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.
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