Buy Life Insurance, the smart way.

Life insurance plans are classified into two major types: Pure protection policies or term life plans: Life insurance term plan pays your family the death benefit as mentioned in the policy in case of your death while the policy is in force.

In comparison to investment-type life insurance plans, term life plans only get you a death benefit and not any other return.

Investment policies: Investment-type life insurance plan pays your family a certain sum of money as maturity returns after a set time period (called policy term) or the death benefit in event of your death (while the policy is in force); in exchange of a premium.

Typically maturity periods are ten, fifteen or twenty years upto a certain age limit, usually 65 years. Furthermore, these policies are traditional with-profits or unit linked (ULIP) plans. The death benefit you get is lesser in comparison to pure protection (term insurance) plans, typically 7 -10 times your annual premiue.

If you have family members who are dependent on your income, you must buy a life cover (a term-life protection plan at the least) to secure their future in your absence.

Life insurance provides financial protection against several risk-hazards in the life of every person:

That of dying too soon leaving a dependent family without any means of regular income That of living till old age without visible means of support Paying off loans and other expenses like illness or accidents in your absence.

Moreover, the death benefit is tax free to your family u/s 10(10D), and premiums get tax exemption u/s 80C.

Life insurance provides two types of tax benefits:

The premiums you pay for a life insurance policy are eligible for tax deductions upto Rs 1.5 lakhs under Section 80C (to the extent of 10% of sum assured or actual premiums paid whichever is less)

The death benefit (including any accumulated bonuses) received by the nominee is fully tax- free as per section 10 (10 D).

Any maturity proceeds received (other than death benefit) are tax-free provided, the premiums paid in any of the years during the term of the policy do not exceed 10% of the actual Sum Assured.

Once you buy a Life Plan, keep your nominee aware of the latest policy copy. To make the claim, your nominee has to intimate the insurance company and provide necessary documents which will include copy of death certificate, hospital records, if any, identity and bank account proofs.

• Policy was not in force, i.e. you had not paid the premium or policy was cancelled for some reason
• You did not fully disclose required information in your insurance application
• Death cause was in excluded list; currently the only exclusion for life plan is suicide in first 12 months since start of policy

• Maturity claim which is paid when the term of the plan comes to an end
• Death claim which is paid if the insured dies during the term of the plan
• Money back claims which are payable during the term of the plan if the insured is alive in a money back policy
• Surrender value claim which is payable if the policy is surrendered by the policyholder before the term completes

• When under the influence of alcohol or drugs
• Acts of criminal nature
• Participation in hazardous activities
• Suicide within 12 months of buying the policy or reviving it.

Yes, savings oriented life insurance plans, except ULIPs, provide a loan facility. Under this facility, up to 90% of the plan’s surrender value can be taken by the policyholder as loan.

The nominee should inform the insurance company about the claim. The death certificate of the insured should be submitted and a claim form should be filled stating the details of the policy. Then the insurance company would check the forms and settle the claim