- List of Lifetime Financial Security
- Why Life Insurance
- Benefits of Life Insurance
How a Life Insurance Policy Can Secure Your Future- Know Everything
Life Insurance plays a pivotal role in securing your loved ones even with or without your presence. In the meantime, when financial instability hits hard, life insurance comes to provide them with monetary well-being.
It comprehensively covers all the requirements when you're not there to help them meet even the basic needs. That is why Life Insurance is a mandate for leading a worry-free life protecting all your doubts in advance. Because you never know what's next for you in the store of life. Let's read further about the types, benefits, factors, etc. before buying a life insurance policy in this article.
What are the types of Life Insurance?
Explore different types of Life Insurance, that feature all your future requirements:-
Types |
Key Aspects |
|---|---|
| Term Life Insurance | It lasts for a specific number of years, depending on how long you need a policy (generally, 10/20/30 years). Provides financial strength to the policy owner at affordable premiums. There are 3 different types of term life insurance- |
| Decreasing term life insurance- It's renewable term insurance with a decreasing coverage at the predetermined ranges. | |
| Convertible term life insurance- It allows the policy owner to convert this term policy into a permanent policy | |
| Renewable term life insurance quotes a range for the policy year but renews premiums yearly. Premiums keep increasing annually so it becomes expensive later | |
| Permanent Life Insurance | It provides lifetime coverage to the insured until and unless he stops submitting the premium or usually surrenders the plan. There are different types of permanent life insurance- |
| Whole life insurance- It sources in cash value that lasts till the last days of the insured | |
| Universal life insurance- Its cash value gains interest to the insured's coverage and has flexible premiums. The premiums are adjustable over time | |
| Indexed universal insurance- The policyholder can earn a fixed interest or equity rate of return over the cash value component of the policy | |
| Variable universal life insurance- Just like universal life insurance, its premiums are flexible and can be adjusted either with a level death benefit or with an increasing death benefit. It allows the cash value to be invested in the insured's account |
How does Life Insurance Work?
When you want to secure your family's future and purchase a life insurance policy in your name. Here, you become a policyholder and add the name or details of one or more than one beneficiary to your policy. The policyholder then needs to submit a specific amount as a premium to the insurance company to keep the policy active. The beneficiaries will later receive the benefit of your policy upon your death called the death benefit upon your death. This benefit is a payout amount provided by the insurers depending upon the sum insured mentioned in your policy.
Let's understand the functionality of a life insurance policy through an example:-
Meeta is a 38-year-old working professional who bought a life insurance policy to secure her daughter Shamita's future. She pays a monthly premium to her insurance provider, in return she'll get her daughter's security at any cost. If she passes away before completing her policy tenure, her daughter will receive the amount of Meeta's death benefit. But if she survives the policy term, she herself will receive a lump sum amount of her total sum assured amount.
Procedures and Documents required for claim settlement:-
Claim Intimation:- The nominees of the assured person should approach the insurer informing them about the policyholder's death.
Submitting the Documents:- The original documents and the proof of assured death shall be submitted to claim for payout against the policy. These are the documents that are required to proceed with a claim settlement:-
- Original copy of policy document
- Copy of the original death certificate
- Hospital bills
- Identity proof of the claimant or nominee
- Post-mortem/autopsy records
- Panchnama, FIR, PIR, Police statements, etc., if applicable (in case of an accidental death)
Settlement of claim:- Once the nominee is done with submitting all the required documents, the insurer will proceed with the payout.
What are the Benefits of Purchasing Life Insurance?
Life Insurance is not just financial protection, it's a roof saving your loved ones from all those future worries. Let's hop upon the benefits life insurance provides to you and your family:-
Benefits |
Explanation |
|---|---|
| Financial protection | If you ever lose your life or meet with an unexpected accident in your life, your life insurance policy will ensure financial coverage and a stable source of income for your loved ones. |
| Tax-free payouts | The death benefit received by the beneficiaries after your death will be exempted from any taxes. |
| Debts & mortgages | If you fear bagging any inheritance of debts or mortgages to your family, life insurance can manage an outstanding debt on your behalf. |
| Funeral or burial expenses | Final rites are covered if the policyholder dies in any circumstance. It can alleviate the financial burden of your family in those times. |
| Educational aids | Life insurance also comes to the rescue when it comes to compromising your children's future. It helps to ensure your kiddo's future aspirations are met. |
| Estate planning | It's also helpful to minimize estate taxes and to plan your estate purchase or property transfers with ease. |
Who Needs to Buy Life Insurance?
Here's a list of individuals who are more likely to have insurance for life, check out below:-
- Parents with minor children or dependents going through financial hardships but want to give their children a good life, even if they're not in this world
- Parents whose children need special care and are not self-sufficient enough to bear all the treatment expenses
- Adults having common property or a mutually funded house. Generally, this comes into action when one partner dies and the other one is incapable of paying loans
- Senior citizens who want to leave a legacy for their children who have served them in old
- Young adults to whom their parents consigned an education loan or debts for their studies
- Young people who want to lock the deal at lower premiums and want to secure a bright future for themselves and their loved ones
- Small business owners, in case the business goes down and you require funds for survival. It can help you support your loved ones in hard times.
Decide- Why Do You Need Life Insurance?
It's important to educate yourself before buying a life insurance policy so that you can make a learned decision about which plan suits you the best. Here's a precise list of what you should check in a policy before buying it:-
-
Duration and Amount Covered
Determining the timeframe of the coverage you need and the coverage amount that could be sufficient according to your requirements. -
Additional Riders over Policy
Adding additional riders to your policy like a death benefit rider, critical illness rider, disability benefit rider, and so on can ensure enlarged coverage for your loved ones. -
Insurer's Reliability
The reputation and financial strength of your insurance company highly impact the claim settlement possibilities. So it's better to rehearse thoroughly before buying it. -
Premium Amounts
Opt for a premium amount that suits your affordability and still doesn't compromise on broader coverage. -
Situational Adaptation
It's mandatory to update your policy coverage in any major happenings, be it a new birth, marriage, career developments, etc. -
Special Care Dependents
To provide high-end support and continuous care to the policy owner's dependents who are in special need, life insurance can be a huge aid. -
Legacy & Inheritance
Leave behind the values that inspire your beneficiaries to benefit themselves in the time when you're not there. -
Estate Taxation Plannings
It can help plan your estate taxes creating a whole-new wealth opportunity for your future alikes. -
Requirements
Get a customized Life Insurance policy that suits your needs, click on these cards to know more!
Factors Affecting Your Life Insurance Premiums
There can be n reasons for increasing premiums, let's know them down:-
Factors |
Explanation |
|---|---|
| Age | The earlier/younger your start, the lower will be the premium |
| Gender | Women have lower risks of death (as per the statistics suggest) so they get a lower policy premium than men |
| Lifestyle | If you're involved in adventurous activities or an untraditional lifestyle, your premiums will be high |
| Job profile | People doing a high-risk job easily lose their lives which results in high payable amounts for a policy |
| Driving record | Being a decent and safe driver will cost you nothing but your life, hence you get minimum premiums |
| Alcoholism/smoking | Any method of consuming alcohol/tobacco/nicotine/drugs, etc will cause a hefty premium |
| Medical history | Family medical history tends to get you pre-existing conditions, and it probably will cost you heavy payable amounts |
Common Myths about Life Insurance- Let's debunk it!
Whenever you think of buying a life insurance policy, you must have heard that it's quite expensive to buy it. But the scene is exactly the opposite of this. We'll bust the myths related to life insurance policy:-
Myths |
Facts |
|---|---|
| I'm young and I don't need life insurance. | Buying Life Insurance at a young age locks in better coverages for lower premiums and continues to benefit you even after your health deteriorates post-purchase |
| Life insurance is only for senior citizens. | The fact is, Life Insurance Policy ensures financial protection for you and your loved ones in an unexpected accident/situation. |
| I'm single and don't have any dependents, so why would I need life insurance? | Life Insurance for single survivors can provide financial freedom, and cover your debts, and burial or funeral costs post-death. It can also benefit their chosen beneficiaries. |
| My employer has given me certain coverage, so I don't need a separate life insurance policy. | Life Insurance provided by your employer shall not benefit you in the long run. It can not cover all your family needs or could end by default if you leave your job to the related company. |
| I can't afford heavy premiums and Life insurance is too expensive. | If you start at a young age, LIfe Insurance could be typically affordable. Primarily, the income tax clause doesn't affect the death benefit, hence it becomes tax-free. |
Bottom Remarks
Life Insurance is a comprehensive tool to secure the future of your family when you're not around to provide a backbone of financial stability. But it's necessary to understand the basics, types, benefits covered, how it works, etc. of life insurance. Such that you could make an informed and sincere decision that covers you in the long run.
Here's a list of the Best Life Insurance Policy providers that will help you achieve your future goals at their best.
How does Life Insurance Work?: FAqs
1. I want to buy life insurance, how will the premiums be determined?
The amount of premiums in a life insurance policy solely depends upon the policyholder& 039;s age, the type of policy he has bought, coverage amount and benefits, health status, lifestyle, and so on.
2. Can I change the beneficiaries in my life insurance policy?
Yes. The names of beneficiaries can be changed or modified at any time. This needs to be discussed with your insurance provider(s).
3. Is it possible to have multiple life insurance policies?
Yes, it& 039;s possible to have more than one or two insurance policies with your name. In case you want full-fledged coverage and don& 039;t want to risk unforeseen circumstances. You can buy multiple life insurance policies from different insurance companies according to your requirements.
4. What will happen if I forget or miss to pay a premium?
Many policies provide a specific grace period that can help you pay premiums on time. But if you are consistently missing your premiums submission, it could lapse the policy resulting in to loss of your coverage amount.
5. What is the process of death benefit payout?
In the case of the policyholder& 039;s demise, the beneficiaries in his policy receive the amount as a death benefit. This amount is tax-free and paid as a lump sum or on an installment basis.
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Written By: Simran Nirala
Lives In: Delhi, NCR Expertise: Health & Term Insurance Simran has an experience of 4 years in content writing. She transitioned from hospitality and digital marketing to the insurance industry after her emerging interest in how vast insurance is. With her ability to write complex insurance concepts in a simple, relatable manner, she keeps her audience hooked and solves their doubts smoothly.
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