13 Questions You Must Ask Your Life Insurance Agent

Essential Questions to Ask Your Life Insurance Agents

Frequently Asked Questions

Which documents do I need to produce to purchase a life insurance plan?

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Following are some of the necessary documents that you will have to submit to your insurance company while applying for a life insurance plan:

  • Age proof
  • Photo identity proof
  • Residential proof
  • Medical diagnostics
  • Income proof
  • PAN card
  • Passport-sized photograph

Can I get tax benefits on the premium of a life insurance plan?

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Yes, Section 80C of the Income Tax Act of India allows one to get a tax deduction on the premium paid towards a life insurance policy in a financial year. Under this Section, you can reduce up to ₹ 1.5 Lakhs from your gross taxable income in a financial year. However, these tax benefits depend on the prevailing tax regime. 

What is the basic difference between term insurance and life insurance policy?

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A term insurance policy comes with only the death benefit. Nominees can claim it if their policyholder passes away within the coverage period. On the other hand, life insurance policies offer both death and maturity benefits. Beneficiaries will get the death benefit like a term insurance plan. Furthermore, if policyholders survive the policy term, they will also get a lump sum maturity benefit.

What will be the consequence if I miss the premium payment of my life insurance policy?

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You may forget to pay the premium of your life insurance policy on or before the due date. In such circumstances, if you succeed in paying within the grace period offered by your insurer, your policy will not lapse. Otherwise, you will have to pay a certain penalty and the premium to reinstate your life insurance coverage.

What is the difference between participating and non-participating life insurance policies?

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Participating life insurance policies share the insurer's profits with policyholders through dividends or bonuses. These policies offer guaranteed benefits plus potential additional bonuses, which can enhance the policy's value over time. Non-participating life insurance policies, however, only provide guaranteed benefits and do not share in the insurer's profits. As a result, non-participating policies typically have lower premiums but do not offer any potential for extra payouts.

What is the reinstatement clause in a life insurance policy?

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The reinstatement clause in a life insurance policy allows you to renew coverage if it lapses due to missed premium payments. To reinstate your policy, you must demonstrate insurability by meeting the insurer's health requirements, paying any overdue premiums and interest, and adhering to specified timelines. This clause ensures you can revive your policy within a specific timeframe, following the insurer's guidelines.

What is the concept of life insurance underwriting?

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Life insurance underwriting is how insurance companies assess a person’s risk profile to decide if they qualify for coverage and what premiums they should pay. This process examines factors like age, medical history, lifestyle, job, and financial situation. Underwriters determine if the application is approved, adjust policy terms, or set the premium rate based on this information. This ensures the policy matches the applicant's risk level and financial needs.

How do life insurance and general insurance differ from each other?

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Life insurance ensures financial security for beneficiaries if the insured person passes away, providing a death benefit to support them. In contrast, general insurance covers non-life aspects such as health, property, and vehicles, compensating for losses or damages during the policy period.

Is it good to buy a rider with life insurance?

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Adding a rider to your life insurance policy gives you extra coverage and protection against risks like critical illness, disability, or terminal illness, depending on the type of rider you choose. While riders increase your premiums, they can offer crucial financial support when needed. Consider the benefits and costs carefully to decide if a rider suits your needs.

Is there a limit on the number of beneficiaries?

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In a life insurance policy, there is no legal limit on the number of beneficiaries you can name in a life insurance policy. You have the flexibility to name both primary and contingent beneficiaries, ensuring a clear distribution of benefits according to your wishes.

What is the difference between ‘Irrevocable Beneficiary’ and ‘Revocable Beneficiary’?

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The policyholder can change a revocable beneficiary at any time without the beneficiary's permission. On the other hand, an irrevocable beneficiary cannot be changed without their consent, ensuring they have guaranteed rights to the policy benefits.

What do you mean by the contestable period in an insurance policy?

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The contestable period is a specific time frame, typically one to two years from the policy start, during which the insurance company can investigate and potentially deny claims if they find errors or misrepresentations in the application.

The contestable period in a life insurance policy refers to the initial one to two years after the policy starts. During this time, the insurance company can thoroughly review the policyholder's application for any errors or misrepresentations. After this period, the insurer's ability to investigate claims for potential inaccuracies is significantly limited.

What is the meaning of cash surrender value?

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Cash surrender value in life insurance is what you receive if you choose to end your permanent life insurance policy early, before it reaches maturity or pays out upon death. This value consists of the premiums you've paid plus any interest earned, minus fees charged by the insurance company.

Not all life insurance policies include cash surrender value. Permanent policies like universal and whole life allow you to accumulate cash value over time, which can be accessed through withdrawals or loans. Term life insurance policies do not build cash value and do not provide this option.

Can a beneficiary claim the policy if the policyholder has been missing for multiple years?

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When a policyholder has been missing for several years, beneficiaries can usually claim the insurance policy after a legal presumption of death is made. This typically involves waiting for seven years from the filing of a First Information Report (FIR). During this time, beneficiaries need to follow legal procedures, including obtaining a court declaration confirming the policyholder's presumed death, before approaching the insurance company to settle the claim.

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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