Frequently Asked Questions
✅ What are the different types of life insurance?
Different types of Life Insurance plans in India include –
Term insurance – It provides a pure risk cover to the policyholder and offers the lowest premium rates among other life insurance products
Unit linked insurance plan (ULIP) – ULIPs provide the dual benefit of life insurance and investment returns on the premium paid
Endowment Plan – These plans offer a combination of life insurance and savings under one plan
Term Insurance with Return of Premium (TROP) – The TROP is a form of life insurance which offers to return the total amount of annualized premium paid upon survival of the policy term while providing insurance cover
Whole Life Insurance – This form of life insurance provides coverage to the life assured for his or her entire life
Child Insurance – Child plans offer an opportunity to create wealth to fulfil your child’s life goals such as education and marriage
Retirement Insurance – Retirement plans help you plan your retirement and secure financial independence post-retirement
✅ How to choose the right life insurance?
Here’s how you must choose the right life insurance plan for your family-
Tip 1: Consider your life stage and the number of family members when deciding on a cover amount
Tip 2: Think of how much money your family will require to maintain their lifestyle
Tip 3: The insurance coverage amount should be determined based on your family’s needs and not just your income
Tip 4: You must add any existing liabilities to the cover amount
Tip 5: Choose the insurance company with the highest Claim Settlement Ratio (CSR)
Tip 6: Consider Riders to maximize your coverage
✅ How does life insurance work?
Life insurance is typically an agreement between you (or policyholder) and a life insurance company (or insurer).
You agree to pay a specific amount of money (also known as a premium) towards the policy regularly. On the other hand, the insurer agrees to pay a sum of money (also known as insurance payout) to your beneficiaries in case of your demise.
There are different forms of life insurance plans, each of which has different premium payment frequencies (monthly, twice a year or annually).
✅ Which is the cheapest kind of life insurance?
The least expensive variant of life insurance based on the cost of insurance and the size of premium payable is a term life insurance policy. Term insurance, primarily, does not have any cash value (or maturity value). Upon expiry of the policy term, therefore, the plan expires, and you do not receive any survival payouts.
There are term insurance plans with Return of Premium (TROP), which offer to return the total amount of annualized premiums upon surviving the term life insurance tenure. Overall, term life insurance plans provide the highest possible insurance coverage for the least amount of premium paid.
✅ What kind of tax benefits are available with Life Insurance?
You can avail of the following tax benefits with life insurance:
Deductions under Section 80C of the Income Tax Act, 1961, allows exemptions of up to Rs.1.5 lakh per annum on the annualized premium paid towards the insurance policy.
Deductions under Section 10(10D) of the Act, wherein life insurance payouts (or sum assured/coverage) received on either maturity (survival benefit) or upon the demise of the policyholder (death benefit) by the nominee is exempt from tax.
✅ Why should I buy life insurance?
Primarily, anyone who has dependents (parents, spouse, or children) to support and earns an income needs Life Insurance. Here is why you must purchase life insurance:
To ensure that your loved ones have some financial support in case of your demise
To finance your children’s education and other needs
To have a financial safety net (or savings plan) for the future so that you have a source of regular income post-retirement
To ensure that you have an additional income in case you suffer a loss of income due to any severe health ailment or an accident
To provide support for any financial contingencies and lifestyle requirements
✅ What is the right age to buy life insurance?
The life insurance premiums increase with age, irrespective of gender. Thus, purchasing life insurance as early as possible allows you to avail a lower rate of premium.
Life insurance premium rates remain the same throughout the policy period. Therefore, buying life insurance in your 20s or early 30s allows you to enjoy cheaper premium
The smokers have to pay higher premiums across all the ages. It is not a bad idea to quit smoking, especially when it gets you the double benefits of cheaper premiums and long healthy life!
While the premiums might be low if you buy a term plan when you’re young, you will only need the coverage if you have dependents to look after
Of the life insurance products available, a term plan is the best if you’re looking for a cost-efficient protection plan
✅ Do I have different options to pay my premium?
Yes, there are different premium payment options available. You can choose to pay your premium either monthly, quarterly, half-yearly, or annually. You can also pay the life insurance premium in one go – as a lump sum.
Life insurance plans from Max Life Insurance offer time-saving, convenient, and hassle-free premium payments under the Electronic Clearance System (ECS) service. ECS enables automatic payments of the premium amount from any of your bank account; thus, making sure that you never miss out on your payment deadline.
✅ How much life insurance should I buy?
The objective of life insurance coverage is to provide a financial safety net for your loved ones and/or dependents, so that they do not have to rely on anyone else for support, in your (or the primary breadwinner) absence or in case you are unable to provide for your family due to a permanent disability or illness.
The life insurance must be adequate to help your loved ones maintain the standard of living that you would have provided for them always. Factors which contribute towards determining the life cover include:
Your current annual income
Your financial liabilities (both current and future)
Your life goals
Your age at the time of purchasing life insurance
Ideally, the life cover must be approximately 15 to 20 times your current annual income plus any outstanding loans.
✅ What happens to my life insurance if something happens to me?
If something happens to you, the following things will happen:
· In case you sustain injuries in an accident or are diagnosed with a severe health ailment, you will receive an insurance payout to help cover the treatment expenses while the policy will continue to provide coverage to your family
· In case of your unfortunate demise, the insurer will pay the life insurance benefit to your family, in the form of a lump sum payout or monthly incomes (for a fixed period), after which the plan will cease to exist
To help you avail maximal insurance cover against life’s uncertainties, Max Life Insurance offers various rider options including:
* Max Life Accidental Death and Dismemberment Rider (UIN: 104B027V03) *
* Max Life Waiver of Premium Plus Rider [UIN: 104B029V03] *
* Max Life Accelerated Critical Illness (ACI) Benefit
These riders increase your life cover, over and above the life insurance policy amount, after you pay a nominal additional payment.
*A Non-Linked Non-Participating Individual Pure Risk Premium Health Insurance Rider
✅ What happens if you cancel a life insurance plan?
When you cancel your life insurance plan, you inform the insurance company that you no longer want the plan, and are going to stop making premium payments. In case your life insurance policy has a cash value, you may receive this amount (after deducting the certain fee) upon policy cancellation. After your life insurance policy lapses, the plan will no longer be active, and your beneficiaries will receive no benefits, in case something happens to you.
✅ For how long should I keep my life insurance cover?
Life insurance cover must be based on your life stage and should continue at least until your retirement age. For instance, if you are in your 40s, you should keep your life insurance at least for up to the age of 60 years. Term life insurance plans from Max Life Insurance offer the flexibility to choose the term duration (minimum of ten years to a maximum of 50 years).
Also, the minimum age of buying term life insurance is 18 years, while the maximum age can be up to 60 years. You can purchase life insurance cover for up to 85 years of age.
✅ Do I need life insurance coverage after I retire?
Yes, you need life insurance coverage throughout your retirement, as part of your long-term financial plan for the following reasons:
1. The maturity benefits from life insurance (for example, you receive the total amount of annualized premiums paid under a term plan with return of premium benefit upon surviving the policy tenure) are tax exempt. Thus, you have access to cash, which will provide you with financial independence even after you stop earning a salary.
2. You can provide support for your partner in their retirement years, especially in your absence. The insurance benefit will help your surviving spouse pay certain expenses such as funeral costs, or any existing debt. Having life insurance coverage after retirement will help ensure that your surviving spouse will not be put in a difficult financial situation.
3. There are many life insurance policies (for example, term insurance plans with an in-built critical illness benefit). Thus, your life insurance plan will help you pay for treatment expenses in case you are diagnosed with a critical illness before death. At the same time, you will not have to dig deep into your retirement savings to pay for the medical costs.
✅ Can I change my beneficiary?
You can make or change your beneficiary or nominee, anytime during the benefit period of an active life insurance policy. You will have to fill out the policy amendment request form. In case you have not specified a nominee or beneficiary at the time of policy application, you must select and specify beneficiary details as soon as possible. Declaring a beneficiary will help facilitate faster settlements of your claim.
✅ Can I purchase life insurance under the Married Women's Property (MWP) Act?
All married men can purchase a life insurance policy under the MWP Act, including widowers and divorced individuals. All types of life insurance plans are covered under MWP, irrespective of age, time, and the premium amount.
Married women can also purchase an MWP policy in their name and can name their children as beneficiaries. Their husbands will not get anything from the insurance plan, as it will be regarded as a separate asset. If you are self-employed, business owner, have volatile sources of income or need to take a significant amount of credit, you must purchase a life insurance policy under the Married Women’s Property (MWP) Act.
✅ 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 claim 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 illness rider to your policy, which offers you medical aid in case you are inflicted by a serious illness or injury. Under this rider you can also claim 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 claimtax benefit, under section 80C, on those policies as well.
✅ 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 illness rider 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 much Insurance cover do I need?
While deciding the cover, it is important to remember that the objective of insurance is to provide financial support to your family and/or dependents, in case you (as the primary breadwinner) are no more, or are unable to earn because of a permanent disability or illness. The life cover you decide on should be adequate to help your family maintain the standard of living you would have provided for them always.
You should keep the following things in mind as you go about the calculations:
- Your current annual income
- Your current and future financial liabilities
- Your financial goals
- Your age at the time of policy purchase & number of working years left
- Number of dependent family members & their expenses
✅ 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 anyone as your nominee for the life insurance policy.
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.
✅ 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, etc), you must choose a policy tenure, long enough to help you cover all such events.