Life Insurance Plan

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What is Life Insurance Policy?

A life insurance policy refers to the contract between an insurance provider and an individual,[1]. As per the agreement, the policyholders pay a certain amount as the policy premium while the insurer pays a specific amount to their family on untimely demise of life insured.

With death being the only sure thing in life, it is crucial to buy the best life insurance policy that suits your financial needs.

Why Choose Life Insurance Plans?

A life insurance policy helps you safeguard the financial interests of your family when you are not around. Millions of people buy life insurance for reasons that are often difficult to put into words. It forms a crucial component of a sound financial plan because of the following benefits:

1. Financial Protection for Family

A life insurance policy will provide a specified sum to your family (the chosen nominee) at the time of your untimely demise. They can use the sum assured to fulfil various financial needs.

2. Critical Illness Benefit

You can opt for critical illness rider with a life insurance policy, which offer protection against critical health ailments, such as cancer, kidney failures, and cardiovascular issues. This way, you or your family need not worry about the financial side of medical emergencies.
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Who can purchase Life Insurance Policy?

Any individual, either male or female, falling into the age-group of 18-65 years, can buy life insurance in India as per the life insurance terms & conditions

Age GroupImportance of Buying Life Insurance in a Specific Age
20-30Significant coverage at a low premium which will help in repaying education loan if any along with other financial needs
30-40Financial protection for the entire family and regular monthly income as per the life insurance plan chosen
40-50Opportunity to create wealth child’s higher education and retirement planning
50 and AboveEase of repaying huge financial debts for the family if any along with other benefits

Here are some other related aspects of buying life insurance you must know:

  • Just like non-smokers, even smokers can avail life insurance, though the rate of the premium may differ. Also, they must inform the insurer about their habit of smoking while buying a life insurance policy.
  • Disabled individuals can also purchase the best life insurance policy if they can prove that they provide for their family members. They also need to undergo medical tests to determine the policy premium based on the degree of risk involved.
  • People suffering from pre-existing medical conditions can buy life insurance. They need to inform the insurance company about the pre-existing health conditions if any. Failing to disclose the same while purchasing a policy may lead to claim rejection later.

    • At Max Life Insurance, we offer life insurance policies to individuals having pre-existing illnesses.

    Life Insurance Policy[4] Important Terms

    Life Insurance Terms

  • What is a Policy?
    • An insurance policy is basically a legal contract between your insurance company, i.e. insurer and the person being insured. It clearly defines the sort of claims the insurer is concurring to pay along with the various obligations set for both insurer and the insured.
  • What is Sum Assured?
    • It refers to the amount payable to a nominee after the event of the unfortunate demise of the insured, as specified in the chosen life insurance policy. You can use an online life insurance premium calculator to get an estimate of the premium payable for a specific sum assured.
  • What is Annualised Premium?
    • Annualised Premium is essentially the amount specified in the Policy Schedule, and denoted as the Premium payable during a Policy Year chosen by you (as policyholder), excluding any additional premium paid for the Underwriting, loadings for modal premium, Rider Premiums and applicable taxes, cess, or levies, if any;
  • What is Life Insurance Coverage Period?
    • It is the duration for which the insured is covered under a life insurance policy. It can be different from the premium payment term/period during which you need to pay a life insurance premium.
  • What is Maturity Date in Life Insurance Policy?
    • Maturity date is specified in the Schedule, on which the Policy Term expires. It is stated by taking into consideration the age of the insured and differs basis the date on which the policy was issued.
  • What is Life Insurance Premium?
    • It is denoted as an amount specified in the Policy Schedule, payable by You, by the due dates to secure the benefits under the Policy, excluding applicable taxes, cess, and levies, if any.
  • What is Premium Payment Mode or Frequency?
    • An individual can pay the life insurance premium in:
  • Regular mode, which is monthly, quarterly, half-yearly, or annually throughout the policy tenure
  • A specific premium payment tenure, which can be a certain pre-fixed number of years (not till the end of the policy term)
  • What are Life Insurance Riders?
    • Riders are essentially features, which are in addition to basic benefits under the Policy. These include accidental death benefit rider, critical illness rider, and waiver of premium rider.

    What are the Types of Life Insurance Plans?

    Types of Life Insurance

    Every policy buyer must understand different types of life insurance[2]before buying any of them.

  • Term Insurance
    • It is an affordable type of life insurance that offers a high sum assured at affordable premiums. The insurance company offers to pay a sum assured to the policy nominee in case of your untimely demise.
  • Unit Linked Insurance Plans (ULIPs)
    • ULIP is a unique type of life insurance that offers dual benefits of life cover and market linked returns on your investment. A portion of the amount paid as premium is invested in different fund options while the rest is used to provide life cover.
  • Child Plans
    • A child plan is another form of ULIP with which you can create wealth to support the higher education plans of your child. With a child plan, you also get the flexibility to invest money into various funds based on your financial condition and long-term goals.
  • Endowment Plans
    • These plans are known as a combination of life insurance and savings. By investing in an endowment plan, you will receive life cover as well as savings benefit. You will get the maturity benefit on outliving the term of your plan, along with periodic bonuses (if any).
  • Retirement Plans
    • Also known as deferred pension products, these plans aim at helping you create wealth for your retired life to enjoy financial independence. Your nominee will receive immediate payment in case of your demise during the policy term. Otherwise, you will receive the vesting benefit on surviving the term.

    How to Select the best Life Insurance Policy?

    Choosing Best Life Insurance

    With a multitude of life insurance plans available in the market, it is critical to choose the right one. The selection of a life insurance plan must be based on a broad spectrum of financial needs.
    Here are a few steps to consider while buying the best life insurance policy:

  • Learn about types of Life Insurance available
    • Without proper knowledge of how life insurance works, people feel incapacitated to decide about buying the right policy. Hence, it is crucial to gain a thorough understanding of different types of life insurance products before zeroing in on any of them.
  • Assess Your Financial Needs
    • A life insurance plan that is suitable for your peers may not be ideal for you. Thus, you must consider your specific needs, be it affordability, choice of sum assured or riders before you start comparing different plans.
  • Compare Plans in Terms of Benefits
    • Owing to the wide variety of life insurance plans available, you need to be sure that you select the right one which offering adequate benefits. For this, you should do the required homework of comparing the plans across several parameters like premium, the sum assured, and investment component, if any.

    How to choose the best Life Insurance Company?

    The selection of the right life insurance provider is essential to ensure that you or your loved ones will get the benefits they seek from the purchase plan.

    Consider the following aspects while choosing the best life insurance provider:

    1. Claim Settlement Ratio (CSR)

    This ratio defines the claims settled by an insurer over the ones received in a financial year. The higher the CSR, the higher are the chances of getting your life insurance claim paid.

    2. Solvency Ratio

    It refers to how well an insurance company can manage sufficient cash flow to deal with the debts. An insurer can provide hassle-free claim settlement if this ratio depicts its strength to meet the related liabilities.

    3. Premium

    All life insurance plans are priced differently. Thus, you need to choose the one that seems cost-effective to you. In order to avoid the risk of losing the life cover, make sure you do not select a plan with premium is too high and unaffordable.

    4. Persistency Ratio

    It defines the percentage of policyholders that pay the premium over the total active policyholders. It is a good indicator of customer satisfaction delivered by the insurer.

    5. Claim Settlement Process

    A simplified claim settlement procedure implies, your family will not have to face any hassle to receive life insurance benefits. It is advisable to choose an insurance company which follows a streamlined process to settle claims.

    Why Buy Life Insurance Policy Online?

    Choosing Why Buy Life Insurance Online

    Every policy buyer must understand different types of life insurance[2] before buying any of them.
    There are several reasons that support the decision to buy life insurance online, including

  • Transparency
    • From the features of a life insurance plan to its premium and other details, everything is transparent in front of you while buying a policy online. You can count upon this transparency to make an informed decision.
  • Benefit of comparison
    • Buying term insurance online will help you make an informed decision as you will have access to various informative articles, case studies, and calculators.
  • Secure Payment Modes
    • While buying the life insurance policy online, you utilize secure online payment options. Quick and hassle-free payment processing is ideal for times when you need to furnish policy documents to claim tax deductions.
  • Easy Life Insurance Policy Renewal
    • The process of life insurance policy renewal is quite easy and hassle-free. You can get the policy renewal done in just a few clicks made online.

    Documents Required to Get Life Insurance Plan

    You need the following officially valid documents[3][5][6]while purchasing life insurance from a renowned insurer:

    • Passport
    • Voter ID
    • NREGA job card
    • Aadhar Card
    • PAN Card/Form 60

    In case these documents do not contain the updated address, you need the following documents:

    • Utility bills of any service provider
    • Property tax receipt
    • Family Pension Payment Orders issued to the retired individuals
    • Letter of allotment of accommodation from the employers such as PSUs and other statutory bodies

      • How Do You Save Tax with Life Insurance Plan?

      Life insurance policies are considered efficient tools for tax-planning. It is because the policyholder is eligible to get tax benefits4 under the Income Tax Act, 1961. The premiums paid for various life insurance schemes are tax-deductible Section 80C, while the payout or maturity benefit is tax-exempt under Section 10(10D) of the Act.

      How Can You Pay for Life Insurance Policy?

      You can choose to pay the premium of life insurance plans in one go or with regular payments over time. Life insurance policies usually provide the option to choose between a single (one time) payment, regular (throughout the policy tenure) payment and limited premium payment tenure (for a payment tenure less than the policy coverage period).

      With regular premium payment mode, you can select any of the following payment options:

      • Annual
      • Semi-annual
      • Quarterly
      • Monthly

        • You must also know that the life insurance premiums paid online are processed through secure payment gateways, thus ensuring the safety of transactions.

        How Will Your Family Receive the Life Insurance Claim Money?

        After your (Life insured) untimely demise, your loved ones will get the policy benefits by claiming the same from your insurer.

        Follow these steps to claim life insurance policy benefits:

        • Inform the insurer at the earliest
        • Ask for the claim intimation form
        • Ask for the documents to be submitted with the claim form
        • If the policy was bought online, apply for the claim online as well

          • The nominee of a policy should not wait too long after the insured’s demise to ensure quick and easy claim settlement.

          Which Life Insurance Plan Suits Your Need?

          Choosing Life Insurance Policy

          Everyone has different financial needs and life goals, based on which he/she should choose a life insurance plan.

          With Max Life Insurance, you get the flexibility to buy life insurance plans that can be personalized to meet your specific needs. Here is a small guide to help you select the right plan:

          1.Life Stage/Need: 20 – 25 years (Young and unmarried)

          Plans to Consider

          Benefits

          • Adequate coverage at a low premium
          • Convenience to buy life insurance plans anytime and from anywhere
          • Flexibility to choose policy tenure and sum assured

          2.Life Stage/Need: 25 – 30 years (Married with no children)

          Plans to Consider

          Benefits

          • Dual benefit of insurance and investment
          • Protection against various critical illnesses
          • Return of total premium at maturity (with Smart term plan premium back variant)
          • Flexible investment options

          3.Life Stage/Need: 30 – 35 years (Married with young children)

          Plans to Consider

          Benefits

          • Increasing life cover as defined in the policy terms to beat inflation
          • Tax benefits under various sections of the Income Tax Act
          • Additional riders for enhanced protection

          4.Life Stage/Need: 35 – 45 years (Parents with teenage children)

          Plans to Consider

          Benefits

          • Flexible payout options
          • Comprehensive cover at affordable prices
          • Survival benefit as per the chosen plan

          5.Life Stage/Need: Nearing retirement

          Plans to Consider

          Benefits

          • Financial security for retirement goals
          • Wealth creation opportunities for your child’s future goals

          What is the Right Life Insurance Cover for You?

          Once you have decided to buy life insurance, the next big step is to choose a specific life cover, or sum assured. Here are some aspects to keep in mind while determining a ballpark figure for the life cover:

          • Consider Your Working Years

            • A life insurance plan serves as an income replacement tool. Hence, you need to consider the number of active working years it would replace while choosing the sum assured. For instance, if you are 25 right now and have planned your retirement at the age of 50, you have 25 future earning years to consider.

          • Chart Out Your Regular Expenses

            • The sum assured should cover recurring financial outgoes, including household expenses, bills, and existing loan EMIs on a year-on-year basis. By charting out these expenses for a specific period, you will get a better idea of the sum assured to be chosen.

          • Consider Landmark Stages in Your Family’s Life

            • Certain stages or events in life require large lump sum amounts. These include wedding, retirement, or child’s higher education. The sum assured should cover them all majorly to ensure your family will not face a financial burden after you.

              Difference Between Life Insurance, General Insurance, and Health Insurance

              The following table summarizes the differences between various types of insurance plans:

              ParametersGeneral InsuranceLife InsuranceHealth Insurance
              Basic BenefitInsurance coverage for non-life assets, like home, health, and travelLife cover benefit to be given to the familyHealth cover to deal with medical emergencies in life
              Premium PaymentThe entire premium is usually paid at the time of buying/ renewing the policyA fixed amount to be paid for a specific tenure (in years)A specific amount to be paid at first and then after every year for policy renewal
              Policy DurationShort termLong termShort term
              Claim of insuranceIn case of unfortunate events defined in the policy termsEither on the insured’s death or maturityDuring a healthcare emergency
              Tax benefit Under income tax act 1961Under section 80D (for health insurance)Under section 80CUnder section 80D

              Life Insurance Policy FAQs

              search

              A life insurance policy provides a sum assured to the nominee in case of the untimely demise of the life insured individual. There are different types of life insurance plans that you can choose based on your goals and protection needs.

              A term plan is the least expensive variant of life insurance, which does not offer any survival benefits. The plan expires when the policy period ends. However, term plans with return of premium is another variant of term insurance which provides survival benefits.

              You can avail deductions under section of the Income Tax Act, 1961, of up to Rs. 1.5 Lakh per annum on the premium paid towards life insurance. Alongside, the life insurance payouts received by the nominee are exempt from tax under Section 10(10D).

              With life insurance, you can make sure that the financial security of your loved ones in your absence, is never compromised. The insurance benefits they receive will help them finance their regular expenses and life goals.

              The right age to buy the best life insurance policy is when you are young and shoulder the least number of financial liabilities. The earlier you buy a plan; the lesser will be its premium.

              ARN NO: PCP/LIP/0732022

              Sources:

              www.policyholder.gov.in/YouandYourLifeInsurancePolicyFAQs.aspx

              www.policyholder.gov.in/WhatLifeInsurancetoBuy.aspx

              www.irdai.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo2061

              www.maxlifeinsurance.com/content/dam/corporate/Brochures/Term-plans/English/smart-term-plan/smart-term-plan-policy-contract.pdf

              www.maxlifeinsurance.com/blog/term-insurance/what-are-the-documents-required-for-term-plan

              www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11865&Mode=0

              www.maxlifeinsurance.com/claims-centre/documents-required

              Check out the different Online Insurance Plans from Max Life!

              • Max Life Smart Secure Plus Plan

                Comprehensive death benefit for your family member(s) in case of your unfortunate demise during policy term

                Guaranteed maturity benefits/Income Benefit and accrued guaranteed additions to help meet your life goals

                Multiple variants - lumpsum; short term income, long term income, and whole life income with unique benefits

                Know more
              • Max Life Smart Term Plan

                Financial protection against critical illnesses, including heart attack, cancer, and kidney failure

                Flexibility to choose the most suitable premium payment options that fits your budget and income

                Life coverage along with return of premium option to get the premiums paid back as a survival benefit

                Know more
              • Max Life Online Savings Plan

                Comprehensive death benefit covering the policy tenure, along with saving money for various life goals

                Monthly income, accrued bonuses, and flexible fund options for the policyholders with no policy charges

                Flexibility to choose a policy term up to 85 years, premium payment term and payouts to fit your needs

                Know more
              • Max Life Cancer Insurance Plan

                A comprehensive Cancer Insurance Plan that provides a payout at all stages of Cancer

                Get 10% increase in original sum assured in case of no claims for the first 5 years

                20% of Sum Insured - Waiver of premium, in early stage diagnosis

                Lumpsum payout - annual income for 5 years in major stage diagnosis

                Tax benefit under section 800 as per prevailing tax laws

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              • Max Life Smart Wealth Plan

                Comprehensive death benefit for your family member(s) in case of your unfortunate demise during policy term

                Guaranteed maturity benefits/Income Benefit and accrued guaranteed additions to help meet your life goals

                Multiple variants -lumpsum, short term income, long term. income, and whole life Income with unique benefits

                Know more
              • Short Term Income

                Guaranteed income benefit at the end of the policy term based on the chosen frequency for the payout period

                Eumpsum quaranteed death benefit payable to the nominee after the death of the life insured during policy term

                Multiple premium payment tenure and policy period options to fit your profile and specific requirements

                Know more
              • Long Term Income

                Guaranteed Income benefit for 25 or 30 years after the policy period ends, as per the sub variant selected

                Terminal benefit which equals total premiums paid, post completion of the payout period payable to nominee

                Two premium payment options - 6 and 10 years to be chosen as per suitability of the plan for your needs

                Know more
              • Term Plan with Return of Premium

                Option to receive the premiums paid back on successful survival of the insured till end of policy term

                Death benefits for your family members in case of any eventuality leading to the loss of your life

                Limited pay options to pay for term plans with return of premium - 5 Pay, 10 Pay, 12 Pay, 15 Pay, or 60 Pay

                Know more
              • Max Life Critical Illness and Disability Rider

                Additional protection against upto 64 critical illnesses depending on the rider variant you select

                Total and Permanent Disability Cover on the occurrence of disability arising from sickness or injury

                Wellness benefit to avail a discount on annualised renewal premiums as per healthy weeks you accumulate

                Know more
              • Max Life Waiver of Premium Plus Rider

                Waiver of all future premiums in case of the covered dismemberment so that you can live worry-free

                Future premiums waiver in case you suffer from critical illnesses as specified in the rider terms

                Continued benefits of the base policy to give you peace of mind about maintaining various life expenses

                Know more

              Media Center

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              With Covid fears down, people focus on kids’ goals, buying term plans, as per the latest Max Life IPQ 4.0 survey.

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              Max Life Insurance Company Ltd. in partnership with Kantar, on Thursday, launched the fourth edition of the India Protection Quotient survey (IPQ). Conducted entirely online, the India Protection Quotient 4.0 surveyed 5,729 respondents across 25 Indian cities, between 10 December 2021 to 14 January 2022.

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              India's awareness towards life insurance grew significantly over the last two years due to COVID-19, and the need for financial security has gained priority among people, according to Max Life's annual flagship survey.

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              Indians are buying more term plans now as term insurance ownership has gone up to 43 per cent from 39 per cent last year, revealed the India Protection Quotient (IPQ) survey 4. This is despite life insurance ownership remaining unchanged at 78, signifying the fact that consumers are now diversifying their insurance holdings and building a holistic portfolio.

              Read More

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