Life Insurance

Why do you need Life Insurance?

Life is full of uncertainties & you can’t really presume that your future is devoid of risks, so to
be safe one has to get himself insured so that his dependents are offered with financial help in
any unforeseen event.
Life Insurance caters to your following requirements :

 Financial Security to your family

 Investment & saving options
 Protection of your home mortgage
 Saving options for Retirement through Pension plans
 Saving options for Children through Children Insurance Plans

Life Insurance Policies at a glance

Term Insurance : The Term Insurance policy is a Plain Vanilla Insurance Plan which offers
financial help to the family in case of Insured’s demise only during a limited term/tenure of the
plan. As & when the policy expires, you don’t receive any benefits at the maturity. One of the
most striking features of this plan is its Premium rates which are very low along with the
maximum sum assured. Now Insurance Companies have brought in Premium Back Term Plans
wherein you get benefits at the maturity of the term even if you don’t make any claims, however
this feature tends to increase the overall Premium amount

Endowment plans: The Endowment Plans are basically saving plans which offer Insurance
against the Insured’s death during the term of the plan, simultaneously acting as a saving tool.
Unlike Term Plans which don’t offer maturity benefits Endowment Plans provide benefits when
the policy expires. In the case of the Insured’s death his family receives the sum
assured/stipulated coverage along with the accumulated profits/bonus. When the Insured
survives the term period he receives the life coverage plus the profits & bonuses

Whole Life Insurance : The Whole Life Insurance Plans are Permanent Insurance Plans which
run as long as the Policy Holder is alive. The Insured pays the premium amount throughout his
life time. The beneficiary of the policy receives the coverage amount plus the interest &
accumulated bonus only at the time of Insured’s death.

Retirement Plans : These are basically called savings or annuity plans wherein the Policy
holder saves for his retirement by accumulating a corpus which is received at the time of the
retirement. The policy holder either pays in lump sums or at regular intervals over a certain
period of time.
There are two types of annuity Plans in the market – the Immediate Annuity & the Deferred
Annuity, the former is normally for those whose retirement is imminent wherein one invests a
lump sum amount & start receiving the annuity immediately. On the other hand in the Deferred
Annuity, you can start saving for retirement at the young age & accumulating your corpus with
regular premium payments over a period of time called deferment period, post that you can start
your annuities as per the policy.

Children Insurance Plans : These plans act as an important saving vehicle for your child’s
future helping your child at important milestones of his/her life such as Graduation, higher
studies, MBA & at your daughter’s wedding. The Child Plans by Insurance Companies play a
monetary shield in such time when you want your child’s dream come into a reality & help them
prove their talents & excel in their career. In a nutshell these plans offer financial security to
children in the form of savings combined with life insurance by paying at regular intervals so
that the money available to your child at pre-determined stages.

Unit Linked Insurance Plans (ULIPs) : ULIP is an investment vehicle combined with the
feature of life insurance coverage & tax benefits. Thus offering twin benefit of risk cover &
investing in the market-linked instruments, however the policyholder has to borne the risk related
with stock markets. You have the option of spending in numerous funds varying from 100%
Debt Funds to 100% Equity Funds. The ULIPs should be bought with lot of care as they have
upfront charges varying from company to company which range from 10-40%.

Tax Benefits in Life Insurance

Premiums paid for Life Insurance holds benefits of tax deduction under section-80C of Income
Tax Act 1961 subjecting to an upper limit of Rs. 1, 00, 000 in each financial year. Amount
deductible from your taxable is equal to 100% of investment or Rs. 100,000 whichever is lower.

Tax Benefits in Pension Plans : Under Section-80CCC Premiums paid for Pension Plans enjoy
a tax benefit of Rs. 1, 000, 00, this limit falls under the same limit of Section-80C.

Taxability of Maturity Proceeds : Any sum received from Life insurance policy as maturity
proceeds, death benefits is tax-free. In the Pension Plans one-third of the value at vesting date
would be tax-free & annuity can be purchased with the rest two-third amount, cash received from
this will be considered as part of your income & taxed accordingly.

Riders in Life Insurance

Riders are one of the important ingredients’ of life insurance acting as ADD-ON Covers to your
Insurance Policy which are otherwise payable if taken as a separate plan, however these riders
increase the overall premium of the policy. They can be customized according to the policy you
buy matching your present & future needs & giving you an extended cover/protection against
certain risks of life.

Following are the common riders offered by Life Insurance

Players:
Critical Illness or Dread Disease Rider : This is a very common rider wherein the insured is
paid the sum assured in case he suffers from the critical/dreaded diseases like Cancer, Stroke,
attack etc and survives the illness for a period of 30 days from the date of diagnosis. The diseases
covered under this rider differ across Insurance Providers; you must check the exclusivity clause
& the number of diseases covered before buying an insurance plan. Also the premium paid for
the rider is eligible for tax deduction under section 80D of the Income Tax Act.

Accidental Death & Disability Rider : Insurers cover the Insured in the case of accidental
death or if they become disabled either partially or permanently owing to the accident. There are
certain exclusions to the riders such as suicide etc. which must be checked before buying.

Waiver of Premium Rider : This rider has a unique feature wherein you can ceased to pay your
premium in case of any unforeseen event like acute illness of the policy holder or accident,
however the policy continues to stay alive.

Term Rider : This rider adds to your risk cover/life coverage providing for payment of the
coverage face amount in event of death of the life insured with lower cost. Insurers have a limit
to the maximum sum assured in this rider.
Life Insurance Plans for women In today’s modern world where the women have now surpassed
men in every field, they are not just home-makers but are independent, working & earning their
livelihood. Insurers have now brought in insurance plans specially designed for women
considering their requirements.