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What Documents are Required to Buy a Life Insurance Plan?

dateKnowledge Centre Team dateMay 28, 2021 views192 Views
Documents for Buying Life Insurance Policy | Buy Best Life Insurance Plan

Do you plan to buy a life insurance policy, because it offers financial cover to you and the family in case of some unpleasant happenings? Before finding the best life insurance plan, you must know the purpose of buying an insurance plan. Do you want to buy a policy to protect the family financially in case of your untimely death? Or you look at the policy as an aid to resolve issues such as:

  • Payment of outstanding debts
  • Aid to run house in case of loss of job
  • A major contributor to a child's higher education?
  • A combination of all or part of the above?

The purpose to buy a policy helps in evaluating the insurance amount you require for the fulfilment of the same. If you already own a life insurance plan, then it is important to know the benefit of buying an additional policy and what value will it add to the investments and financial security.

By having a purpose, you can buy the best life insurance plan that meets your requirements at an effective cost. It is also necessary to know for whom you want to buy an insurance plan. Who do you want to buy an insurance plan for?

  • Yourself
  • Spouse
  • Child
  • Dependents

Money can't fill the void your death will leave in the life of your loved ones. But it can work as financial assistance to them in your absence.

Documents for Buying Life Insurance Plan

Your application for a life insurance plan contains information largely under the following four heads. Thus, you will need to provide as many documents as well, to support your information:

  • Proof of address: Aadhaar, Driving License, Passport
  • Identity Proof: PAN card, Passport, Driving License
  • Income Proof: Salary slips, bank statement, ITR
  • Medical History: Any relevant medical report

Buying the Life Insurance Plan you Need

Understanding your financial and safety needs and finding the best suitable life insurance plan accordingly is what you need to do. Given below are a few steps and tips to break down your search and find the life insurance plan for your family:

1. Know Your Options

There are two types of life insurance plans:

  • Pure protection plans
  • Savings plans

Pure protection plans usually only work in case of an emergency. For example, a term insurance plan or health insurance plan. These plans have lower premiums but have a very important role to play in your family’s survival if anything happens to you.

Savings plans, like unit-linked insurance plans (ULIPs), endowment plans, child plans, retirement and pension plans are designed to help you achieve specific life goals. With these plans, you can hope to achieve your goal within the safety umbrella of a life cover.

For example, if you are saving for your child’s higher education, a child plan will ensure that your child gets the financial support you planned for her/him. In the case of your early demise, the plan continues to invest in your child’s goal and pays the maturity funds to the child as you intended.

2. Assess Your Insurance Need

Your insurance needs consists of two factors:

  • Your family’s lifestyle and living costs (Covered by pure protection life insurance plans like term life insurance)
  • Your family’s future goals (cover individually with savings plans)

The assessment of these two will let you know the premium amount you can pay regularly. Remember life insurance comes before investments. So, even if your income and expenses do not allow huge savings, at least the pure protection life insurance plan is a must.

The amount of cover in these plans should, however, depend on the financial need of your family. For example, a term life cover should be large enough to help your family maintain their lifestyle until the children grow up and start earning.

Or you can follow a simple rule of thumb and buy a term life cover at least 10 times your annual income. This will be enough to cover your family’s urgent financial needs for long enough for them to stand on their feet.

The financial goals will be covered individually with your savings plan investments.

3. Buy Life Insurance Online

With the availability of online insurance policies, you can find a suitable life insurance plan sitting on your couch or office table. You can check the premium cost of the life insurance plan you want to buy using the online premium calculators.

The calculators also help you compare:

  • The cost of adding different features and benefits to your plan
  • Premium amount for different premium payment tenures
  • The premium cost of paying your policy premium in different modes

The online mode lets you compare different plans, discover the company’s performance and also interact with the customer service.

Learn how to buy a life insurance policy online.

4. Insurance Application & Premium Revision

One of the steps while buying an insurance plan is the application form. You may find that the life insurance application form is a quite detailed document. You need to provide information about your life, occupation, and medical history.

For a healthy individual with a normal medical history, the insurer may allow life cover without a medical examination. However, for most other cases it will be another necessity. If you have a medical condition or a family medical history of certain diseases the insurer may revise your final premium.

Although, this amount could be higher than the originally estimated premium cost, due to your medical history the life cover is even more important for your family. In case of wrong information or hiding a piece of relevant information from the application forms, your family may lose the claim settlement.

Other factors which may cause an upward premium revision after submitting a proposal are:

  • Occupation
  • Hobbies
  • Adverse medical report

The medical examination that the insurer schedules for you is also an important step towards the financial safety of your family. It’ll help you find any medical condition you have been unaware of.

5. Select Your Nominee

At the time of applying for insurance, you need to share the name(s) of the nominee/beneficiary who would receive the sum assured after your death. In the case of a married person, the spouse automatically becomes the nominee. However, you have the option to add your children as a beneficiary.

Documents for Buying Life Insurance Policy | Buy Best Life Insurance Plan

Learn more about how to choose a nominee for your life insurance plan.

Frequently Asked Questions (FAQs)

Q: Do I need to submit proof of address while buying a life insurance policy?

A: Yes. You are required to submit proof address that can be an electricity bill, house tax receipt, or a water bill to buy a life insurance policy.

Q: What all documents do I need to submit as proof of income while buying a life insurance plan?

A: You must provide salary slips or form 16 for the tax assessment of the current year as proof of income while buying a life insurance plan.

Q: Do I need to submit identity proof of the beneficiary as well to buy a life insurance policy?

A: Yes. Along with your identity proof, you are also required to submit identity proof of the beneficiary as well to buy a life insurance policy.

Q: What documents are required for submission to receive disbursal of insurance policy in case of policyholder's death?

A: For receiving the disbursal amount of the insurance policy, you need to submit a death certificate, claim form, policy bond, FIR copy, post-mortem report if required.

Q: What all documents are required to be submitted on the maturity of the insurance policy?

A: The insurance company sends an intimation letter along with the discharge voucher to the policyholder 2 or 3 months earlier from the date of maturity to make timely payment. You are required to return the duly signed policy bond and the discharge voucher to the insurance company for timely disbursal of the amount.

After assessing the requirement choose the best life insurance policy in India or a whole life insurance policy whichever suits you the best.

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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 www.canarahsbclife.com.

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 Oriental Bank of Commerce 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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