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10 Need-To-Know Life Insurance Facts

dateKnowledge Centre Team dateJune 22, 2021 views122 Views
Life Insurance Facts | Buy the Best Life Insurance Plan

One of the most valuable decisions you can make, especially for your family, is investing in life insurance plans. Insurance has a lot of importance because it will help you look after your family by covering them in case of accidents or sudden demise.

Several people face untimely death from an illness or accident, and if you are the sole provider for your family, such scenarios will cause them trouble. They will have a hard time paying off debts, bills, looking after house expenses, and much such expenditure. You can look after such difficulties by ensuring a safe financial future for your loved ones by buying the best life insurance policy.

10 Facts about Life Insurance Plan

A life insurance policy comes with many benefits. However, there are also certain facts related to the policy that you should be aware of before buying the financial product. The must-know facts of a life insurance policy are as follows:

1. Taking care of your loved ones even in your absence

This one's obvious. If you are the provider in your family, there might be many duties you have to look after, like paying off loans and debts, paying for your child's education, buying a car, and so on. But in the case of your unexpected death, all of the burdens will land on your family's shoulders. With the help of an insurance plan, all these problems will be less strenuous on your family.

2. Debt management

Debt is not a matter that will let you live comfortably, and if you face sudden death, it will be all the more a problem for your family to deal with, having no support. In such situations, a properly chosen insurance plan will help your family out.

3. Effortlessly achieve long-term goals

If you want to buy your dream house or car, certain types of insurance plans will allow you to fulfil your long-term goals with additional benefits. One such plan is Invest 4G, and the advantages of this plan include:

  • Guaranteed regular income
  • Limited premium pay
  • Assured loyalty additions

This plan is a Unit Linked Individual Life Insurance Savings Plan which you can customize as per your goals and changing requirements. With an unmatched combination of Portfolio Management Options and flexibilities, this plan gives you complete control over your savings and insurance needs.

4. Life insurance complements your retirement goals

Investing in a life insurance plan is like putting money into a pension scheme or an annuity and enjoying what you have sown after retirement. Such plans assure you of a steady flow of money every month even after retirement.

4 Major Retirement Planning Benefits

5. Life insurance plans are cheaper when you are younger

If you are a student, you might take out loans for education by co-signing it with your parents or guardian. To pay back these loans, you can consider purchasing a suitable life insurance plan. Because of your young age and good health, your insurability is high, which the premiums that you will have to be will be lower.

Learn the advantages of buying a life insurance plan at an early age.

6. Helpful for your business

Insurances do not just look after you and your family, but they also take care of your business. Many policies provide death benefits, but you might know little about the several options the policies offer that can potentially help your business grow. There are two kinds of life insurance policies - (a) life insurance policy and (b) term insurance policy.

A term insurance policy renders security only for a certain period and pays out the money only if you expire during the tenure. And if you outlive the policy, the policy terminates, and the coverage expires. On the other hand, an investment-cum-protection plan provides you with a round sum at the end of the term of the policy. The cover offered may not be as high as the term insurance plans.

7. Saving taxes

With the insurance plan you buy, you can save taxes, irrespective of the policy. The premium you pay for an insurance policy qualifies for an optimum tax benefit of Rs 1.5 lakh under Section 80C, additionally also tax-free continues on death/maturity under Section 10 (D) of the Income Tax Act, 1961.

8. Means for mandatory savings

You will have to pay a premium higher than the insurance cost if you plan to purchase a conventional or a unit-linked insurance policy (ULIP). The extra money you pay, the premium, increases the cash value that you can sell, borrow, or gain as an income from the policy.

9. You may not qualify later on

Life insurance policies function on unpredictability. When you are healthy and paying life insurance plan premiums, it might seem like an extra monetary burden. However, when you fall ill or meet with an accident, you may not be permitted to buy a policy. Thus, it is vital to get insurance at an early age when your health is at its peak, rather than getting it later when there are chances of your health deteriorating.

Insurance companies permit you to append certain benefits or insurance riders to your current or new plan. The insurance riders provide added perks to your insurance plan. For instance, the untimely death benefit rider lets you utilize all or part of the money if you have less time to live due to a critical condition. You may also use the money for your medical procedures and related expenses.

Here are 5 reasons to add riders to your life insurance plan.

10. Peace of mind

Death is inescapable, but you can take measures to look after and provide for your family even after you have gone. It could be a small policy not offering much, yet it is a security you could provide to your family, helping them fend for themselves.

Purchasing insurance policies is always a good practice and the best security you could provide your family and yourselves. It is a social device that reduces or eliminates the risk of loss of life and property. Buy the best life insurance plan to protect your loved ones from any financial shock that they may get if you pass away. A safe and secured tomorrow is possible only when you have planned it right.

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Frequently Asked Questions (FAQs) for Life Insurance

The premium is one of the most important factors to consider before buying a policy. Many people buy a life insurance policy with a high sum assured but are unable to process the premiums for the entire premium payment tenure. You can get a better idea of the premium outgo with the premium calculator available in the 'Tools and Calculator' section of

Life insurance plans come with several riders which increase the efficiency of the policy for the buyer. For instance, if you have a history of terminal illness in your family it would be advisable to opt for terminal illness rider with your term insurance. Riders or add-ons help in customising the standard policy benefits for the requirement of different families. The iSelect term insurance plan comes with a built-in cover for terminal illness, and option for protection against accidental death or disability. You can also opt to cover your spouse's life under the same policy by paying an additional premium.

Insurance companies calculate the premiums based on several factors such as age, gender and occupation.

Age:It is one of the biggest factors that influence life insurance premiums. Premiums tend to be low when the life insured is younger as the chances of contracting diseases is low. Young people also opt for policies with longer tenures and pay premiums for a longer duration, which makes the policy cheaper for young people.

Gender:The insurance premium for women is generally lower when it comes to life insurance plans. Women live longer and pose a lesser risk of a claim leading to lower premiums for them.

Lifestyle habits:The premiums for people who smoke or drink is always higher due to higher health risks.

Policy term:Policy terms are also taken into consideration by insurers while deciding the premium amount. Policies with longer tenure are cheaper as compared to short-duration policies.

Mode of purchase: The platform that you use to buy the policy also determines how much you will have to pay for the plan. People who buy life insurance policies online have to pay lower premiums as compared to offline policies.

Occupation:The nature of your work is an important factor that influences the premium amount. Certain occupations like shipping and mining are considered more dangerous as compared to jobs in services industries. The insurance premium rises with the risk profile.

Processing life insurance claim is a transparent and smooth process with Canara HSBC Life Insurance.

In case of the death of the life insured, the nominee will have to intimate the company by filling a Death Claim Form and sending it to the nearest branch office.

Once the form is received, the claim is registered by the insurer.

After the registration of the claim, the company will send the claims pack along with the related forms such as physicianâ s statement form and employer certificate that need to be filled.

Along with the duly filled forms a few documents such as original [policy document, death certificate, copy of bank passbook, hospital or treatment records, photo identification and address proof have to be provided.

The claim is processed on the submission of relevant documents. Once the documents are verified, the claim amount is released post all due diligence.

Household expenses rise with age. The cost of children's education increases along with other lifestyle expenses. The iSelect term plan offers an option to increase the cover according to the life stage. If opted, the insurance cover increases by 25% at every 5-year terminal till the 20th policy year.

Even though a life insurance policy is bought to protect your family in your absence. There are chances of the claim being rejected due to several factors.

False information: If the policyholder provides false information or conceals important information while buying the policy, the insurer has the right to reject the claim after his/her death.

Type of death: Deaths due to suicide in first policy year, intoxication or pre-existing disease is not covered under life insurance.

Premium payment: The payment of premiums on time is of utmost important to avail the benefits of life insurance. Life insurance policy may lapse on the failure to pay the premiums

Nominee details: An insurance company can put the claim on hold if the nominee details have not been filled or not been updated by the policyholder.

Suicide: If the life insured commits suicide within 12 months of buying the policy, the insurance companies generally pay 80% of the total premiums paid.

Buying life insurance online is not only safe but a better option. Online life insurance policies have lower premiums and the individual is not required to visit the insurer's branch or a bank. Online insurance policies also offer higher benefits. Customers should, however, buy online policies only from credible insurers and should check for SSL certificate on the website to ensure that the website is legitimate.

The cost of life insurance policies varies depending on factors like age, gender and occupation. The average cost of life insurance plans, especially term plans, is very low compared to the amount of coverage offered.

An individual is allowed to have multiple life insurance policies. People opt for more than one policy to increase the cover or avoid claim rejection. In case of multiple policies, even if the claim is rejected by one insurer, the beneficiaries may receive the benefit from a different insurer.

Life insurance policies are of different types. In the case of unit-linked or endowment policies the policyholder receives the maturity benefit at the end of the policy term. However, in the case of term insurance plans, there are no maturity benefits. The death benefit is only paid out after the death of the life insured.

When you buy life insurance, the insurance company asks for the nominee details. Only the person named as the nominee in the policy can cash out a life insurance policy in case of death of life insured.

A life insurance policy is generally taken for a specified period. After the policy duration of a term plan gets over, the policy simply terminates and ceases to exist. However, in the case of unit-linked plans or endowment, you can use the policy as a tool for retirement planning and the accumulated corpus is used by the insurer to pay you monthly amounts for your entire life.

If a policyholder purchases a term plan for 25 years and dies during the policy term. The family receives the death benefit. In the case of iSelect term plan, the policy provides four payment options to the beneficiaries. If the regular payment options are chosen the policy works as a source of regular income.

It is a popular misconception that life insurance is only for accidental deaths. A term life insurance plan like iSelect also covers terminal disease along with death. A terminal illness cover is important as health insurance pays only for the cost of treatment and hospitalization, but a terminal illness cover pays you a lump-sum amount which takes care of other expenses. On the other hand, unit-linked policies such as Invest 4G cover death and also provide decent returns for other financial goals such as buying a house of child's education.

It is ideal to buy life insurance in your early 20s because it’s is the time when people have just started with their professional life and so there are lesser responsibilities and financial liabilities to take care of. Also, if you buy life insurance at this age, you will be paying relatively lower insurance premiums since it’s a due fact that mortality rate in case of young people is low. And that is why insurance companies offer lesser premium rates to younger people as they think that they are most likely to be fit and healthier with less chances of filing a claim in future.

Once you have cancelled your life insurance policy, you will instantly lose your life insurance cover. Afterwards, your insurance company will get in touch with you and ask for valid reasons regarding the cancellation of your policy. In case you cancel your life insurance policy within the grace period, i.e. 15 to 30 days, depending on your insurer, then insurance company will reimburse the premium amount paid by you. But, no refunds will be paid to you if the policy is cancelled after the grace period.

Yes, you can take life insurance under Married Women’s Property (MWP) Act, 1984 only if you are a married man and a resident of India. Buying a life insurance plan under MWP Act would be helpful in saving your family’s financial well-being when you are not around. As per this policy, only wife and children would be eligible to receive the death benefits. You can also buy a policy if you are a widower or a divorcee. However, in that case, you can give your child’s name as your beneficiary. It is very simple to buy a life plan under MWP Act. All you need to do is to fill up an MWP addendum while purchasing an insurance policy.

Yes, there are different payment options for you to pay premiums. Here’re some of them

    1. Regular premium payment option – This premium payment option allows you to pay premiums equal to your policy term either monthly, quarterly, half yearly or annually.

    2. Single payment option – Through this premium payment option, you can pay the lump-sum amount in one single payment.

    3. Limited payment option -In this premium payment option, you can pay premiums for a specific period of time less than policy term either monthly, quarterly, half yearly or annually, but benefits of insurance can be enjoyed for a longer period of time.

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