What is Life Insurance Policy?

If you know what is life insurance meaning, you must know that life insurance plan may not seem like necessary, but it sure is a smart choice in this uncertain time. It provides your family members with financial protection at the time of your untimely demise. Not only this, but life insurance definition also includes various other benefits, including tax exemptions on premium paid.

Yes. As per life insurance definition, you pay a certain amount as a premium regularly to the insurer. You can avail of tax deduction up to Rs.1.5 lakh under Section 80C of the Income Tax Act, 1961, for the life insurance premium paid. Tax benefit are subject to change as per are prevailing tax laws.

The different types of life insurance policy available in India are as follows:

• Term Life Insurance Plans
• Unit linked insurance plan (ULIP)
• Endowment Plan
• Money-Back
• Whole Life Insurance
• Child's Plan
• Retirement Plan

Nominee is the family member or relative who will receive or who will be entitled to the insurance plan benefit i.e., Sum Assured after the untimely demise of the policyholder.

You can opt for either one-time premium payment (annually) or regular premium payments which include monthly/quarterly/semi-annually.

As a policyholder, you have an option to nominate more than one induvial for your policy. However, on doing so, the pay-out amount gets divided evenly between the nominees, and each gets their respective share in a legal manner.

Yes, when you have more than one nominee, the pay-out they receive gets equally divided amongst them. However, different types of life insurance policies have different terms and conditions, so it is better to check such things with your insurance provider to assess life insurance meaning for your loved ones.

Depending on many factors such as your chosen option of premium payment, add on riders, age, and medical conditions, the premium amount you need to pay towards your insurance differs.

Typically, most insurance plans can be bought by anyone over the age of 18, however, depending on the policy terms and conditions as well as the insurer, the maximum age limit may vary.

In case of the policyholder’s (life assured) untimely death, the nominees or assignee must immediately send a claim intimation to the insurance provider. Some mandatory documents required are:

• Original insurance policy documents
• Original/attested copy of death certificate issued by local municipal authority
• Death claim application form (Form A)
• NEFT mandate form attested by bank authorities along with a cancelled cheque or bank account passbook
• Nominee’s photo identity proof such as a copy of Passport, PAN card, Voter identity card, Aadhar (UID) card, etc.

Rule of thumb for life insurance policies suggests that one must invest in life insurance plans with a sum assured that is 10 to 12 times their annual income. However, the life insurance meaning can differ from person to person as every individual has uniquely distinctive financial conditions.

Yes, it is possible to cash out your life insurance by leveraging cash value withdrawals, or opting for a loan against your policy, or surrendering your insurance plan.

The meaning of life insurance paid-up value is a lowered proportionate of the sum assured of the insurance, which includes the number of premiums paid as well as the total number of premiums. In case the premium payment for any specific types of life insurance policy is not made on time, and the policy lapses, then the specific policy obtains a Paid Up Value.

Typically, to revive or reinstate a lapsed life insurance policy, the policyholder must send forward an application to the concerned insurance company. After the application, the insurance provider may propose submitting a standard revival form.

However, depending on individual insurance company’s internal policies, the option to reinstate a lapsed life insurance policy may or may not be available.

In case the nominee passes away before the policyholder, a request for change of nominee should be filed by the policyholder. For all kinds of insurance, it is the responsibility of the policyholder to ensure that the particulars about their nominee is updated on their insurance.

However, if the policyholder’s insurance allows multiple nominees, and one of them meets with an untimely demise, then the pay-out is given to the other active nominee. Note that this depends on the terms and conditions of the insurance plan and internal policies of the insurance company.

Financial experts always recommend that you buy a life insurance policy as early in your life as possible. This is because, buy purchasing a life insurance plan when you are young like in your early 20s, you can keep your life insurance premium low. However, you should also consider additional factors like your current income, number of dependents, etc. before you make the purchase. As a result, the right age to get life insurance cover can vary significantly from one individual to another.

Critical illness cover is usually offered as an optional rider, but some life insurance companies in India currently offer this benefit as the default option. On opting for this rider, you get cover in case you develop critical illnesses like cancer, heart disease, liver and kidney disorders, etc. While opting for the critical illness rider can increase your premium, the potential payout may help you manage your medical expenses better if you develop such critical illnesses.