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Features and Benefits Of Life Insurance in India

Features and Benefits Of Life Insurance in India

Life Insurance Benefits | Important features of Life Insurance

The average penetration and density of life insurance in India is a measly 2.76%. There have been improvements in this arena but overall the growth has been rather slow in India. Not many people are aware of the benefits of life insurance and the numbers for penetration are an indicator of the same.

Accidents and mishaps are strong indicators of how fragile human life can be and how we need to systemically insure our lives. It is an important tool for providing an individual's family with safety and security. It acts as a protective cover to safeguard the insured's dependents. In the event individuals do not insure their lives, their dependents end up facing the tragic loss of their loved one along with a whole host of liabilities such as rent, loans, EMI's and child services.

Life insurance is crucial for families to feel security and a sense of confidence to continue their lives without losing their everyday stability. To help understand the key features and advantages of life insurance, here's a quick lowdown:

Features of Life Insurance Plans

1. Policyholder

Policyholder is the individual who pays the premium for the life insurance policy and signs a life insurance contract with a life insurance company.

2. Premium

A premium is the cost the policyholder pays the life insurance company for covering his/her life.

3. Maturity

Maturity is the stage at which the policy term is completed and the life insurance contract ends.

4. Insured

Insured is the individual whose life is secured via the life insurance. After his/her death the insurance company is accountable to provide a financial amount to the dependents.

Also Read about - Who is the Insurer and Insured?

5. Sum Assured

The amount the insurance company pays the dependents of the insured if those events occur which are specified in the life insurance contract.

6. Policy Term

Policy term is the specified duration (listed in the life insurance contract) for which the insurance company provides a life cover and the time period during which the contract is active (listed in the life insurance contract).

7. Nominee

A nominee is an individual listed in the life insurance contract who is entitled to receive the predetermined compensation, as a part of the policy.

8. Claim

On the insured's demise, the nominees can file a claim with the insurance provider in order to receive the predetermined payout amount.

Advantages of Buying a Life Insurance Policy

1. Death Benefits

Life insurance enables individuals to protect themselves and their families, in case of any unfortunate happening in the life of the insurer. The insurer pays an amount equivalent to the sum assured as specified in the contract along with applicable bonuses. This is known as the death benefit.

2. Wealth Creation through Investment Components

A few life insurance policies offer wealth creation benefits as well. In such life insurance plans, you can invest your premiums in different funds based on your risk appetite. These life insurance plans are excellent wealth builders in the long run.

Invest 4G offered by Canara HSBC gives you the option of choosing from a range of seven funds. The fund options include both equity and debt investments and 4 different portfolio management strategies to help you maximise your gains.

3. Financial Security

The primary importance of a life insurance policy is that it provides your family with long-term financial security. Life insurance policies provide a lump sum money to financially support your family in the case of your early demise. Plans like iSelect Start term can look after the family’s regular expenses, future goals and any ongoing debts after your death.

4. Loan Option

A cheaper loan facility is one of the important benefits of life insurance plans. You can use your life insurance policy with the investment part for a loan as well. Life insurance plans like guaranteed savings plans, money back plans and whole life insurance policies acquire a cash value over time. You can borrow at a low rate of interest against this cash value.

5. Life Stage Planning

The importance of life insurance grows as you progress through your life stages. Life stages refer to the multiple major stepping stones like marriage, childbirth, home purchase, retirement, etc. You can use life insurance plans to prepare for each of these life stages. For example, term insurance for protection, child plan for child’s marriage and education, ULIP for building wealth, the pension plan for retirement, etc.

6. Assured Income Benefit

Assured Income benefit is another important benefit of life insurance plans. ISELECT SMART360 TERM PLAN offer a regular income payout option for your family after your early demise. Similarly, life insurance pension plans can offer a long-term guaranteed income to you and your spouse.

Reasons to Buy a Life Insurance Policy

Why Life Insurance Policy is Important for your Financial Security?

The importance of life insurance in your life cannot be overstated. It helps you and your family get financially secure. There are many benefits of life insurance other than providing financial protection. It can help you in achieving different goals throughout your life as well.

Here are some reasons that depict the importance of life insurance.

1. Cover for Critical Illness Situations

The costs associated with healthcare are sky-rocketing. If the disease is critical like heart attack, respiratory issues etc, then it is sure to dig a huge hole in your pockets. These diseases also take a lot of time to recuperate and require proper rest. Thus, during this time, you will not be able to earn as well.

Life Insurance policies such as Canara HSBC Life Insurance term plan iSelect Star, cover critical/terminal insurance in all their plan options. Thus, you are given money the moment you are diagnosed.

2. Achieve Child Goals Safely

It’s a given that as a parent, you would want the best for your child. You can align your life insurance policy so that you can help fulfil your child’s goals of higher education or marriage. But these goals require a lot of money.

There are specific life insurance plans made to achieve these goals known as Child Plans. These not only include life cover but allow you to invest and build your corpus.

Canara HSBC Life Insurance Child Plans such as Smart Junior Plan as well as Invest 4G has a lot of strategies with which you can achieve your goal.

Also, these come with a Premium Funding Benefit option that waives off the remaining premiums if you die during the policy. The policy is continued.

3. Enjoy a Safer Retirement

Retirement is one of the biggest milestones you look forward to throughout your working life. After retirement, you will no longer have your income by your side. Thus, it becomes important to accumulate enough funds so that you no longer have to worry post you retire.

Retirement plans provide your life cover as well as a stream of regular income.

Also, ULIPs such as Invest 4G has a systematic withdrawal feature that helps you receive a regular sum of money for your expenses after retirement.

Six Factors to Consider before Buying a Life Insurance Policy

Here is a list of the factors that you should consider before you decide to buy a life insurance policy.

1. Sum Assured

The first and foremost thing to look at is the amount you will be covered for through your insurance. You are required to choose the sum assured before the commencement of the policy.

Assess all the future needs and expenses of your family members before deciding an amount.

2. Duration of the Policy

This is the time for which your policy will be active. Life insurance policies come with different terms. They can range from 10 years to even covering for you till the age of 100.

The longer the policy the lower can be your premium.

3. Additional Benefits of the Life Insurance Policy

Be sure to take note of the benefits involved in the policy. These can be bonuses, riders, etc. Riders enhance the scope of the policy. Make sure that your policy contains these benefits before buying.

4. Flexibility

The life insurance policy should be flexible. These can be in the form of providing multiple payment options, freedom to choose the mode and duration of payments, etc. The more flexible a policy is the more it is easy for you to customize according to your own.

5. Terms and Conditions

Make sure you do read the terms and conditions part associated with the policy thoroughly. There can be certain things that you might not be aware of or the agent did not communicate to you.

6. Claim Settlement

Last but not least is to consider the claim settlement process of the insurer. Go through the process so that you know the steps involved to get the claim. Also, check the claim settlement ratio of the company.

FAQs on Life Insurance Benefits

1. Can I Buy life insurance Riders without a Base Policy?

No. Riders are the additional benefits that enhance the scope of your base life insurance policy. Thus, you need to purchase a basic life insurance policy to add a rider. After you do purchase the policy, you get the chance to choose amongst the riders. These do not work without insurance.

2. Will I get a return at the time of maturity of my life insurance policy?

The returns that you get if you survive the policy’s term are known as maturity benefits. Though death benefits are available in every life insurance policy, the maturity benefit differs amongst policies. These depend on the type of policy you are buying.

For example, basic term insurance does not have maturity benefits, while ULIP does.

3. How long does my life insurance plan last?

Your life insurance plan's validity is based on the following. On the occurrence of these events, your life insurance is used up.

  -  When you have surpassed the term of your policy

  -  When you die during the policy and your family gets the claims

*In case if you have opted for the premium funding benefit, the investment part of your policy will continue even after death.

4. How many riders could I add to my life insurance policy?

You can add as many riders as they are offered by the insurance company. Each rider is different and caters to a specific purpose. There is no limit on riders. However, note that each rider will increase your premium.

Life insurance plans are an absolute necessity today. It is a risk minimization and protection tool that can help insured and their dependents in multiple ways while dealing with a variety of life events. By understanding the key features and benefits of a life insurance policy, you can make an informed decision.

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