In India, the average penetration and density of life insurance is 2.76 percent. There have been improvements in this area, but overall growth in India has been slow. The numbers for penetration show that not many people are aware of the benefits offered by a life insurance company.
Accidents and mishaps are powerful indicators of how fragile human life can be and how we need to ensure our lives on a systemic level. It is an important tool for ensuring the safety and security of a person’s family. It serves as a safety net for the insured’s dependents.
If people do not insure their lives, their dependents face the tragic loss of a loved one, as well as a slew of liabilities such as rent, loans, EMIs, and child care.
Life insurance is critical for families to feel secure and confident in their ability to carry on with their lives without losing their daily stability.
Different Types of Life Insurance Policies in India
Life insurance cover surrounds a wide range of situations. The primary goal of a life insurance policy is to ensure the financial security of your family after your death. However, there are numerous policy options within life insurance to meet a variety of financial objectives.
Thus, before deciding to purchase a life insurance policy from a life insurance company, it is critical to understand the various types of life insurance policies available in India.
1. Term Life Insurance
Term insurance is widely regarded as the most basic type of life insurance. It is a simple insurance policy that provides life insurance cover for a set period of time. If the life insured dies during that time, the nominee is entitled to the predetermined death benefit.
The most distinguishing feature of a term insurance policy is a large amount of life insurance cover provided at extremely low premium rates. Certain term plans also provide maturity benefits, such as the return of premiums if the policyholder lives longer than the policy term.
2. Whole-Life Insurance Plan
Unlike term insurance, which provides life insurance cover for a set period of time, whole life insurance provides life insurance cover until the policyholder’s death. You can choose a participating or non-participating policy based on your financial needs and risk tolerance.
Although the premiums for participating whole life insurance are higher, dividends are paid to policyholders on a regular basis. The premium rates for a non-participating policy are lower, but the policyholder does not receive regular dividends.
3. Unit Linked Insurance Plan (ULIP)
Because of their versatility, ULIPs are popular among the many forms of life insurance plans available. ULIPs provide the dual advantages of investing and insurance.
A part of the premiums paid for ULIPs is used to ensure life insurance cover, while the remainder is invested in a variety of investment vehicles such as market-backed equity funds, debt funds, and other securities.
Because investors may readily swap or divert their premiums across the many funds offered by a life insurance company, ULIPs are exceptionally versatile securities.
4. Child Insurance Plan
A child insurance plan is one of the several forms of life insurance that a life insurance company offers. Such a plan is designed to achieve a single goal: to provide financial security for the policyholder’s kid in the event of the policyholder’s untimely death.
Parents may invest in the finest child insurance plans to fulfil the financial needs of their kid’s schooling, marriage, or a variety of other financial ambitions that their child may have.
5. Endowment Plan
This is another sort of life insurance policy that serves as both an insurance and a savings tool. Endowment plans are designed to give maturity benefits to the life insured in the form of a lump sum payout at the conclusion of the policy term, even if no claim is made.
Endowment plans are suited for customers who want full life insurance cover as well as a substantial savings component. They assist policyholders in developing the habit of saving while also offering financial stability to their families.
6. Money Back Plan
A money-back policy, which is one of the greatest forms of life insurance plans, pays policyholders a percentage of the entire amount insured at regular intervals in the form of Survival Benefits.
When the policy reaches maturity, the remaining Sum Assured is paid to the policyholder. If the policyholder dies during the period, their dependents get the whole Sum Assured, with no deductions.
7. Retirement Plan
A retirement plan is life insurance designed to provide you with financial stability and security once you retire. You lose your regular income from your job when you retire. Investing in retirement plans may help you build a steady source of income.
If you continue to invest until retirement, the plan will assist you in meeting your post-retirement expenditures. A retirement plan asks you to invest a portion of your earnings on a regular basis during your working life.
How to Claim a Life Insurance Policy?
The most common question concerning life insurance is how to submit a life insurance claim. The fact is that the procedure is similar to applying for any other kind of insurance. Here are the fundamental steps:
1. Contact the insurance company or agent
They should be able to explain their claim-filing procedure. The insurance provider’s name will be printed in large characters on the life insurance policy, making it impossible to overlook. If you recall the agent you worked with, request them explicitly.
2. Get copies of the death certificate
Obtain certified copies from the funeral director. Photocopies are not accepted by life insurance providers. And although this is a little off-topic, it is critical: Obtain a minimum of 10 certified copies of the death certificate.
You’ll need them to cancel subscriptions, shut accounts (such as mobile phones), get access to bank accounts, submit income taxes, and contact utility providers to have services turned off.
3. Fill out the paperwork and send it in
Most insurance providers provide their paperwork online. If that isn’t an option, contact your insurance provider or agent to find out what you need to do. They’ll most likely want you to supply the death certificate and the papers.
4. Specify how you want to be paid
Some insurance companies provide a lump sum payment, but alternative possibilities exist. You must inform the firm of your choice. Continue reading to learn more about the procedure.
Wrapping It Up
It is impossible to overestimate the value of life insurance in your life. It assists you and your family in achieving financial security. Aside from financial security, there are several advantages to having life insurance cover. It may also assist you in reaching various objectives throughout your life.
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