Life Insurance

What is Life Insurance?

Life Insurance is a contract between an individual (policyholder) and an insurance company that provides financial protection to the policyholder’s family in the event of their death. In exchange for regular premium payments, the insurer promises to pay a lump sum (sum assured) to the nominee upon the insured’s death or after a set period in certain plans.

It acts as a safeguard for your loved ones, ensuring financial stability even in your absence. Some policies also provide a savings or investment component, helping you meet long-term financial goals like children’s education or retirement planning.

Features and Benefits of Life Insurance

• Financial Security: Provides your family with financial stability after your demise.
• Tax Benefits: Premiums paid are eligible for deductions under Section 80C, and maturity/death benefits are exempt under Section 10(10D) of the Income Tax Act.
• Long-Term Savings: Some plans offer a maturity benefit that helps you save for future goals.
• Loan Facility: Certain policies allow you to borrow against the policy value in case of financial emergencies.
• Wealth Creation: ULIPs and Endowment plans help you grow wealth over time while maintaining life cover.
• Customisable Coverage: Add riders for critical illness, accidental death, or disability for enhanced protection.

Types of Life Insurance Policies in India

• Term Life Insurance: Pure protection plan that offers financial coverage for a fixed term. Affordable and ideal for high coverage at low premiums.
• Whole Life Insurance: Provides lifelong protection (usually up to 99 or 100 years) with savings benefits.
• Endowment Policy: Combines insurance with savings. A lump sum is paid at death or policy maturity.
• Money Back Policy: Offers periodic payouts during the policy term and remaining sum assured at maturity or death.
• Unit Linked Insurance Plan (ULIP): Provides dual benefits of investment and insurance. Premiums are partly invested in equity/debt funds.
• Child Plan: Designed to secure your child’s future education and financial needs, even in your absence.
• Pension/Retirement Plan: Helps you build a retirement corpus and ensures regular income post-retirement.

Difference Between Term Insurance and Whole Life Insurance

How to Choose the Best Life Insurance Policy

Follow these tips before buying a life insurance plan:

• Assess your financial goals and family’s needs to decide on coverage amount.
• Start early—premiums are lower at a younger age.
• Compare plans from multiple insurers for benefits, riders, and claim settlement ratio.
• Choose a trusted insurer with high claim settlement record (above 95%).
• Read policy documents carefully for inclusions, exclusions, and surrender conditions.
• Opt for term plans if you want pure protection at affordable rates.
• Consider ULIPs or Endowment plans if you seek insurance plus savings.
• Evaluate the rider options—critical illness, accidental death, or waiver of premium.

Importance of Life Insurance in India

• Acts as a financial safety net for dependents in case of untimely death.
• Helps in wealth accumulation and long-term financial planning.
• Ensures your children’s education and family’s lifestyle remain unaffected.
• Provides tax advantages on both premiums and payouts.
• Helps in retirement planning through pension-oriented life policies.

Claim Settlement Ratio of Top Life Insurance Companies in India

The claim settlement ratio indicates the insurer’s reliability — it is the percentage of claims settled against the total received in a financial year. The higher the ratio, the better the insurer’s trustworthiness.

Which Life Insurance Policy is Best for Family

• LIC Tech Term Plan
• HDFC Life Click 2 Protect Super
• ICICI Pru iProtect Smart
• Max Life Smart Secure Plus Plan
• SBI Life eShield Next
• Bajaj Allianz Life Smart Protect Goal
• Tata AIA Sampoorna Raksha Supreme
• PNB MetLife Mera Term Plan Plus

Banks & Tie-ups for Life Insurance in India

Several banks in India offer life insurance policies in partnership with leading insurers through the bancassurance model, allowing customers to access insurance services conveniently through their bank branches or online platforms.

• State Bank of India (SBI): Partners with SBI Life Insurance Company Ltd.
• HDFC Bank: Partners with HDFC Life Insurance Company Ltd.
• ICICI Bank: Partners with ICICI Prudential Life Insurance Company Ltd.
• Axis Bank: Partners with Max Life Insurance Company Ltd.
• Bank of Baroda: Partners with IndiaFirst Life Insurance Company Ltd.
• Canara Bank: Partners with Canara HSBC Life Insurance Company Ltd.
• Punjab National Bank (PNB): Partners with PNB MetLife India Insurance Company Ltd.
• IDBI Bank: Partners with IDBI Federal Life Insurance (now Ageas Federal Life Insurance).