What is Life Insurance

 

What Is Life Insurance?

Life is beautiful, but also uncertain. We can never predict what could happen the very next moment. In such cases, the financial security of the family becomes most important. One such security medium is life insurance.

 

“Life Insurance” is defined as a financial product that pays you or your dependents a sum of money either after a set period or upon your death. In other words, life insurance is an insurance tool or a provision that helps you secure your family’s financial future by getting adequate risk cover for your life. In return, you pay a particular premium amount to the insurance provider and can be rest assured that your family will be financially secured even in your absence.

Benefits Of Life Insurance Plans

Secure Family’s Financial Future

Life insurance plans cover you against the unfortunate event of death and provide the entire sum assured to the nominees/beneficiaries of the policyholder. The inner peace of knowing your loved ones’ financial future is secure, is unrivalled.

Protection against Critical Illness, Accidents & Disabilities.

A rider is an add-on cover to the base policy that provides additional benefits. Most Life Insurance plans, offer optional riders, for extra protection against Critical illnesses, Accidents & Disability. Riders can be opted for by paying a small additional premium along with the base plan.

Tax Benefits³ u/s 80(C) & 10(10D)

You can avail tax benefits³ on premium paid and death benefit received under the policy as per Section 80C and Section 10(10D) of the Income Tax 1961, respectively.

Retirement Planning

A life insurance policy is an ideal way to accumulate wealth over the term of the policy and use the funds during your retirement years. With a life insurance plan that offers savings and investment options, you can choose from various plans that will help you make a financial plan for your future when you no longer have a steady flow of your salary income.

Protection from the Burden of Debt

If you have taken a loan, a life insurance plan can ensure that in your absence, the burden of repaying the loan should not have to be shouldered by your family. Hence, they can use the benefits of life insurance to fulfil their own financial needs and also do away with pending loans, in case you are unable to fulfil them.

Why Should You Buy A Life Insurance Policy?

Financial Security

It is always better to secure your family’s financial future so that they would not face any financial crisis after you. This makes it a perfect reason why you should buy a life insurance policy

Backup Provision

Lifestyle and education costs are continually rising. Quality education nowadays needs a bunch of money, and the fees structure keeps going high for premium institutes. Money received through life insurance can be utilized for your child’s education.

Flexibility

Most life insurance policies, offer choice in terms of sum assured, policy term, premium payment term, premium payment frequency, benefit pay out options, rider attachments, and many more, which can be chosen as per your convenience.

Affordability

Life Insurance plans come with affordability. You can use the premium calculator to determine the premium amount you will be paying towards your policy. Today, a life cover of Rs. 1 Crore with Edelweiss Tokio Life Total Protect Plus would come at Rs.16 per day.⁵

Tax Benefits³

Premium amount paid of life insurance has tax benefits³ under Section 80(C) and benefits received u/s 10(10D)

Benefit Payouts

In case of claims made on the demise of the life insured, or even at the end of the tenure, the policy benefits are paid to the nominee / life assured. In some cases, you can choose monthly pay outs which can act as income for long term.

Riders

Some events may not be covered in the life insurance policy that you purchase. You can choose riders to get additional protection against critical illness, accidental death, permanent or partial disablement and so on. For riders offered by Edelweiss Tokio Life Insurance, please refer the below section.

Return of Premiums

By choosing the Edelweiss Tokio Life Total Protect Plus term plan with return of premium option, you can avail of the sum of all the premiums as a survival benefit at the end of the plan. Hence, not only do you receive life insurance coverage during the policy term but you can also get back all the premiums paid during the policy term.

Joint Coverage for Spouse

With Edelweiss Tokio term plan like Edelweiss Tokio Life – Total Protect Plus, you can choose to cover your spouse under the same insurance plan as you, thus ensuring their safety in your absence. By opting for the Better Half Benefit, in the event of your death, not only does your better half receive the aid of the death benefit, but also continues to be protected under the same plan with an additional coverage amount equal to half of your cover. Moreover, they need not pay any premiums to keep the plan in effect.

Additional Protection for the Child’s Future

Under the Edelweiss Tokio term insurance plan, Total Protect Plus, you can also opt for additional coverage for your child below the age of 18 years and ensure life cover for them until age 25. Hence, in the event of your unfortunate demise, the sum assured of the term plan as well as the additional sum assured towards the additional coverage will be paid out as a death benefit.

Types of life insurance

There are numerous variants of life insurance policies available in the country that will suit the different requirements of the customers. Before buying a life insurance plan, you must learn about its features in-depth.

 

• Term insurance:
  A term insurance is an insurance policy that provides one of the purest forms of insurance coverage. Term insurance plans provide a high sum assured at affordable premium plans. If the policyholder passes away during the pre-defined tenure of the plan, their beneficiaries will get the coverage. If the policyholder opts for a return of premium term plan and survives the policy tenure, a maturity benefit will be paid out, which is the total of all premiums paid till date.


• Guaranteed savings plans:
  A guaranteed savings plan provides policyholders with insurance coverage along with the ability to build, save and earn a guaranteed financial corpus. With a guaranteed savings plan, if you pass away during the plan's tenure, your beneficiaries will get the sum assured. If you survive the plan's term, you get guaranteed returns from the plan as a maturity benefit.


• Unit Linked Insurance Plans (ULIPs):
  A unit linked insurance plan (ULIP) is an insurance-cum-investment policy that will provide the policyholder with the dual benefits of insurance coverage and market-linked returns. Therefore in these plans, the premium amount paid by the policyholder is used for two benefits. The first part is used for life insurance coverage, while the second part is used for market-linked securities based on the policyholder's suitability and risk profile. Investment plans also allow individuals to switch between their investments during the plan's tenure. 


• Health plans (critical illness):
  A health insurance plan is an insurance policy that assists the policyholder in dealing with the medical expenses and the costs attached to the treatment of an illness. The health insurance plan is quite beneficial for dealing with the rising healthcare costs and protecting your savings.


• Group life plans:
  A group life insurance is a life insurance plan that offers affordable life insurance to a group of individuals like employees or members of an organization. Employers usually provide life insurance to their employees through a single Master Life Insurance. A group life plan is an effective way to ensure the safety of a company's employees.

Different types of life insurance

 

 

Basis	Term plan	Guaranteed savings plan	ULIPs	Health plan	Group life plan
Policy term	Generally, ranges from 5 to 50 years	Generally, ranges between 10 years to 35 years.	Term ranges from 10 years to 20 years.	Term ranges between 2 years to 3 years.	Generally, when an employee retires from the organization.
Maturity benefits	Maturity benefit is paid on survival only if a return of premium term plan is chosen.	You will be paid maturity benefits if you survive the tenure.	You can get the maturity benefits at the end of the policy as survival benefits.	Does not provide maturity benefits.	Does not offer any maturity benefit.
Death benefits	If you pass away while your plan was active, your beneficiaries will get the death benefit.	The death benefit is provided to beneficiaries when the policyholder passes away.	The beneficiaries will get the death benefit if the policyholder passes away when the plan was active.	Does not provide any death benefits.	If a member passes away during term of the plan, they get death benefits.
Optimal for	Term plans are optimal for individuals who are looking to safeguard their loved ones at affordable costs.	Ideal for individuals who want insurance coverage along with guaranteed returns from the investment.	Ideal for individuals who wish to earn market-linked returns and get insurance coverage for their loved ones as well.	Health plans are ideal for individuals who wish to safeguard themselves from healthcare costs.	Optimal for companies and organizations that wish to safeguard their employees.

 

What is life insurance premium? 

The premium in a life insurance policy is the amount that a policyholder pays to the insurance company periodically. These payments are made to ensure that their insurance policy stays in effect. The premium amount is calculated by the insurance company and will depend on different factors like: 

 

• Type of plan


• Age of the Policyholder
  


• Gender of the Policyholder
  


• Medical History of the Policyholder


• Lifestyle Habits of the Policyholder (Smoking, Alcohol, etc.)


• Occupation of the Policyholder


• Riders opted for

 

If the policyholder skips out on making the premium payment on time, their policy may lapse and the insurance coverage stops.

Insurance companies have made provisions to allow policyholders to make the premium payments as per their suitability. Policyholders have the flexibility of choosing the premium payment mode (Single Pay, Limited Pay or Regular Pay) and premium payment frequency (monthly, quarterly, half-yearly, or annually).  

Steps To Buy Life Insurance Plans Online

Step 1 : Determine which plan you wish to buy

Depending on your need, you may buy any life insurance policy offered by insurers. For example, if you want a pure life cover, then you may buy a term insurance plan. If you need life cover and savings option in a single plan, then then you may think of buying a ULIP.

Step 2: Choose your life cover

Usually, life insurance cover needs to be at least 10 times your annual income, when it comes to term insurance plans. Else, you can choose the suitable sum assured, bearing in mind the death benefits you may need to safeguard your family’s financial interests.

Step 3: Calculate your premium

Today, premium calculators have made this task easy. You need to enter a few details as required, and the calculator will show you the exact premium amount you will have to pay towards the best suitable life insurance policy.

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How Can You Save Tax³ With A Life Insurance Plan?

 

Life insurance is one of the primary and essential requirements of ensuring a financially balanced and comfortable life for your loved ones. The death benefits that come with life insurance help your family build a safe and safeguarded future, even in your absence. Moreover, under Section 80C and 10(10D) of the Income Tax Act, there are income tax benefits³ on life insurance. Under section 80C, premiums that you pay towards a life insurance policy qualify for a deduction up to ₹1.5 lakh, while Section 10(10D) facilitates income on maturity benefits/death benefits without any tax liabilities³.

Premiums paid towards your life insurance policy are eligible for tax benefits³ up to Rs. 1.5 Lakhs. The maturity benefits are also eligible for tax benefits³ if the premium amount is 10% or less of the sum assured. In short, the sum assured must be at least 10 times the premium amount or more to avail the tax benefits³. If the premium amount is greater than 10% of the sum assured, the deduction will be applicable only on the amount equivalent to 10% of the sum assured.

Reasons Why Buying Life Insurance Online Is A Good Idea

 

The Internet has changed the world drastically and, due to the widespread connectivity, the number of people who buy insurance online is increasing. One of the primary reasons for purchasing insurance online is that communication between the Customer and Company is directly leading to transparency and clarity. The process of buying life insurance online is hassle-free, paperless, and usually cheaper.

 

Moreover, with the ongoing threat and spread of the COVID-19 pandemic, buying life insurance online is a great way to avoid unnecessary contact and avail of a life insurance cover from the safety of your home.

 

Documents Required For Buying Life Insurance Policy? 

 

If you wish to buy your life insurance plan smoothly, you must ensure that you provide all the relevant documents needed for the purchase. The documents required for buying the life insurance policy are:

 

1. Income certificate: It is required to estimate the sum assured or the cover which would be offered to the insured. You can provide your ITR documents, salary slips, etc.

 

2. Address proof: You can provide any legal documents that withhold information about your residential address.

 

3. Identity and age proof: You can provide documents like your PAN card, Aadhaar card, Voter ID card, etc.

 

4. Medical certificates: Test reports of the medical checkup mandated by the insurance company or the set of existing medical reports for any pre-existing medical condition or ongoing treatment.

 

5. Other relevant documents: These may differ for different life insurance plans and providers.

Life Insurance Riders And Their Importance 

 

A life insurance rider is additional insurance coverage that you can include in your insurance policy. When you include a life insurance rider in your plan, you will be covered for specific situations. With a rider's help, you can enhance the coverage you get through the plan. Including a rider will mean a hike in your premium amount, based on the rider you choose. Therefore, you must choose your riders carefully. 

 

Some of the riders Edelweiss Tokio Life provides are:

 

LIFE INSURANCE RIDER offered by Edelweiss Tokio Life

Accidental Total and Permanent Disability Rider
The rider will offer the financial assistance and support to deal with any immediate expenses or loss of income arising from permanent disability to the life assured.


Hospital Cash Benefit Rider
If the life assured is hospitalized for the treatment of an injury or illness, the rider will offer a daily allowance, along with coverage of the actual medical expenses.


Critical Illness Rider
With this rider, the life assured will be liable to get a lump sum payout if they get diagnosed with any of the 12 listed critical illnesses.


Accidental Death Benefit Rider
This rider will offer additional sum assured to the nominee if the life assured loses their life in an accident.


Income Benefit Rider
Assured regular income to the family after the policyholder’s demise to secure their financial future.


Waiver of Premium Benefit
All future premium payments are waived off and benefits are continued to be paid in case of listed critical illness diagnosis or accidental total disability or death.


Payor Waiver Benefit Rider
Available for policies where the policyholder and insured are separate individuals, this optional rider waives off all premium payments in case of the policyholder’s death.

 

How Much Life Insurance Cover Do I Need? 

 

To estimate life insurance cover amount you need, you must:

1.  Factor in the monthly expenses and lifestyle costs of the individuals dependent on you.Plan a retirement net for your spouse. It will help your spouse spend their golden years without worrying about money.

2. Calculate the number of liabilities you hold – outstanding debt obligations, loans, etc.

3. Evaluate different life goals and events of the individuals dependent on you. You must factor in events like your children’s educational future, higher education, marriage, etc.

4. Plan a retirement net for your spouse. It will help your spouse spend their golden years without worrying about money.

5. Calculate your existing wealth that exists in savings and investments. You can deduct this amount from your cover.

 

 

Important life insurance terms you must know

 

Before you purchase a life insurance policy, it is important that you understand the policy entirely before you purchase the plan. Some of the terms you should know are:

Policyholder

An individual who has bought a life insurance plan and pays the premiums towards the plan is called the policyholder.

Life assured

It is the individual who is insured or protected through the plan.

Term plan with return of premium option

A term plan with return of premium enables the policyholder to receive a maturity benefit of all the premiums paid towards the policy, after the policy term ends.

Nominee

Nominees are the people who will receive the life insurance payout along with other benefits in the event of an eventuality. The policyholder will have to include the beneficiaries in their insurance policy when purchasing it.

Policy tenure

The duration for which the policyholder will get the coverage is called the policy tenure.

Premium

Premium is the amount that individuals have to pay to the insurance company for keeping the policy intact.

Sum assured

The sum assured is the pre-determined maximum claim amount payable to the policyholder/nominee. The policyholder will have to specify the sum assured when they purchase the plan.

Death benefit

The death benefit is the amount the policyholder’s nominees will get if the policyholder passes away during the plan’s tenure.

How to file life insurance claim?

 

 

The steps you must follow while filing a claim with Edelweiss Tokio Life Insurance are:

 

• Contact Edelweiss Tokio Life Insurance through our authorized support channels.


• Or you can visit our Claim Intimation page.


• Provide all the relevant details regarding the claimant, the policy and the life assured.


• Fill out the claim settlement form (offline or online).


• Provide all documents required.


• Relax while we check the claim documents and process your request.

 

 

 

Documents required for claim settlement:

 

• Original Policy Documents


• Copy of the Original Death Certificate


• Cause of Death Certificate


• Certificate from the hospital and the treating doctor (if the life assured was hospitalised)


• Medical Records of treatment and hospitalisation


• FIR / Panchnama / Police Report / Inquest Report (if it’s an ongoing police investigation)


• Post-Mortem Report (if conducted)


• Copy of life assured’s Driving License (if death occurred due to a vehicular accident)


• Copy of Claimant’s/Beneficiaries’ documents (Identity and Address Proofs)


• Any other documents as required by the insurance company

 

For more details regarding the documents required for claim filing and other details, visit our Claim Intimation page.