FAQ's

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• What is Life Insurance?

  Life Insurance is a contract between a person and a life insurance company to reimburse his/her beneficiaryA person(s) designated by the policy owner to receive the proceeds of an insurance policy upon the death of the insured. (usually a spouse or child) at the time of his/her demise. The reimbursement amount is pre-decided based on the terms of the policy.

• Why is Life Insurance useful?

  Life Insurance is useful to provide your family with financial security in case circumstance throws you into a situation where you cannot earn or in the case of your premature demise. It helps keep your family in a position to enjoy financial security even after your demise.

  Life insurance policies also offer you the ability to save, which helps provide financial stability.

• Is Life Insurance necessary?

  Life Insurance is not necessary but is a smart investment to make, especially if you have a dependent spouse and children. It offers your family the benefit of financial support even after your death. In addition to this, it offers a number of advantages and provides a lot of flexibility on your investment. For example, you can add a critical illnessIncludes a range of illnesses that affect your health majorly, during a defined period of time. riderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. to cover the cost of expensive for surgeries and operations; you can withdraw a part of your maturity benefit in case of an emergency or for your child's education or marriage, etc. Life Insurance policies come with a lot of flexibility.

• How do I decide on the amount of life insurance I need?

  The amount that you receive on maturity depends on the amount of premiumA regular payment made to the insurance company to keep the policy in force. you pay. The maturity benefit you need depends on your standard of living, income, spending habits, etc. You should aim to receive a maturity amount equal to 8 to 10 times your annual salary.

• How much does life insurance cost?

  The cost of life insurance depends on the type of policy you take, the amount of premiumA regular payment made to the insurance company to keep the policy in force. you pay, the sum insured, your age and the benefits you expect to receive when your policy matures.

• Do I have different options to pay my premiumA regular payment made to the insurance company to keep the policy in force.?

  Yes, there are options available to you to pay your premiumA regular payment made to the insurance company to keep the policy in force.. You can pay your premiumA regular payment made to the insurance company to keep the policy in force. monthly, quarterly, half-yearly or yearly. You can also pay it in one lump sum. However, a monthly premiumA regular payment made to the insurance company to keep the policy in force. is the most common because the amount is relatively small and it is easier to monitor and be prepared for a more frequent premiumA regular payment made to the insurance company to keep the policy in force. payment.

• What if I don't pay my premiumA regular payment made to the insurance company to keep the policy in force. on time?

  You usually get a grace periodPeriod of time after the due date of a premium, during which the policy remains in force., up to 30 days, to pay your premiumA regular payment made to the insurance company to keep the policy in force. once it falls overdue. If you still don’t pay you premiumA regular payment made to the insurance company to keep the policy in force. after the grace periodPeriod of time after the due date of a premium, during which the policy remains in force. your policy stands defunct and you cannot claimNotification to an insurance company that payment of an amount is due under the terms of the policy. any benefits from your policy.

  However, you can revive your policy once you pay all your overdue premiums and you will again start receiving the benefits of the policy.

• What are the advantages of investing in a life insurance policy?

  In addition to giving you, and your family, financial protection investing in life insurance offers many other benefits.

  • Encourages the habit of saving so you are provided with financial security at the time of retirement or your family is provided with financial assistance at the time of your demise.
  • Through a Life Insurance policy you can claimNotification to an insurance company that payment of an amount is due under the terms of the policy. a tax benefit under section 80C of the Income Tax Act, up to Rs. 1,00,000.
  • The maturity benefits from a life insurance policy are tax free under section 10(10D) of the Income Tax Act.
  • You can invest in a policy that offers you a loan against your amount invested, if you need financial assistance in the case of an emergency. You can also take a loan from a bank or financial institution and put your policy up as collateral for the loan.
  • You can invest in a policy that allows you to withdraw a part of your investment at the time of a financial emergency.
  • You can add a critical illnessIncludes a range of illnesses that affect your health majorly, during a defined period of time. riderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. to your policy, which offers you medical aid in case you are inflicted by a serious illness or injury. Under this riderAn attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage. you can also claimNotification to an insurance company that payment of an amount is due under the terms of the policy. a tax benefit up to Rs. 15,000 as specified in section 80D of the Income Tax Act.
  • You can also invest in policies in the name of your spouse and children and claimNotification to an insurance company that payment of an amount is due under the terms of the policy. tax benefit, under section 80C, on those policies as well.

• So I won’t be able to claimNotification to an insurance company that payment of an amount is due under the terms of the policy. tax benefits if I stop paying premiums on my life insurance or pension policies, right?

  Correct. If you stop premiumA regular payment made to the insurance company to keep the policy in force. payments of your policy, it amounts to discontinuation of the policy and you cannot claimNotification to an insurance company that payment of an amount is due under the terms of the policy. any tax benefits. However, if you discontinue paying your premiumA regular payment made to the insurance company to keep the policy in force.s after 2 years from commencement of your policy, tax will not be deducted on premiumA regular payment made to the insurance company to keep the policy in force. paid in the year when your policy ends. The amount of tax deducted on the premiumA regular payment made to the insurance company to keep the policy in force. paid in the preceding year, is taxable in the year when policy terminates.

• What about with a Unit Linked Insurance Plan (ULIP). Can I claimNotification to an insurance company that payment of an amount is due under the terms of the policy. tax benefits if I discontinue my ULIP policy?

  In the case of a Unit Linked Insurance Plan you are not entitled to receive any tax benefits if you stop paying premiums earlier than 5 years from the commencement of your policy.

• What about tax benefits on medical insurance premiums?

  In calculating your (individual or HUF) total income, any sum paid by you, other than in cash, out of your income that is chargeable to tax

  • to effect or to keep in force insurance for your health or the health of your spouse or children and
  • to effect or to keep in force an insurance on the health of your parent or parents

  up to Rs. 15,000 for each person mentioned in (i) and (ii) in the previous year and in case the person is a senior citizen up to Rs. 20,000 for each person mentioned in (i) and (ii) in the previous year shall be allowed a deduction.

• Can I claimNotification to an insurance company that payment of an amount is due under the terms of the policy. tax benefit on the interest on a loan taken against an insurance policy for the purchase or construction of a house?

  Interest on loans taken against an insurance policy is allowed as a deduction from income chargeable under the head “Income from house property” provided the amount of loan is used by the policyholder to acquire, to construct, to re-construct, to repair or to renew any property.

• What are the Tax Benefits in case I opt for a Pension Plan?

  You can claimNotification to an insurance company that payment of an amount is due under the terms of the policy. tax benefits for a Pension Plan under Section 80CCC if you have paid premiums. You will receive pension from a fund referred to in Section 10(23AAB). You will be able get a deduction of up to Rs. 100,000 on your total annual income.

• What happens when my life insurance policy matures?

  When your policy matures you will receive the accumulated amount. This amount will include the total of all your premiumA regular payment made to the insurance company to keep the policy in force.s paid, plus any bonuses you have received on the part of your premiumA regular payment made to the insurance company to keep the policy in force. that has been invested by the insurance company on your behalf (for eg, ULIPs). The amount you receive will be quite substantial because the premiums you pay will accumulate and get compoundedThe value of an investment increases exponentially over time due to compound interest on being compounded. every year till the maturity of your policy.

• Will I have to pay tax on my maturity benefit?

  No, you will have to pay no tax on the maturity proceeds of a life insurance policy. In fact, under a pension plan you can even withdraw up to one-third of the total maturity amount in cash and that too will be tax free. All this is provided that you have paid all your premiums and you have not let your policy lapse.

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