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Life Insurance: All You Need to Know

What is Life Insurance?

Life Insurance plan is essentially a contract between an individual (policyholder) and an insurance company (insurer). Under the contract, the policyholder pays a certain sum of money as a premium to the insurance company. In return, the insurer promises to pay a specific sum of money (sum assured) to help cover all financial expenses in case the policyholder (life assured) experiences a catastrophic event (a list of such events is available in the policy document)

In simple terms, life insurance is one of the simple ways you can ensure that your pockets and financial plans are not severely affected by an unforeseen contingency like sudden hospitalization, disability, or death.

In case of your demise, the insurance money (or death benefit) paid by insurance company will help your family maintain their lifestyle and pursue their goals without depending on anyone else.

Although the death benefit is the primary feature of life insurance, you can add many other benefits such as health cover and disability cover.

What Are the Important Life InsuranceTerms That You Must Know?

1. Who is the Policyholder?

The policyholder is an individual who purchases a life insurance plan. If you are working and earning a salary, then you can purchase life insurance as a policyholder. However, if you do not have a source of income, you cannot buy a life insurance plan for yourself.

2. What is Sum Assured?

It means an amount as specified in the term insurance policy schedule, which is payable to your nominee upon your death. In other words, it is the life cover amount that the insurance company promises to pay your family in case of your unexpected death within the policy tenure.

The calculation of the maximum value of sum assured and required premium amount is based on your current income, selected policy tenure and the mode of payout.. You can use an online life insurance calculator to get an estimate of the Sum Assured and the premium amount payable that you can avail under a plan.

3. Who is a Nominee?

The nominee is the individual who receives the insurance plan benefit amount (the Sum Assured of the policy), after the death of the life insured. Therefore, the nominee should be a family member.

While you can include your mother, father, spouse, or child as a nominee, it is also possible to nominate relatives such as an uncle, aunt, and nephew.

How to Choose a Nominee for Your Life Insurance?

The choice of the nominee is entirely dependent on the policyholder. Therefore, you need to assess your family’s needs and the nominee’s accountability before appointing a nominee who will benefit from the compensation.

When buying a life insurance plan, you can nominate your mother, father, spouse, or child as the nominee.

Moreover, if you’re wondering, “Can I choose more than one nominees?” The answer is, “yes.” Insurance companies allow policyholders to choose more than one nominee, in case they wish to do so.

You can either add multiple nominees who will be eligible to divide the sum assured (the insurance death benefit) amongst themselves in equal proportion after the death of the policyholder, or one can specify the percentage in which the death benefit has to be divided.

4. What Do You Mean By life insurance Term (Coverage Period)?

The period of coverage is defined as a specific period, within which the insurance protection is granted to a policyholder. For most life insurance types, you can freely choose the coverage period.

Therefore, it is advisable that you select a coverage period that helps you extend the life insurance protection over most of your working life. This way, you can make sure that your insurance plan is active while you achieve important goals in life, such as buying a home, financing your child’s education and marriage.

What period of Coverage should you choose?

Ideally, you must purchase life insurance for a tenure that at least coincides with your working years. For example, if you are 25 years old and plan to retire at the age of 60, the cover period should be 35 years. On the other hand, if your financial goals would stretch beyond your retirement (such as child’s marriage), you must choose a policy tenure, long enough to help you cover all such events.

Why Should You Purchase Life Insurance?

Whether you are a young professional, newly married, a young parent, or nearing retirement, your family’s happiness and security is always a top priority. You take care of your family’s financial needs, providing them with a suitable lifestyle.

However, if anything unfortunate happens to you, the household needs and dreams of your family should not suffer. Life insurance can ensure that your dependents can look after themselves and meet their goals even when you are not around.

When you purchase term insurance plan, you choose a significantly large amount of money (life insurance cover/sum assured) that your family will receive after your death during the policy term. After your death, the life cover amount will assist your family to cope with the sudden loss of income and maintain their current lifestyle.

You can use an online life insurance calculator to get an estimate of the highest possible life cover that is available under the plan and the premium amount payable. This way, you can make sure that you have the best possible financial protection for your family.

Moreover, life insurance can help you avail significant tax benefits and by buying Critical illness benefit rider (available at an additional cost) will protect you against serious health issues, such as heart conditions, cancer, brain tumour etc.

What Are the Benefits of Life Insurance?

"Who will get the benefit of your life insurance?"

"How Life Insurance will help if anything happens to me?"

Such questions usually cross one’s mind when they plan to buy life insurance.

You need to understand that life insurance can offer many more benefits than just a large sum to your family at your untimely demise. The following are some significant benefits of buying life Insurance.

What are the Types of Life Insurance Plans?

Life insurance is not a single product; instead, it has many forms. Most common types of life insurance include term plans, unit linked insurance plans, endowment plans, and retirement plans.

Thus, you need first to understand the working of each form of life insurance and then compare between plans to see which one suits you the best, in terms of benefits as well as affordability. Using a life insurance calculator here can help you assess your life cover requirement and choose the most suitable plan variant.

Let us take a closer look at the different life insurance plans in detail:

Which Life Insurance plan suits your need?

When it comes to buying life insurance, the “one size fits all” does not work. Each has a different perception towards life, and therefore, seeks a plan that is personalized according to his or her needs.

At Max Life Insurance; therefore, you can find flexible life insurance plans that can be customized to match your age and unique set of life goals and protection needs. Let us help you with a small guide to assessing your insurance need as per your life stage:

Life stage

What Form of Life Insurance You Need

Plans to Consider

Young and unmarried

A savings plan, health insurance

Max Life Online Savings Plan

Max Life Cancer Insurance Plan

Max Life Online Term Plan Plus

Married with no children

Term insurance, savings plan, health insurance

Max Life Super Term Plan

Max Life Online Term Plan Plus

Max Life Premium Return Protection Plan

Max Life Online Savings Plan

Max Life Cancer Insurance Plan

Married with young children

Term insurance, savings plan, health insurance, child’s plan

Max Life Super Term Plan

Max Life Online Term Plan Plus

Max Life Premium Return Protection Plan

Max Life Online Savings Plan

Max Life Cancer Insurance Plan

Max Life Child Insurance Plans

Parents with teenage children

Term insurance, savings plan, health insurance, child’s plan

Max Life Super Term Plan

Max Life Online Term Plan Plus

Max Life Premium Return Protection Plan

Max Life Online Savings Plan

Max Life Cancer Insurance Plan

Max Life Child Insurance Plans

Nearing retirement

Health insurance, term insurance, savings plan

Max Life Super Term Plan

Max Life Online Term Plan Plus

Max Life Premium Return Protection Plan

Max Life Online Savings Plan

Max Life Cancer Insurance Plan

Questions that you need to ask while buying life insurance

What will Be the Ideal Life Insurance Cover for You?

Typically, as per the experts of the industry, the life cover you can and should buy will be 10 to 15 times your annual income.

It is advisable that you assess your current income, existing liabilities (for example, home loan), and future financial needs. Subsequently, you may decide an insurance amount that is suitably high to help take care of all the liabilities and future requirements.

You can use a life insurance calculator to get an estimate of the total life insurance coverage that you can avail and the required premium payable. After that, you can proceed to select a plan variant that matches your insurance needs.

Will you get your money back if you survive the term of your Life Insurance?

In general, life insurance plans offer maturity benefits upon surviving the policy term (for example, retirement plans, savings plans). On the other hand; there are no maturity benefits with term insurance plans.

However, many insurance companies have started to offer term plan variants with the return of premium feature. Therefore, you can not only avail comprehensive life cover benefits at a low premium cost but also get a guaranteed return of total premiums paid after surviving the policy term.

Max Life Insurance’s Smart Term Plan offers you both regular (where the policy tenure is same as the premium payment tenure) and a limited premium payment tenure (in the form of Single Pay and Pay till 60), for insurance coverage of up to 50 years. Also, you get back the total amount of premiums paid upon completion of the policy cover.

How Can Term Insurance Plans Help Beat Inflation?

Life insurance is a long-term commitment. Your term insurance cover may seem adequate for now, but once you factor-in the rising inflation and increasing cost of living, the life cover amount might not be sufficient to support your family’s lifestyle needs in the future.

Like most other investments the final value of life cover is affected by the rate of inflation. Therefore, you need to select a term insurance plan that offers an increasing income benefit to help beat the impact of inflation.

When you purchase the Smart Term Plan from Max Life, you may choose the “Life Cover + Inflation Protector (Increasing Income)” payout, in which your nominee would receive 100% of the sum assured immediately after your demise. Along with the lump sum, the nominee would receive an increasing monthly income for ten years, which is 0.4% of the Sum Assured for the< first year. The monthly income would subsequently increase every year by 10% of the monthly income from the first year.

For Example, if you have chosen the sum assured of Rs. 1 crore as life cover, your nominee would receive the entire Rs. One crore immediately at the time of your demise. Along with it, they will also receive Rs: 40, 000 every month for the first year. Subsequently, from the second year onwards, the monthly payout amount would increase by 10%, and continue to do so, for ten years from the year of your demise. Thus, your nominee would receive a monthly income of Rs. 44,000 and henceforth.

How Can Savings (ULIPs) Plans from Max Life Help Beat Inflation?

When you purchase savings plans from Max Life (these are inherently ULIP plans), you are eligible to receive both death benefit and earned proceeds as maturity benefit. You would avail investment returns on the paid premium as maturity benefit from the plan, and in case of your demise, your family would receive both the accumulated returns and the lump sum payment of the sum assured, upon your demise.

Here’s a breakdown of the expected returns (for a standard male) from the savings plans from Max Life Insurance:

Scenario

Example 1

Example 2

Example 3

Age of Life Insured (years)

35 years

35 years

35 years

Premium Payment Term (years)

1

5

20

Policy Term (years)

10

10

20

Annualised Premium

Rs. 150,000

Rs. 75,000

Rs. 40,000

Maturity Value (@4%)*

Rs. 171,107

Rs. 386,734

Rs. 998,765

Maturity Value (@8%)*

Rs. 253,651

Rs. 534,657

Rs. 1,573,007

*Please note that the above-assumed rates of return, 4%, and 8%, are only scenarios at these rates after recovering all applicable charges. These are not guaranteed, and they are not the upper or lower limits of returns of the investments selected in your savings plan, as the performance of the individual funds is dependent on several factors including future investment performance. To get an estimate of your value, you can use this life insurance calculator.

Who can buy Life Insurance?

Any individual aging between 18 years to 65 years can purchase life insurance in India. While both male and female policy buyers enjoy the same premium rates, female buyers have an additional offset on the rate of premium and a high cancer care cover.

As per the India Protection Quotient report by Max Life, approximately 65% of Indians living in the urban areas own life insurance.

Can a smoker buy life insurance?

While insurance companies offer low rates of premium to non-smokers, smokers too can avail life insurance. However, they have to inform the insurance company about their smoking habit at the time of purchase of the policy itself. In case you choose not to make the disclosure, you may risk rejection of your claim later.

Also, smokers usually pay up a higher premium amount than the non-smokers. Furthermore, the premium amount may vary according to the different categories of smokers, as described below:

Can a Disabled Person Buy Life Insurance?

A disabled can purchase life insurance; however, they need to:

If an individual is experiencing blindness, mental disorders, or have complete immobility, they may not be able to buy a life insurance plan. In any case, it is important that they inform the insurance company about their disability at the time of purchase of the policy itself. In case you choose not to make the disclosure, you may risk rejection of your claim later.

If you have a pre-existing illness, can you purchase life insurance?

Individuals with a pre-existing health condition can purchase life insurance. However, it is important that they inform the insurance company about any pre-existing health condition at the time of purchase of the policy itself. In case you choose not to make the disclosure, you may risk rejection of your claim later.

Typically, individuals with a pre-existing illness may have to pay a higher premium amount for the insurance cover (this is called premium loading). In addition:

If you have a pre-existing illness, it is advisable to fully disclose your condition to the insurer and discuss your case, to get the best possible form of life insurance.

How To Choose the Right Life Insurance Provider?

The next crucial step is to choose the right insurance company based on its customer assistance, plan benefits, and claim settlement ration. Here’s are a few terms you need to understand first:

1. What is their claim settlement ratio (CSR)?

Claim settlement is the ratio between the number of claims successfully disbursed by an insurance company and the number of claims they have received in a financial year.

For Example, a claims settlement ratio of 98% means that the insurance company has settled 98 out of 100 death claims filed in that particular year. Therefore, higher the CSR, better are the chances of your death claim getting settled.

Also, you need to compare the year-on-year CSR for the insurance company to check if they have been consistent in paying the life insurance claims.

2. What is their Solvency Ratio?

Solvency Ratio refers to the ability of an insurance company to have a sufficient cash flow to take care of its debts.

Thus, you can expect hassle-free claim settlement from your insurance plan if the insurance company depicts a strong ability to meet their short-term and long-term liabilities.

3. How much will the plan cost you?

Each life insurance plan is priced differently. Given the fact that you have to pay the premiums at regular intervals to keep your life plan active; you need to choose an insurance plan that is cost effective. In case the premium is too high, and you cannot afford to pay the premium, you may risk losing your life cover.

How Much Money Can You Get From Life Insurance (Term Insurance)?

Life insurance payouts are usually lump sum, as in the case of term plans, where there is only the component of the death benefit. i.e. the policyholder’s family, who received a lump sum amount as a plan benefit.

With changing times; however, policyholders can choosHow easy is it to buy Life Insurance?e between three different payout modes, at the time of purchase of the policy, namely:

How easy is it to buy Life Insurance?

Buying life insurance from Max Life is quick and hassle-free. Here are a few hallmarks of our life insurance plans:

Here is the breakdown of our life insurance buying process:

Step 1: Select your policy term, and the sum assured

The first step of buying life insurance is to use the online life insurance calculator to calculate the premium for the desired sum assured and tenure of the plan.

Note: The ideal benefit amount for your life insurance plan should be 10 to 15 times your annual take-away income.

Step 2: Choose Riders

The next step will be to choose add-on benefits, in the form of riders over and above the base cover. These additional benefits enhance your financial protection in case of unfortunate events such as a disability or being diagnosed with a life-threatening health condition. These optional benefits are available on payment of additional premium.

You can choose from the following rider options:

* Critical illness cover that offers to cover up to 40 illnesses

* Accidental death and disability benefit

* Premium waiver benefit, applicable in case of diagnosis of critical health condition or disability

Step 3: Payment of Premium

After selecting the plan and its benefits, you can proceed to complete filing of personal information and pay the premium. You will need to fill out the following information and make the payment:

* Income, education, and profession details

* Nominee details

* Present Address (where the insurer conduct will conduct a medical test)

You have the option to pay the premium online using net banking, debit or credit card

Step 4: Fill out the Proposal Form

Essentially, the proposal form is a detailed version of your application form, which focuses on the information related to your life such as your lifestyle habits (such as smoking and drinking) and medical history (including that of your parents)

Step 5: Medical Tests

“What medical tests I need to undergo while getting insured? Is it mandatory to undergo a medical test while buying life insurance?” These are some fundamental questions many people face while exploring life insurance options.

In some cases, based on individual life-risk, a medical test may be proposed. The medical test is a requirement, usually after the successful completion of the proposal form and document submission.

How can you pay for a Life Insurance?

Life insurance plans allow you to pay the premium either in one go (single payment) or through regular payments (annual, semi-annual, quarterly, or monthly). Max Life Smart Term Plan also offers the option to pay the premium for a limited payment tenure (Pay till 60).

While in a single-pay insurance plan, you have to pay the entire premium amount upfront at the time of purchase of the policy. On the other hand, limited premium payment tenure allows you to avail life cover throughout the policy tenure, while paying the premium for a time period less than the policy tenure.

Regular premium payment options allow you to pay in the following premium payment modes:

Regular premium payment options allow you to pay in the following premium payment modes:

It is essential to know here that the policyholder can change the premium payment mode during the premium payment term.

Also, modal factors are applicable for modes other than the annual payment mode, to help the insurers cover for loss of interest arising out of policyholder not paying the entire premium up front.

Typically depicted as a percentage, the modal factor is the frequency, which a policyholder chooses to pay the term plan premium.

For Max Life Insurance plans, the following modal factors are applicable:

Payment Mode

Modal Factor

Annual

1.000

Half Yearly

0.520

Quarterly

0.265

Monthly

0.090

What are the documents you need to get life insurance in India?

According to the insurance regulator, the following documents qualify as mandatory while purchasing a life Insurance plan is

Validation Type

Valid Documents

Age Proof

· Pan Card

· Voter’s ID

· Passport

· Driving License

· School/ College Certificate

· Birth Certificate

Address

· Passport

· Voter’s ID

· Telephone bill

· Ration Card

· Electricity Bill

· Bank A/C Statement

· Letter from Recognized Public Authority

Photo identity

· Driving License

· Aadhar Card

· Voter’s ID Card

· Passport

· Pan Card

· Letter from Recognised Public Authority
or Public Servant with Photograph
verifying the identity and residence

Income proof

· Salary Slip

· Form 16

· ITR/ Assessment Order/ Employers Certificate

Additional documents

· Recent passport size photographs

· Medical reports

· Other documents which the insurance
company might require on an
ad-hoc basis


Why Choose Max Life Insurance?

With one of the financially stable business structure, high claim settlement ratio for FY 17-18 as per IRDAI Annual report, multiple policy options, personalized assistance, and quality service, Max Life Insurance offers you comprehensive financial protection against the uncertainties of life. Here is how Max Life helps you choose an insurance variant that suits your current life stage and future life goals:

“Live Life to the Max”

Life is all about creating beautiful memories with your loved ones. Amidst all the fun and fervour; however, do not let the uncertainties of life take away your happiness and peace of mind.

At Max Life, we understand how valuable you are to your family. Therefore, our life insurance plans are specifically designed to provide long-term financial security and peace of mind.

With life insurance at the helm of your future planning; therefore, you can make sure that your loved ones continue on their path of self-discovery and live life to the Max!

Life Insurance Plans

Basic Life Cover

Provide Financial security for your family with one-time lumpsum payout

How this variant works?

  • Premium that you pay - 8968
  • Lumpsum one time payment that your family gets - Rs. 1 crore
  • Effective cost - Rs. 90 / lac of cover
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Basic Life Cover + Monthly Income

Financial Security for your family with monthly income for 10 years in addition to lumpum

How this variant works?

  • Premium that you pay - Rs. 11,918
  • Lumpsum Payout of Rs. 1 Cr + Monthly Income of Rs. 40,000 for 10 years
  • Effective Cost - Rs. 81/lac of cover
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Basic Life Cover + Increasing Monthly Income

Enhance the financial security with increasing monthly income, in addition to lumpsum

How this variant works?

  • Premium that you pay - 13,216
  • Lumpsum Payout of Rs. 1 cr + monthly income of Rs. 40,000 that increases by 10% every year
  • Effective Cost - Rs. 78/lac of cover
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Life insurance Related Articles

 

BEWARE OF SPURIOUS PHONE CALLS AND FICTITIOUS/FRAUDULENT OFFERS

IRDAI clarifies to public that:

• IRDAI is not involved in activities like selling insurance policies, announcing bonus or investment of premiums.

• Public receiving such phone calls are requested to lodge a police complaint.

IRDAI - Registration No. 104. ARN/Web/01. Category: Life. Validity: Valid.

Corporate Identity Number (CIN):U74899PB2000PLC045626.

Trade logos displayed above belong to Max Financial Services Limited and Mitsui Sumitomo Insurance Co. Ltd. respectively and are used by Max Life Insurance Co Ltd under a license.

Copyright @2016 Max Life insurance Co. Ltd. All Rights Reserved. An ISO 9001:2008 Certified Company. 

Max Life Insurance Co. Ltd. is a Joint Venture between Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Registered Office: 419, Bhai Mohan Singh Nagar, Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab -144 533. Corporate Office: Max Life Insurance Co. Ltd., 3rd, 11th and 12th Floor, DLF Square Building, Jacaranda Marg, DLF City Phase II, Gurugram (Haryana) - 122002. Operation Center: Max Life Insurance Co. Ltd, Plot No. 90-A Udyog Vihar, Sector 18, Gurugram (Haryana) - 122015.

Helpline: 1860 120 5577 (9:00 A.M to 6:00 P.M Monday to Saturday) * Call charges apply. Online Term Plan Helpline: 1800 200 3383. Fax Number:0124-4159397.

Email ids: service.helpdesk@maxlifeinsurance.comonline@maxlifeinsurance.com

Life Insurance Coverage is available in this Product
Unit Linked Insurance Products (ULIPs) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Max Life Insurance is only the name of the insurance company and Online Savings Plan is only the name of the unit linked life insurance contract and does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these funds, their future prospects or returns.
Some benefits are guaranteed and some benefits are variable with returns based on the future performance of your Insurer carrying on life insurance business.
Assumed rates of return (4% and 8%) are not guaranteed and they are not the upper or lower limits of what you might get back, as the value of your policy is dependent on a number of factors including future investment performance. The guaranteed and non-guaranteed benefits are applicable only if all due premiums are paid.

THE LINKED INSURANCE PRODUCTS DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF FIFTH YEAR.

Insurance is the subject matter of solicitation. For more details on the risk factors, Terms and Conditions, please read the sales and rider prospectus carefully before concluding a sale. Tax benefits are eligible for tax exemption on fulfilling conditions mentioned under Section 10(10D) of income tax act 1961. Tax exemptions are as per our understanding of law and as per prevailing provisions of income tax at 1961 . Policy holders are advised to consult tax expert for better clarification /interpretation. Please note that all the tax benefits are subject to tax laws at the time of payment of premium or receipt of policy benefits by you. Tax benefits are subject to changes in tax laws. The monthly Income Benefit and Terminal Benefit may be taxable subject to extra premium being loaded at underwriting stage.

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