insurance companies and also working as “Policy Bazaar Partners”.
Then experts seek essential details from the clients, their financial and protection goals, analyze them, match with the available life insurance products and create mantra for the clients. The experts guide and assist the clients to get the insurance policies at ease.
