What is Life Insurance & Who should be Insured?
Life insurance is an agreement between an individual and an insurance company. The policy promises to pay a specified beneficiary a sum of money if the insured person passes away. Life insurance serves to provide financial support to the insured person's family or dependents in the event of an unexpected death. Here are some general guidelines on who should consider having a life insurance policy:
- Breadwinners: If you are the primary earner in your family and your family depends on your income to meet their daily expenses, then having a life insurance policy can provide financial security to your family in case of your untimely death.
- Dependents: If you have dependents such as children, elderly parents or other family members who rely on you for financial support, then having a life insurance policy can ensure that their financial needs are taken care of in case of your untimely death.
- Debtors: If you have taken on significant debts such as a mortgage, car loan, or personal loan, then having a life insurance policy can provide financial protection to your family and help pay off those debts in case of your untimely death.
- Business Owners: If you own a business or have business partners, having a life insurance policy can provide financial security to your business and your family in case of your untimely death.
It's important to note that the decision to purchase a life insurance policy should be based on your individual financial situation, goals and needs. It's recommended to consult with us to determine the type and amount of life insurance that is right for you.
Types of Insurance Policies:
In India, there are several different types of life insurance policies available, including:
- Term Insurance: The most basic form of life insurance, providing coverage for a specified time period. If the insured person dies within the policy term, the beneficiary receives a death benefit. Term insurance policies are typically the most affordable option.
- Whole Life Insurance: A policy that provides coverage for the insured person's entire life. The policyholder pays premiums until their death, and upon their passing, the beneficiaries receive a death benefit.
- Endowment Plans: A combination of life insurance and savings. The policyholder pays a premium, and the policy provides both a death benefit and a savings component. If the policyholder survives the policy term, they receive a lump sum payment at maturity.
- ULIPs: A policy that combines life insurance with investment. A portion of the premium paid by the policyholder is invested in equity, debt or balanced funds, while the remainder is used for life insurance coverage. The policyholder can choose how to invest, and returns depend on market performance.
- Money Back Policies: A policy that provides periodic payouts to the policyholder throughout the policy term. If the insured person dies during the policy term, the beneficiaries receive a death benefit.
It's important to choose a policy that suits your individual needs and provides adequate financial protection to your family or dependents in the event of an untimely death.
Approximate Cost:
Here's an approximate cost of life insurance premium per lakh for an adult male of 25 years old who is a non-smoker under different insurance categories:
| Policy Type | Premium per Lakh (Approximate) |
| Term Plan | Rs. 400-500 |
| Endowment Plan | Rs. 800-1200 |
| ULIP | Rs. 500-800 |
Please note that the above table provides only an approximate cost of life insurance premium per lakh and the actual premium may vary depending on the insurance company, coverage amount, and individual health profile.
Return Expectations:
The returns expectations on insurance policies can vary depending on the category of the policy. Here's a general overview of what you can expect from some common insurance categories:
- Traditional Endowment Plans: These policies offer guaranteed returns along with a bonus that is declared by the insurance company. The returns on traditional endowment plans are typically in the range of 4% to 6% per annum.
- ULIPs: These policies are linked to the performance of the stock market and the returns can vary depending on the fund chosen by the policyholder. The returns on ULIPs can range from negative to high positive returns, depending on the market conditions and the fund's performance.
- Term Insurance: These policies do not offer any returns as they are pure risk protection plans. In case of the policyholder's death during the policy term, the nominee will receive a death benefit payout from the insurance company.
It's important to note that the returns on insurance policies are subject to market risks and are not guaranteed. The actual returns can vary based on a variety of factors such as market conditions, investment performance, and policyholder's age and health profile. It's recommended to carefully read the policy documents and consult with us before investing in any insurance product.
General insurance, also known as non-life insurance, is a type of insurance that provides financial protection against damage, loss, or liabilities that may arise due to unforeseen events such as accidents, thefts, natural calamities, and health problems. In India, the Insurance Regulatory and Development Authority (IRDA) regulates general insurance.
Here are the various categories of general insurance:
- Health insurance: Health insurance provides financial protection against medical expenses arising from illness, injury, or hospitalization. It covers hospitalization expenses, pre and post-hospitalization expenses, and other medical expenses incurred during the policy period.
- Motor insurance: Motor insurance provides financial protection against damage or loss to your vehicle due to accidents, theft, or natural calamities. It is mandatory to have third-party liability insurance for all vehicles in India.
- Travel insurance: Travel insurance provides financial protection against loss or damage to your luggage, medical expenses, trip cancellation, and other travel-related contingencies. It is advisable to have travel insurance when traveling abroad.
- Home insurance: Home insurance provides financial protection against damage or loss to your home due to natural calamities, fire, theft, or other unforeseen events. It also covers the contents of your home, such as furniture, appliances, and other belongings.
- Marine insurance: Marine insurance provides financial protection against damage or loss to cargo or ships during transportation by sea, air, or land. It covers various types of risks such as piracy, theft, and damage due to natural calamities.
- Commercial insurance: Commercial insurance provides financial protection to businesses against various types of risks such as liability, property damage, and employee-related risks. It covers various types of businesses such as shops, factories, and offices.
Health insurance is a type of insurance that provides financial protection against medical expenses arising from illness, injury, or hospitalization. It covers hospitalization expenses, pre and post-hospitalization expenses, and other medical expenses incurred during the policy period. Health insurance policies can be purchased for individuals, families, or groups.
Here are some important parameters to look into before buying health insurance:
- Coverage: The coverage offered by health insurance policies varies from policy to policy. It is important to choose a policy that provides comprehensive coverage for medical expenses, including hospitalization, pre and post-hospitalization expenses, daycare procedures, and ambulance charges. Look for a policy that covers pre-existing conditions, maternity expenses, and critical illnesses.
- Sum insured: The sum insured is the maximum amount that the insurance company will pay for medical expenses. It is important to choose a sum insured that is adequate to cover medical expenses in case of hospitalization. The sum insured should also be reviewed periodically to ensure that it is sufficient to cover rising medical costs.
- Network hospitals: Many health insurance policies have tie-ups with network hospitals where policyholders can avail of cashless hospitalization. It is important to choose a policy that has a wide network of hospitals to ensure that you can avail of cashless hospitalization in case of emergency.
- Exclusions: Health insurance policies have certain exclusions, which are medical expenses that are not covered under the policy. It is important to read the policy document carefully and understand the exclusions before buying the policy.
- Premium: The premium is the amount that you pay to the insurance company for the policy. It is important to compare premiums of different policies before buying a policy. Look for a policy that provides comprehensive coverage at a reasonable premium.
- Claim settlement process: The claim settlement process is the process by which the insurance company settles claims made by policyholders. It is important to choose a policy from an insurance company that has a good claim settlement record and a hassle-free claim settlement process.
In conclusion, health insurance is an essential part of financial planning. It is important to choose a policy that provides comprehensive coverage at a reasonable premium. Look for a policy that has a wide network of hospitals, covers pre-existing conditions, and has a good claim settlement process. Contact us and we will help you choose the right health insurance policy for you.
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