Life Insurance Policy: Definition, How It Works, Benefits, Policies in India

Life Insurance Policy Companies in India, LIC, ICICI Prudential Life Insurance, HDFC Life Insurance

Life Insurance Policy

What is Life Insurance Policy

A life insurance Policy can be called a protection plan that the individual takes for his family for their better future. Life Insurance Policy is the kind of deal that is made between the insurance company and the individual. In an Insurance policy, the company promises to give financial protection to the person in exchange the insured person pays monthly fees.

 According to the legal contract, the insurance company has to pay a fixed amount of money to the insured person or his family upon death or after a fixed period that is mentioned in the contract. It is mentioned in the contract that the policyholder has to pay a monthly amount to the insurance company in a form of a premium.

The insurance company and the policyholder are the two parties included in the Life insurance policy. At the time of maturity of the policy, the insurance company has to pay the promised amount to the policyholder.

Life Insurance Policy

Features of Life Insurance Policy

  • The Insurer – The Insurer is the company that provides the benefit of the insurance policy. The company offers policies to the individual for a better future.
  • The Policy Holder- The policyholder is the one who buys the policy from the company in the legal agreement.
  • Insured- the individual whose life is insured.
  • Nominees The person who will get the amount after the death of the insured is known as the nominee. Nominees can be family members or spouses of individuals. The name of the nominees is added by the policyholder at the time of taking the policy.   
  • Premium It is the amount that the policy person pays to the insurance company regularly.
Insurance Policy

Benefits of Life Insurance Policy

  • Future Security– The policyholder is aware of the fact that the amount he is investing in the insurance company is a kind of investment that will benefit him in the future.
  • Flexibility– The policyholder has the option to pay the amount in installments according to his pocket. The Individual is not burdened to pay all amounts together.
  • Financial Benefits– The life insurance policy provides financial benefits to the individual. The policyholder is aware that he and his family will get a fixed amount as promised by the company.
  • Tax Benefits– According to the Income Tax Act, if any individual is continuously paying the installments for an insurance policy then the premium paid can avail as a tax deduction under section 80 C of the Income Tax Act, 1961. The policyholder can also avail a deduction of up to Rs 1.5 lakh.
Terms in Insurance Policy

How Life Insurance Policy Works

It is very important to get a Life Insurance policy for a better and secure future. But before buying the insurance policy the individual should be aware of how these policies work. As it is clear from the above paragraph that it is also a kind of death benefit that is given by the insurance companies. There are two types of popular insurance policies in India.

  • Term Life Insurance Policy– A term Life Insurance Policy is cheaper than a permanent life insurance policy, the coverage in this policy is for a particular time. It covers the individual for the period of time decided at the time of purchasing policy like 10, 20, or 30 years. If the insured person dies during the covered period then the decided amount will be given to the beneficiaries but if the person survives then nothing will be paid by the Insurance Company.
  • Permanent Life Insurance – Permanent Life Insurance covers the insured person till he/she survives. It gives coverage for the whole life.  It is more expensive than term life insurance. There are also two types of permanent life insurance that are whole life insurance and universal life insurance.
Types of Permanent Life Insurance Policy

 Permanent life insurance is divided into two categories-

  • Whole Life Insurance –The best part of this life insurance is that the premium will not change for the whole life and the death benefit is guaranteed.  It is considered a simple policy.
  • Universal Life Insurance –  In this Life insurance the holder has the flexibility to pay the amount. The policyholder can pay premiums in both smaller and larger amounts.
 Important Points to Remember              
  • One of the main points that need to keep in mind is that the premium insurance is lower for younger people and slowly increases with age.
  • According to many studies, it is noticed that men survive less than women so premiums for men are higher.
  • Our daily habits also affect our health so individuals with smoking and drinking habits are charged more by insurance companies.
  • Family history of any illness is also considered an important part of the insurance policy.
  • The insurance companies also charge higher premiums for people who are suffering from any illness or may have suffered from any illness in past.
  • The premium also depends on the occupation if the individual is working in a dangerous area then he will be charged with a higher premium.

BEST LIFE INSURANCE COMPANIES IN INDIA

 A life insurance policy is an agreement, between the company and the individual. There are many companies in the market that are providing insurance. So, here is a list of companies that offers policies to individual-:

  • Max Life Insurance
  • HDFC Life Insurance
  • Tata AIA Life Insurance
  • Pramerica  Life Insurance
  • Excide Life Insurance
  • Reliance Life Insurance
  • Canara HSBC Life Insurance
  • Bajaj Allianz Life Insurance
  • Aegon  Life Insurance
  • ICICI Prudential Life Insurance
  • Aditya Birla sun Life Insurances
  • Aviva  India Life Insurance
  • Bharti Axa Life Insurance
  • PNB met Life Insurance
  • Life Insurance Corporation of India
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How to Apply/Buy the Life Insurance Policy in India

In the era of the internet, it is very easy to apply for or buy a Life Insurance Policy online.

  • First, visit the official website of the company from which you want to buy the policy.
  • The page of the company website will open.
  • Enter your all asked information like names, age, mobile no, gender, income, etc.
  • Click on check premium.
  • Enter your life cover amount and premium.
  • Click on proceed.
  • Enter all information asked and click on proceed.
  • Enter your payment mode and pay.
  • You will receive a confirmation message and mail.
 Conclusion

The life insurance policy is the financial protection plan if an individual passes away. It is very helpful for the person as well for his family’s better future. It is considered a good investment with maximum benefits. Do remember the longer you take time to purchase it the more it will cost you.

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