Buy Life Insurance Policy Online in India

What is Life Insurance?

Benefits of Life Insurance

Types of Life Insurance

How Much Life Insurance Do You Need?

To keep calculations simple, we usually apply the basic thumb rule as follows to calculate HLV:

 

Age Approx HLV
18-35 25 X Annual Income
36-45 20 X Annual Income
46-50 15 X Annual Income
51-60 10 X Annual Income

For example, for a 30-year-old person earning 10 lac annually, the ideal life cover would be 25 x 10,00,000= 2,50,00,000.

Who Should Buy Life Insurance?

How Does Life Insurance work?

Factors Affecting Life Insurance Premium

What is a Life Insurance Rider?

Types of Life Insurance Claims

FAQs about Life Insurance Policy in India

What is the consequence of not paying my insurance premium on time?

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A grace period of 30 days is usually given over and above the premium due date. If the premium remains unpaid even after this period, the policy lapses. You need to pay the revival premium if you want to restart the policy.

What do I receive on the maturity of my Life Insurance Policy?

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If your Life Insurance Policy has a savings component, i.e., other than a term plan, you receive the maturity benefit (as Lump Sum or Regular payouts, whatever option is chosen). This amount is the total of all your premiums paid during the policy term plus a bonus (if any). 

What does "Fully Paid Up" mean on a Permanent Life Insurance Policy?

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Fully Paid Up means you have paid enough premium payments to cover the cost of Insurance for the rest of your life.  

Do I need to pay tax on my maturity benefit?

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If your life insurance policy’s annual premium is less than 10% of the total sum assured, the maturity benefit you receive is tax-free under Section 10(10D) of the Income Tax Act. For instance, if your policy promises a sum assured of 1 crore, your annual premium should not exceed 1 lakh to qualify for these tax benefits.

What are the different options available for me to pay the premium?

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Here are the most common methods that you can choose to pay your premium on time:

  • Collection agents accept cash or cheques and provide receipts. You can also visit the insurance company’s office to pay in person.
  • Online payments through the insurer’s official website are convenient, or you can visit Franchise/premium payment points that also accept premiums.
  • Electronic Clearance Service (ECS) allows automatic debits from your account.
  • Some insurers offer payment options via IVR and ATM or use Post Dated Cheques (PDCs) to ensure timely payments.

What if I do not want my Life Insurance Policy once I have taken it?

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You have several options if you no longer want your life insurance policy. Term Plans generally come with a 15-day Free-Look period, during which you can cancel and receive a refund. Once the Free-Look period is over, you can opt to surrender the policy. Surrendering the policy means you will receive the cash value minus any applicable surrender fees.

You can also stop paying premiums, and the policy will lapse. Alternatively, you can convert your policy to a different type of term or assign it to another person.

On maturity, can a new policy be availed at the rate of the old premium?

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No. Once the policy matures, it is closed and cannot be renewed. In such a case, if the policyholder wishes, they have to take a new policy as per the new terms and conditions.

Am I still eligible for Life Insurance Coverage if I have a serious health concern?

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Usually, all insurance providers require the applicant to undergo medical testing, after which they decide the coverage and premium depending on the risk area you fall into. Even if you are not in the best of health or suffering from any serious ailment, you still have a few options available for Insurance, though at an elevated premium.  

Can I buy Life Insurance for anyone I wish to?

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You can buy Life Insurance for someone other than you, but the main factor here is "Insurable Interest" along with the insured's consent.

Insurable Interest means a person's interest in something like property or another individual wherein any loss or harm to this property or individual would affect the person. 

An insurable interest relationship is usually between:

  • Spouses and Children
  • Business Owner and Key Employees
  • A creditor and a Borrower

Why should I buy another Life Insurance Policy when I already have one policy from my employer?

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It's great if you have Life Coverage from your employer. However, in most cases, you might need more than your employer's policy to cover your family needs, which may end if you change jobs. Analyze your financial cover requirements and decide if you need another Insurance cover. In such cases, Term Plans, due to their affordability, can be a good choice as an addition.

What is Mortgage Insurance?

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A Mortgage Insurance Policy is designed specifically to repay the mortgage debts in the unforeseen event of the policyholder's death. The beneficiary in the case of Mortgage Insurance is the lender and not any immediate family member. It basically lowers the risk to the lender of providing a loan to a borrower.

If I stop smoking today, or maybe 6 months before taking a Life Insurance Policy, will I get a Non-Smoker rate?

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Smokers typically pay two to four times more than non-smokers for life insurance. Insurers offer non-smoker rates after 3-5 years of tobacco abstinence, and some provide it after just one year. If you quit smoking six months before getting a policy, you might not immediately qualify for non-smoker rates. Some insurers offer a “non-smoker in transition” rate, which falls between smoker and non-smoker rates. Always check with your insurer for specific policies.

What is the best kind of Life Insurance Policy?

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The best kind of Life Insurance is the one that suits your requirements. If you want high coverage at a low cost, go for Term Insurance. However, Whole Life Insurance should be the choice if you want coverage for the rest of your life. 

What is the Contestability Period in Insurance?

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The contestability Period in Insurance is the time frame during which the insurer can contest the policy’s validity and refuse to pay the death benefit. This period, usually two years, allows the insurer to investigate and deny claims if they find any fraud or misrepresentation in the application.

What Is Indexed Universal Life Insurance (IUL)?

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IUL is permanent life insurance that offers death benefits and components for savings. The policy's cash value can be invested in a savings account or linked to a stock index performance, with a variable interest rate and a minimum guaranteed rate. Policyholders can adjust premiums, and the policy can serve as a tax-free retirement savings option. Upon death, the beneficiary receives the death benefit, but the cash value may or may not be given to the beneficiary as per the policy terms.

What is Cash Value Life Insurance and How does it work?

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Cash value life insurance is a permanent policy that provides both a death benefit and a savings component. When you pay your premiums, a portion of the money goes into a savings account called the "cash value." Over time, this cash value grows. You can borrow from it, withdraw funds, or even use it to cover premiums. The death benefit is paid to your beneficiary, while the cash value may or may not be given to the beneficiary as per the policy terms.

What are the details of the life insurance policy?

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Life insurance is an agreement to pay regular premiums to an insurance company. In return, they promise to pay you or your nominee a specified amount when the policy matures. In case of unfortunate death, it provides financial security for your family before the policy matures. It also helps address the risks of living without financial support in old age.

What is the benefit of life insurance?

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The primary benefit of life insurance is financial protection for your loved ones in the event of your passing. Life insurance provides a death benefit, which can be used to pay funeral expenses, cover outstanding debts and loans, replace lost income, fund education expenses, supplement retirement income, pay estate taxes, and support business succession planning.

Life insurance can also offer living benefits such as cash value accumulation, tax-free growth, and access to funds through loans or withdrawals. Some policies offer terminal or critical illness benefits, providing financial support during difficult times.

Who needs a life insurance policy?

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Life insurance is precious and can benefit various individuals, including small business owners, working parents, stay-at-home parents, retirees, single people without children, and empty nesters.

Which type of life insurance is best?

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A whole life insurance policy is considered very secure. It has strict premium payment rules. If you keep making the scheduled premium payments, the policy's cash value will increase yearly. On the other hand, If you are on a budget and want to provide coverage for your family, term life plans are often the most cost-effective option.

What age is best to get life insurance?

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Life insurance premiums are usually lower for younger people, while older individuals pay higher premiums. However, there can be exceptions based on an applicant's health. For example, a 30-year-old will likely get a more affordable premium quote than a 40-year-old.

Is life insurance money refundable?

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Life insurance money can be refundable under certain circumstances:

Return of Premium (ROP) Life Insurance is a policy that refunds all your premiums. If you pass away during the term, your beneficiaries receive the death benefit, and if you are still alive when the term ends, the insurer will refund all the premiums you have paid (tax-free).

Cancellation of Term Life Insurance is when the company must refund your payments if you cancel a term life insurance policy within 30 days of purchasing it.

What is the maximum life insurance coverage in India?

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The HLV (Human Life Value) factor limits your life insurance coverage based on age. For instance, if your annual income is ₹12 lakh, the maximum life cover you can get would be 1.8 crore (15 times your income).

What are the two basic types of insurance?

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Insurance plans are broadly categorized into Life Insurance and General Insurance. Life insurance provides financial security for your family and loved ones, while general insurance covers various other risks, such as health, vehicle, and property.

How do I cancel my life insurance policy?

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Contact your insurance provider to cancel your life insurance policy and inform them of your decision. You may need to complete a policy surrender form or write a cancellation letter. Ensure you have confirmation of the cancellation. Remember, cancellation may involve surrender charges, and you may lose the accrued benefits. Always consider the implications before cancelling.

Disclaimer

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  • This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
  • All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
  • Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.

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