Is it necessary to buy life insurance?

If you have financial dependents and liabilities, it is crucial to buy life insurance. In case of an unwanted upshot, your loved ones can suffer from a lack of adequate funds. Besides, if you have loans, your family can lose the asset if they default on the repayment. Thus, to protect your family from unpleasant circumstances, you can buy life insurance online from reputed insurers.

How does life insurance work?

You procure life insurance in exchange for a payment known as premium. Parts of the premium provide the administrative charges of the insurer and the life coverage costs. In savings plans, the insurer invests another part into profit-making schemes. This portion earns revenues, which the insurer passes on to you as benefits.

Who can buy a life insurance policy?

If you are a wage earner and have relatives to sustain, you can buy life insurance for the family. Even homemakers need life insurance because their contribution has an economic value. Children need it as well to avoid risks on their future income potential. Retirees can also invest in pension plans as an alternative source of income. Thus, anyone can buy a life insurance policy. The age bracket for purchasing life insurance in India is usually between 18 and 65 years. You can check the criteria like minimum and maximum age of entry on your insurer’s website.

What is the ideal life cover that I need?

Several factors govern the ideal amount for your life coverage:The number of your financial dependentsThe kind of lifestyle you want to ensure for them and the money necessary for meeting such living costsThe amount needed to cover your children’s expenses and your existing loansYour current age and annual incomeThe premium you can affordYour investment goalsYou can take the help of experienced life advisors to identify the best life insurance cover in keeping with your needs.

What is the right age to buy a life insurance plan?

The moment you acquire the responsibility for the financial wellbeing of your retired parents, spouse, or children, becomes the correct time for buying life insurance. Even if you have just started to earn, you need to assemble funds for future goals and old age expenses. Life insurance costs increase with age. Thus, delaying the purchase of a life insurance policy will raise the premium you have to pay. However, the amount remains fixed throughout the policy tenure. Therefore, buying early will help you save on the premium outgo.

How to pay the premium for my life insurance?

Online life insurance payment channels:NEFT through your bank’s net banking platformPayment from your insurance company’s website with approved credit or debit cards Internet bankingElectronic bill payment services of your bank Bill DeskMobile Immediate Payment Service (IMPS) with MMIDOffline avenuesCheque drop boxes at selected ATMsCash/ cheque/demand draft/ credit card payment at your insurance provider’s branch offices Electronic fund transferStanding instruction to debit your bank account automaticallyDirect debit from your bank account through Electronic Clearance Service (ECS)

What will happen to my life insurance policy if I cancel it?

If it is a plan with cash value, you will receive the surrender value provided the policy has completed the lock-in period. You can obtain the surrender value of your policy from your insurance provider.Your life cover will cease to exist, and your family will no longer receive the benefits of life insurance if anything regrettable happens.If you cancel your policy during the free-look period, you will get a refund of your premium minus the stamp duty and medical expenses incurred by your insurer.

How do I choose a nominee?

You can appoint as your nominee anyone you want to benefit from the life insurance funds. The general practice is to assign your close relatives like children, spouse, or parents. But, to secure your family’s finances, you need to evaluate the accountability of the person you choose. You can select multiple beneficiaries as well. Moreover, if you want to nominate children below age 18, you have to appoint a custodian. The appointee will receive the payout unless the minor attains adulthood. However, nominating an unrelated person who will not suffer any hardship from the loss of your income can be hazardous. Thus, insurance companies may refuse such a nominee.

Can I change the beneficiary/nominee for my life insurance policy?

You can change the nominee for your active life insurance policy any time during your policy term. Multiple nomination changes are permissible, and the latest nominee supersedes the previous ones. You can fill up the relevant amendment form mentioning the details of your new nominee and submit it to the insurer. The forms are available on the insurance provider’s website and branch offices.

How will my family receive the life insurance claim?

Filing a claim is a straightforward process and involves the following steps:Filling up the claim form online or at a branch office of the insurance companySubmitting a copy of the death certificate and the original policy bondFurnishing documents like hospital certificate, police FIR report, postmortem report, discharge summary and other medical records in case of an accidental death Furnishing KYC papers of the legal heir like the succession certificate in the absence of a nomineeThe insurer will scrutinize the documents and verify the validity of the claim. Once satisfied, they will settle the payment. Your family will receive the benefits as a lump sum, a fixed, or increasing incomes as stated in the policy.

Why should I buy a life insurance policy?

Why should I buy a life insurance policy?Reasons for buying life insurance include:Protecting your loved ones from the financial losses resulting from an eventualityShielding your family from the challenges of repaying your due creditsFinancing your children’s higher education and other long-term goals Securing a constant income after retirementSaving taxIncreasing your monetary assets through disciplined savings and judicious investments

What are the tax benefits available with life insurance?

You can avail deductions up to ₹1.5 lakhs per financial year for your life insurance premiums, under Section 80C of the Income Tax Act, 1961. However, if your policy was issued before March 31, 2012, you can apply for such deductions when the total premium does not exceed 20% of the sum assured. For policies issued later, the total premium must not surpass 10% of the sum assured to be eligible for deductions.Moreover, Section 10(10D) makes the maturity benefit tax-free if the total premium amount does not go beyond 10% of the sum assured. Besides, the death benefit paid to the nominee is exempt from taxes.