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Life Insurance FAQ’s

What is life insurance?

Life insurance is a contract between the life insurance company and the insured customer wherein the insurance company agrees to pay the maturity benefit to the insured or the death benefit to the nominee of the insured in return for a nominal amount known as “Premium” which is to be paid by the insured customer to the insurance company on regular intervals. Life insurance is a long term contract unlike the health and motor insurance. The minimum period of a life insurance contract would be 5 years and can extend up to 99 years depending on the type of policy.

What is a term insurance?

Term insurance is a type of life insurance in which the insurance company pays the death claim of the insured to the nominee of the insured in return for a premium. Term insurance provides the claim in case of untimely death of an insured. The term insurance is a long term contract between the insurance company and the insured customer. As the name suggests term insurance is a life insurance plan taken for a particular period of term (years).

What are the types of term insurance available in India?

Term insurance is available in many types in India, they are:-

  • Increasing term insurance- The coverage increases each year in a specified percentage i.e. 5% or 10% and the total increased sum insured doesn’t cross the basic sum insured chosen by the insured customer.
  • Decreasing term insurance – As the name suggests the coverage is decreased each year over a period of time. The sum insured decreases at certain percentage each year.
  • Money back term insurance – The premiums paid are returned to the customer at the time of maturity and in case of death of the customer the claim is paid.
  • Pure term insurance – In pure term insurance, claim is paid only on the death of the policy holder. No survival benefits are paid to the customer in case of survival till the end of the policy period.

How is a term insurance plan different from other life insurance plans?

Term insurance is a type of life insurance plan which only focuses on the coverage of life and the claim is payable only in case of death of the policyholder while the other life insurance plans are seen as a tool for savings. Other life insurance plans provide both the maturity benefit as well as death benefit to the policyholder. Term insurance is typically an insurance tool to provide claim in case of death while the other life insurance plans are saving tools.

Why should I buy a term policy?

Life is unstable and we need a backup plan to provide financial security to our family. In case of sudden demise, family might face financial hardships due to the death of the earning member of the family. A term policy covers the children education costs, clears the outstanding loans and provides income to the family of the policyholder in case of untimely demise of the insured.

Do I need to buy term insurance even if I’m covered under my company’s group policy?

Employer sponsored life insurance policy would be valid only till the time you are on the payroll of the organization. If is advisable to have a separate term insurance plan after analysing your liabilities and outstanding loans to maintain a healthy financial condition of your family in case of your sudden demise. It can also be noted that the company sponsored life insurance coverage would not be sufficient to meet your financial goals as the company offers minimum life insurance coverage without considering your liabilities.

When should I buy a term policy?

There is no better time to by a term life insurance policy. It is better now than never to purchase life insurance policy. Ideally one should purchase a term insurance policy immediately after starting a job. Early term insurance purchase results in lower premiums to be paid to the insurance companies. The term insurance premium depends on the age of the proposer and thereby increases with increase in age.

Are there any age limits for buying a term policy?

Most of the insurance companies restrict the maximum entry age to buy a term insurance policy to 65 years. This is due the general practice that most of the people retire at the age band 60-65 and also would be free from all the financial obligations and liabilities, hence there would be no need to have a term insurance policy. The minimum entry age for a term insurance policy is 18 years while the maximum entry age is 65 years. Once the term policy is taken the term can be chosen by the proposer, the younger the proposer higher the term period.

How to select the best term policy for myself?

The best term insurance policy can be selected online on our portal Life Insurance by comparing the premiums from different insurance companies. It is advisable to talk to our expert regarding your requirements which helps them in guiding you to pick the best term insurance plan in India. The best term insurance plan is the one which offers best coverage at reasonable premium.

What are the benefits of buying a term insurance policy online?

There are many benefits in buying a term insurance policy online. Few of them are listed below:-

  • Lesser premium - The premium to be paid is less in case of online term insurance plans when compared with the offline modes. This is due to the less administrative costs involved with online purchase.
  • Comparison – When purchasing online you can have many options to select from. The term insurance plans and premium from different companies would be displayed on the portal when you make a purchase online.
  • Save Time & Energy - Both time and energy can be saved by purchasing term insurance plan online. You can purchase the policy by sitting at your home and paying the premium online without requiring moving out of your comfort zone in most of the cases. These days most of the insurance companies are not stressing on physical medical tests as they are conducting telephonic tests which forms the health declaration of your proposal form.

What kinds of deaths are covered in life insurance plans?

The life insurance policies cover both the Natural and Accidental deaths. In case of death due to any illness or diseases or old age is termed as Natural death in life insurance while any death as a result of accident is known as Accidental death. Death due to murder is covered subject to the nominee or the legal heir not being involved in the murder of the policyholder.

How much life cover do I need?

Life insurance companies usually offer life insurance coverage 15-25 times your annual income. This is a standard followed by most of the life insurance companies in India. The life cover is based on your income, higher the income higher would be the life cover. If you require life cover above the set limit, then there should be a valid justification for the required coverage to be given to the underwriting team of the life insurance company.

What policy term should I select?

There are 4 types of term policies in general; Increasing term insurance policy, decreasing term insurance policy, Pure term insurance policy, Money back term insurance policy. The type of term insurance policy required varies from one person to another. The term policy should be selected on the basis of your requirements. Most people consider the pure term policy which pays the claim in case of death of the policyholder and few of them consider increasing sum insured term insurance policy. Different term insurance policies have different conditions under which they can be purchase. If you are unable to decide on which type of term insurance policy to purchase, please talk to our expert who can guide you in your term insurance purchase.

What are the in-built benefits offered under term insurance?

Most of the term insurance plans have the basic coverage i.e. coverage against death while few term insurance policies offer in-built covers such as Accidental disability riders, Waiver of premium in case of accidental disability and critical illness. Although these come as add-ons the premium for these policies would be higher when compared to the plans without any in build add-ons. The basic coverage in term plan is the coverage against death which remains in all kinds of term insurance plans.

What is the maximum cover I can get without going for physical medicals?

The maximum cover that one can get without going for medicals varies from one insurance company to another. For instance company X might offer Rs.10Lacs coverage without any medicals which some insurance companies offer only Rs.5 Lacs without any medicals. Now-a-days most of the insurance companies are conducting tele medicals to ascertain the health condition of the applicants. So the maximum cover one can get without physical medicals would be 1-2 Crore depending on the income of the applicant and the previous health conditions.

How to use the term insurance calculator?

Term insurance calculator can be used from the online portal to calculate your term insurance premium.

  • Step 1: Enter the details such as Gender, Annual income from all the sources, Alcohol consumption and tobacco consumption, Salaries or Self employed and Date of Birth. After this you need to enter your contact details to facilitate a call from our agent.
  • Step 2: Now the premium from different insurance companies will be displayed on the screen. You can edit the details such as Coverage, Term, Premium payment method, Mode of claim settlement etc and submit the details to get the desired premium. The premium can be changed by changing other factors such as Coverage required, mode of payment etc.
  • Step 3: The next step is to select the best life insurance plan and pay the premium to the insurance company before proceeding to fill the proposal form details

How to calculate my life insurance premium online using life insurance calculator?

Life insurance calculator can be used from the online portal to calculate your life insurance premium.

  • Step 1: Enter the details such as Gender, Annual income from all the sources, Alcohol consumption and tobacco consumption, Salaries or Self employed and Date of Birth. After this you need to enter your contact details to facilitate a call from our agent.
  • Step 2: Now the premium from different insurance companies will be displayed on the screen. You can edit the details such as Coverage, Term, Premium payment method, Mode of claim settlement etc and submit the details to get the desired premium. The premium can be changed by changing other factors such as Coverage required, mode of payment etc.
  • Step 3: The next step is to select the best life insurance plan and pay the premium to the insurance company before proceeding to fill the proposal form details.

What is the best term insurance plan in India?

The best term insurance plan in India can be found on the portal Life Insurance after entering the basic details of the applicant. The best term insurance plan is the one that offers the maximum coverage at affordable premiums and with all the possible add-ons. To get the best term insurance plan please talk to our life insurance expert who will guide you in selecting the best term insurance plan in India.

What is the process to buy online term insurance policy?

The process of buying a term insurance plan online has become simple with PolicyBachat. For buying a term insurance plan online please visit Life Insurance and follow the below steps.

  • Step 1: Enter the details such as Gender, Annual income from all the sources, Alcohol consumption and tobacco consumption, Salaries or Self employed and Date of Birth. After this you need to enter your contact details to facilitate a call from our agent.
  • Step 2: Now the premium from different insurance companies will be displayed on the screen. You can edit the details such as Coverage, Term, Premium payment method, Mode of claim settlement etc and submit the details to get the desired premium. The premium can be changed by changing other factors such as Coverage required, mode of payment etc.
  • Step 3: The next step is to select the best life insurance plan and pay the premium to the insurance company before proceeding to fill the proposal form details.

When will my life insurance claim be rejected?

The life insurance claim can be rejected by the insurance company due to the following reasons:

  • The death of the policy holder due to Suicide. Death due to suicide is not covered during the first year of policy by most of the insurance companies.
  • Death due to drug overdose.
  • Death due to accident caused under intoxication.
  • Non disclosure of medical history or incorrect declaration in the proposal form.
  • Policy lapse due to non payment of premiums.

How to renew my life insurance policy?

Life insurance renewal has never been simple as it is now. With the advent of technology the life insurance renewal process is simple. You can renew your life insurance policy with online without worrying about the need to go to insurance company office to pay the premium. To renew your life insurance policy online please contact our agent who can assist you in renewal process. Insurance companies send a payment link to the customer to renew the life insurance policy; once the payment is made renewal intimation will be sent to the customer.

What is the ideal time to renew my life insurance policy?

The ideal time to renew a life insurance policy is before the expiry. Once the policy expires there would be no coverage to the insured, to prevent this life insurance policy should be renewed before expiry. In case you are not able to renew your life insurance policy before the expiry date, it is advisable to renew during the grace period which is provided by your insurance company. If the payment is not made for renewal during the grace period, then your life insurance policy will be lapsed.

What happens to my life insurance if it’s not renewed on time?

Your life insurance policy expires if it is not renewed on time. Most of the insurance companies offer up to 30 days as grace period for customers to renew their life insurance policy failing which the policy would lapse. The renewal should be made before the expiry date or the last date of grace period.

What are the tax benefits on life insurance policy?

The premiums paid towards life insurance are eligible for certain tax benefits. Under section 80C of the Income tax act, life insurance premiums paid are eligible for tax exemption of up to Rs.1.5 Lac. The critical illness rider under your life insurance policy is eligible for tax deduction under section 80D up to Rs.60000. The claim amount received on the death of the policyholder is fully tax exempt under Section 10(10D) of the income tax act. In other words the proceeds from the life insurance policy are tax free.

Can I cancel my life insurance policy?

Yes, you can cancel your life insurance policy. There is a cooling period or free look period of 15 days from the date of issuance of the policy. You can cancel your life insurance policy during the free look period without any penalties. If you wish to cancel your policy after the free look period, a pro rate premium would be deducted by the insurance company and the remaining amount would be paid to you.

What is grace period in term life insurance policy?

Grace period is the time in which the policy would remain inactive till the time premium payment is done and claims would be made only after the clearance of pending premium payments. Generally the grace period in life insurance policies is 15 to 30 days, during this period the customer can renew the life insurance policy. If the premium payment is not made within the grace period, the policy would lapse. Therefore it is essential to make the payment before the expiry of the policy or during the grace period. The grace period starts from the due date of renewal.

What happens if I declare wrong information in my life insurance application form?

Life insurance works on the principle of utmost good faith which means that the information declared by the customer would be considered as accurate and the policy would be issued based on the information provided in the proposal form. Incorrect declaration can lead to the termination of the policy or denial of claim. The declaration made by the applicant is considered to arrive at the premium and the coverage, if incorrect declaration is made in the proposal form it results in claim being rejected by the insurance company.

What is Policy Bachat and how does it help with my life insurance policy purchase?

Policy Bachat is an online insurance web aggregator which helps in selecting the best insurance policy for its customers based on the customer’s requirements. We at PolicyBachat provide the customer with wide range of options to select from. The best life insurance policy can be selected online from our portal. We even provide assistance to our customers in selecting the best life insurance policy based on the requirements of the customer.

What are the documents required for making life insurance claim?

Below are the documents required for making a life insurance claim:-

  • Original life insurance policy copy
  • Original/attested death certificate issued by the local authorities
  • FIR Certificate  stating the cause of death
  • Panchanama certificate
  • Death claim application form
  • NEFT mandate or cancelled cheque leaf.
  • Medical records
  • Post mortem report

These documents are to be submitted to the insurance company to process the life insurance claim. Different set of documents are required for different causes of death.

For any query regarding life insurance plans please visit our portal and talk to our agent to select the best life insurance policy from different insurance companies available online.

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