Guide to Life Insurance Policy and its Benefits

Guide to Life Insurance Policy and its Benefits

B
Bajaj Finserv Health
October 04, 20215 mins read

Key Takeaways

  • Investing in a life insurance policy helps secure your family’s financial future
  • Understand various life insurance policy details and choose a suitable one
  • Do a life insurance policy comparison and select the best insurance provider

A life insurance policy is essential as it provides the financial assistance needed to secure your family during unexpected events. It plays a key role in safeguarding the future of your loved ones. However, before investing in a life insurance policy for family, you need to understand what maturity amount, sum assured meanings convey. Understand this common jargon as well as life insurance policy benefits to make the right choice.

What is life insurance?

A life insurance policy provides a dedicated amount either after the death of a policyholder or after the maturity period. For this, all you do is pay a premium amount to the insurance provider. In case of the unexpected death of the policyholder during the tenure, an amount is paid to the nominee. This is known as a sum assured or death benefit. However, in case the policy matures in the policyholder’s lifetime, the policyholder receives a maturity benefit from the provider in addition to a bonus amount, if applicable.

Read on to get more insight on the sum assured and other essential life insurance information. This can help you choose the life insurance policy best available in the market.

Additional read: How to Choose the Perfect Medical Coverage for Your Health Insurance Policy

What are the benefits of investing in a life insurance policy?

If you are wondering how to choose life insurance, the best way is to check the life insurance policy details of different providers and compare them. Before carrying out a life insurance comparison, get to know the umpteen benefits of investing in one too.

Availing a life insurance policy is a long-term investment that not only is profitable, but also secured as per policy regulations implemented by the IRDA. One of the most important benefits is the risk cover a policy provides you. This can help you tackle unforeseen expenses. By paying your premiums regularly and accumulating a larger corpus as the sum assured, you can meet expenses during different phases of life.

While it offers you a risk cover, a life insurance policy is also an investment option. It can help you manage expenses like building your home, educating your kids or financing post-retirement plans. Another interesting feature of a life insurance policy is that it provides guaranteed funds in the form of annuities. This way you get regular income even after you have retired.

What’s interesting is that you can also avail a loan against your insurance policy in times of need. You can do so while keeping your policy active as the benefits of your life insurance plan are not hampered. You can also avail tax benefits under Section 80C and Section 10D of the Income Tax Act, 1961 when you invest in it [1].

types of life insurance

How many types of life insurance policies are available in India?

When it comes to life insurance, India has a wide range of plans that you can avail. They include term insurance plans, unit-linked plans, endowment policies, pension plans and money back policies [2].

While term insurance policy is the simplest of all with affordable premiums, you will not get any maturity benefits after the term ends. In the event of death or maturity, the nominee or policyholder gets only the sum assured.

If you opt for a money back policy, you will receive survival benefits in addition to the sum assured after the policy matures. You have to pay higher premiums if you are investing in ULIP (unit linked) or endowment plans but you will get maturity benefits too. While investing in a life insurance policy, compare different providers and only then make your choice.

Additional read: Health Insurance Benefits: 6 Advantages of Availing a Health Insurance Plan

What do you mean by sum assured in a life insurance policy?

The sum assured of a life insurance policy in India is pre-fixed amount paid by the insurer either due to death or when the term ends. Ensure that you pay your premiums regularly to receive this benefit. If you choose a life insurance with maturity benefits, only then can you enjoy the maturity amount, which includes the sum assured along with bonuses.

The event for which you insure varies depending on the type of plan you choose. If you opt only for a protection plan, death is the insured event. However, by choosing savings-related plans, you get benefits of two insured events. These events can be either the death of the policyholder or the maturity of your policy.

Is it possible to increase the sum assured?

Yes, it is possible to increase the sum assured if you top it up with another life insurance policy. This way your sum assured amount increases. Another way to increase it is by opting for specific riders that can offer you certain benefits. Some of the common riders that can be clubbed along with an insurance policy include critical illness riders, accidental death riders and term riders.

How to choose an ideal sum assured?

While selecting a sum assured amount, consider certain key factors. Check your income and obligations so that the premiums are affordable. Other factors to check include your age, inflation rates of economy, your health conditions and your lifestyle. 

Now that you know the importance of sum assured in a life insurance policy, opt for an amount that suits your budget when it comes to the premiums. Today you can invest in a life insurance online from the comfort of your home, which is both convenient and offers better comparisons. Make you think deeply and take an informed decision to secure your family’s future.

Guide to Life Insurance Policy and its Benefits banner
  1. https://incometaxindia.gov.in/Tutorials/20.%20Tax%20benefits%20due%20to%20health%20insurance.pdf
  2. https://www.policyholder.gov.in/What_Life_Insurance_to_Buy.aspx

Please note that this article is solely meant for informational purposes and Bajaj Finserv Health Limited (“BFHL”) does not shoulder any responsibility of the views/advice/information expressed/given by the writer/reviewer/originator. This article should not be considered as a substitute for any medical advice, diagnosis or treatment. Always consult with your trusted physician/qualified healthcare professional to evaluate your medical condition. The above article has been reviewed by a qualified doctor and BFHL is not responsible for any damages for any information or services provided by any third party.

Related Articles

View All

Health Videos

background-banner-dweb
Mobile Frame
Download our app

Download the Bajaj Health App

Stay Up-to-date with Health Trends. Read latest blogs on health and wellness. Know More!

Get the link to download the app

+91
Google PlayApp store

Health Library

Health Articles

CIN

U85320PN2019PLC185286

Registered Office

Bajaj Auto Limited Complex, Mumbai - Pune Road, Akurdi, Pune - 411 035

Corporate Address

Mantri IT Park, A wing,
3rd floor, Nagar Road,
Viman Nagar, Pune, Maharashtra - 411 014

© 2021, Bajaj Finserv Health Limited. All rights reserved.