Life Insurance Features
Life insurance is an innovative financial product that can help you achieve many financial goals. You can use it to provide financial protection for your loved ones and dependents, as well as a second source income in retirement. It also helps build a corpus for the child’s higher education and marriage. Life insurance policies can also be used to transfer wealth to future generations in a tax-efficient way.
Let’s learn more about the various types of life insurance available and their particular features.
Term insurance
Term insurance can be a cost-effective form of life insurance. Financial protection is provided to the nominee(s)/dependent(s) in case the policyholder dies during the policy tenure. If you are unable to be there, the term insurance money paid can be used by the insurer to protect your family’s financial future.
Term insurance is recommended for married couples, young professionals, and parents. Term insurance premiums can be deducted from your taxable income as per Section 80C under the Income Tax Act. This could provide you with an immediate tax benefit.
Life insurance – A term policy provides high life coverage for a low premium. For Rs 490 per month, ICICI Pru iProtect Smart offers a 25-year-old non-smoker Rs 1 Crore term coverage.
Fixed Premium – Both the premium amount and coverage (sum assured), are set at the time of purchase and selection. Fixed life coverage means that premiums will not change over the term.
Longer coverage – Term plans can offer coverage that extends well beyond the age of 60. The policyholder also pays a premium, which is fixed throughout the duration of the contract. You can also get whole-life insurance from ICICI Pru iProtect Smart if you are over 99 years old.
Nominal can claim the money via a variety of payout options. You can receive the life insurance payout in a lump sum, i.e. Single payment or income form. Annual or monthly payments or a combination of both lump sum or income form.
Optional Critical Illness Benefit+ – ICICI Pru iProtect smart term insurance offers the option of receiving a payout if you are diagnosed with up to 34 critical illnesses. This amount can be claimed without the need for hospital bills.
Optional accidental deaths coverage – Term Insurance lets you add accidental coverage of your choice either during purchase or after purchase. If you have life insurance that covers Rs 1 crore and has an accident benefit of Rs 50lakh, your nominee will receive Rs 1.5 crore in the event of your death. Maximum accidental death coverage available with ICICI Pru iProtect smart is Rs 2 Crore
The terminal illness benefit – Some insurance plans cover your entire insurance coverage, i.e. Sum assured even before your death if you’re diagnosed with a terminal illness
Waiver to premium# – In the event of permanent disability caused by an accident, all future premiums are borne entirely by the company. The life insurance remains intact.
Life insurance for every life stage
A sound financial plan should include life insurance. Experts say that the type of coverage needed changes as we age. Children, houses, and retirement are all important factors in the equation. Bob Bland, CEO at LifeQuotes.com gave us an insider’s view of which policies should be purchased and when.
Scenario 1 – You are a recent college graduate with no children
Life insurance is not necessary if you do not have dependents or student loan debts. Bland suggests that you be skeptical of anyone telling you otherwise.
Scenario 2 – You are in your 20s, newly married, and work full time.
You wouldn’t want your spouse to be left in debt if the worst happens. Consider a term policy if you have a mortgage, car loan or other financial obligations. Bland says that a 20-year plan worth $500,000 could be as low as $15 to $45 per monthly.
Scenario 3 – You are in your 30s and married.
Life insurance becomes crucial at this point. Financial experts recommend that you choose a plan that pays out at least 10x your annual income to the beneficiary. Bland suggests term life policies for breadwinners, which can range from $750,000 to $1 Million. For this type of coverage, a married couple might only need to pay $52 per month.
Scenario 4 – You are in your 40s, and you’re considering entering the consulting world.
Bland suggests that you get an insurance check-up if you are leaving the security of your salaried job. Bland says that the first thing to do is ask your HR department if company life insurance is transferable in the event of your departure. Many are not, so you will need to find your own insurance company. However, policies are still affordable. Bland says that a 45-year-old man with good health could pay $112 per month for $2.5 Million in coverage.
Scenario 5 – You are in your mid-40s, married with no children, and have a great job.
Bland says that a married couple with a high level of earning power requires very little life insurance. He suggests a policy that covers funeral expenses as well as family debts like mortgages.
Scenario 6 – You are in your 60s, married, and just retired
Bland recommends that you have life insurance if you are fortunate enough to have a decent pension, no debt, and no children. Bland recommends that you carefully examine your financial situation. Consider a basic policy if the death of one spouse leaves the beneficiary spouse in an extremely difficult financial position.
Additional Resource:
https://cometinsure.com/pk/life-insurance
https://www.iii.org/article/what-are-principal-types-life-insurance
https://www.abl.com/personal-banking/bancassurance/