Life Insurance

Overview :

Life insurance Policy is a contract between insured and the life insurance company (insurer) for the specified period of time (term) to protect your family against financial risk of your life to the extent of the life coverage (sum assured) by paying a cost (premium) to the life insurance company.

Life insurance is a must for the bread earner of the family, who has dependents. In case of an uncertain death of the bread earner it pays a lump sum amount to the nominee of the life insurance policy, so that the family can continue with the same standard of living even after losing him. Basically we can say life insurance covers the risk of death.

Life Insurance Premium :

The cost or premium of your insurance policy depends on the type and kind of coverage you get under a life insurance plan. Premiums vary from insurance type to insurance type. So, for an identical insurance cover, term insurance premiums are extremely low while money back premiums are extremely high.

Insurers offer many options on paying the premiums. Monthly, quarterly, half-yearly, annual, or one-time all these are premium paying options. Remember, the annual premium-paying option is cheaper than a monthly premium paying option and the one-time premium-paying option is cheaper than the annual one, and so on.

Life Insurance Riders :

A life insurance policy covers the risk of losing your life, by providing a financial payout to your nominee.

Riders are additional benefits that can be purchased with an insurance policy. They provide additional covers to your existing insurance cover.

What is important is to choose the right rider from a host of options that you will get: Term rider, Accidental Death Benefit rider or a Critical Illness rider.

Life Insurance Benefits :

Life insurance can provide for two risks the risk of your dying early AND the risk of your living too long.

It provides financial security to your family if you are not around anymore, depending on the type of life insurance policy you opt for. Different types have different premium levels and varying coverage.

Some insurance plans also provide income for you in your non-earning years i.e. after retirement. There are various life insurance plans that do this, such as endowment plans and pension plans.

Life Insurance Claims :

You have done the right thing by you and your family by buying that life insurance policy, covering yourself adequately. Now, how about an actual claim? How would you go about that?

The process claim is straightforward and simple. There are instances when claims can be rejected, for instance, on proving misrepresented facts on the insured's part.

Life Insurance Charges :

There are some charges besides the premium, that you pay for life insurance plans. These include commission paid to the insurance agent, administration charges towards your policy, mortality charges, etc.

There is a whole bunch of charges in ULIPs - Premium allocation charge, fund management charge, surrender charges, policy administration charges, mortality charges, fund switching charges, switching charges, partial withdrawal charges, revival charges, and miscellaneous charges.