What is life Insurance?
Life insurance is a legally binding contract between the policyholder and an insurance company.
In exchange for the premiums paid by the policy holder, during the agreed Premium Payment Term (PPT) and payment frequency, a life insurance policy ensures financial support to the policy holder and the policy holder’s nominees in case of eventualities.
How is life insurance different from general and health insurance?
As the name implies, life insurance is a cover on your life. It ensures financial support to your family (spouse, children, etc.) in case of loss of life. Whereas, general insurance provides coverage for your other assets, such as cars, homes, etc. against loss or damage caused by unfortunate incidents like theft, fire, manmade or natural calamities, accidents, etc.
Health insurance provides coverage against medical emergencies including the cost of hospitalisation.
Is Life Insurance an indemnity based cover?
A life insurance policy is not a contract of indemnity; it's a fixed benefit policy.
In case of indemnity-based policies, the insurance company replaces (or pays for) the damages, and the pay-out revives the insured to the same financial status before the occurrence of the loss.
Since the value of human life is not quantifiable, the principle of indemnity does not apply in the case of life insurance.
Why do I need Life Insurance cover?
Life insurance is one of the best gifts you can give to your loved ones. Though no one likes to think about unfortunate events, when we do, we often worry about what may happen to the loved ones who are left behind.
If you are the breadwinner of the family, your life insurance cover would help the family members to continue living the same lifestyle in case of unexpected eventualities.
Additionally, life insurance policies help you build substantial wealth and fulfil your important life goals such as starting a new business, buying a new house or a car, renovating your old house, etc.
How much of Life Cover do I need?
How much life cover you need depends on your life stage, household expenses per month, current income, liabilities, medical expenses, education expenses for your children, number of dependants, etc.
A Human Life Value (HLV) Calculator is one of the better ways to estimate the current value of all income you would earn in the future for your family. Please click the link below to calculate HLV: https://www.sudlife.in/human-life-value-calculator
Should you invest in Life Insurance Policy?
Every now and then, all of us probably come across the thought "what would happen to our loved ones when I am not there?"
Besides taking care of the household expenses, your children’s education, or financial liabilities of your family in your absence or post retirement source of income, life insurance works as a great investment plan for yourself.
Certain insurance policies can help you with your retirement plans or with your long-term goals, such as purchasing your dream home or starting your start-up, etc. A life insurance policy will also help you save on income tax and effectively increase your savings.
What are the types of Life Insurance Products?
Buying a life insurance product is one of the most responsible financial decisions of your life. There are various types of life insurance products and each of these products has its unique benefits.
Here are the different types of life insurance products you can choose from:
Term Insurance | ULIPs (Unit Linked Insurance Plans) | Whole Life Insurance | Money Back Insurance Plans | Endowment Insurance Plans | Child Insurance Plans | Retirement Insurance Plans | Group Life Insurance I Savings Insurance Plan I Pension & Annuity Plans
Star Union Dai-ichi Life insurance has a host of Life Insurance products to help you achieve your various financial goals. Please click here to choose a tailor-made plan suitable for you:
Which type of Life Insurance cover suits me/ do I need?
Choosing the right type of life insurance plan can be a puzzling exercise, but it is one of the most important decisions you can make to ensure a comfortable and secured life for yourself and your family.
Here is a guide to help you choose the same:
Think carefully and note down your financial goals
● Calculate the insurance cover amount using the HLV tool(https://www.sudlife.in/human-life-value-calculator)
● Assess your total liabilities and household expenses
● Decide an amount that you can pay as comfortably pay as premium
● Your expected maturity amount.
● Undertake suitability analysis and find desired product to opt for.
What is a Money back insurance policy?
Money back policy is a type of life insurance plan that pays the benefits in regular intervals or as a lump sum at defined point/s during the term of the policy.
Money back plan is a great plan for youngsters and first-time investors.It can help them save small amounts regularly and meet their short term/ medium term wealth-creation goals.
What is a bonus and how a bonus is calculated?
Bonus is a share of the profit of an insurance company that is paid to the policyholders over and above the sum assured.
Insurance companies invest a percentage of the assets in securities, bonds, and other financial investment vehicles. When the insurance company makes a profit, a percentage of the surplus is shared with the policyholders as a bonus. Bonus, if declared by the Company, generally accrues at the end of every financial year.
The calculation of bonuses depends on various factors such as profits made in the previous year, history of claims, the projected interest rate in the future, returns on assets, etc.
Insurance companies calculate a bonus as a percentage of the sum assured or a specific amount for every thousand rupees of the sum assured amount.
What are the type of bonuses and when are they paid?
‘Bonus’ is an extra amount given by the Insurer over and above the Sum Assured. In life insurance,there are a different types of bonuses that the insurance companies pay to the policyholders.
Types of bonuses:
● Simple Reversionary bonus (SRB)
● Compound Reversionary bonus (CRB)
● Terminal Bonus
● Interim Bonus
● Cash Bonus
The above bonuses are paid at different times. For example:
A compounded reversionary bonus, the yearly bonus is added to the sum assured, and considering compound interest rates, the next year's bonus is decided on the new sum assured amount.
A simple reversionary bonus is paid on a yearly basis.
An interim bonus is paid on death of Life Assured or after the policy matures before the end of a financial year. Bonus is accrued in Life Insurance policy every year. In case of an unfortunate event before the next bonus declaration, interim bonus is declared for the policy holder’s family.
A terminal bonus, depending on the performance of a policy over a period of time, a one-time bonus is paid to the policyholders upon maturity or Death.
A cash bonus is paid at the end of the financial year.
Is bonus Guaranteed?
Life insurance companies invest the accumulated fund that is paid by the policyholders (in the form of premiums) in assets like bonds, securities, etc. When these investments generate profit for the insurer, the bonus is accrued. In most cases, the bonus is paid annually.
Bonus is usually applicable for participating insurance plans, however, technically, it's not guaranteed.
The amount of bonus is not fixed. It can vary depending on the amount of profits the insurance company makes.
How is Human Life Value calculated?
Human Life Value (HLV) is calculated based on the current value of all income you were supposed to earn in the future for your family. HLV helps you decide how much insurance coverage your family would need in case of the unfortunate event of your passing away. There are two ways one can calculate HLV; one is called an income replacement method, and the other one is a need-based model.
However, you must remember that HLV is not a fixed value; it keeps changing with your changing income, varying liabilities, and other factors.
Please click the link below to calculate HLV:
What are the benefits of Life Insurance policy?
Life insurance is one of the most crucial parts of your financial plan. Life insurance policies have numerous benefits.
Some of the key benefits of Life Insurance are:
● A life insurance plan brings you peace of mind that your loved ones would be financially taken care of, even in your absence.
● Life insurance can help you create wealth. Certain plans will help you build a corpus that you may need to fulfil your different financial goals.
● Life insurance gives Income Tax deductions (up to Rs. 1.5 lacs (of your Taxable Income) under Section 80C of the Income Tax Act 1961.
● Life insurance also gives Income Tax exemptions on the benefits (survival/maturity/death) received as per Section 10(10D) of the Income Tax Act 1961.
● Retirement planning becomes easy with certain life insurance policies, such as annuity-based plans.
To know more, click here:https://www.sudlife.in/products/life-insurance
What are different premium payment types?
A life insurance policy gives you and your family a safety net. Your life insurance can cover your loved ones from financial difficulties if you face an eventuality. However, it’s important to know which life insurance plan is suitable for you as it totally depends on your need.
There are different premium payment options to choose from:
• Regular Premium Payment
• Single Premium Payment
• Limited Period Payment
Can I take a life insurance policy on my own life?
Yes, if you are an adult and are eligible to enter into a life insurance contract, you can take a life insurance policy on your own life.
You need to calculate the amount of life insurance cover (sum assured) you need, the number of years you want the life insurance cover, the number of years you want to pay the premium for and who would be the nominee.
You just need to ensure that an insurable interest exists between you and the nominee, for eg..your parents or your spouse.
What are the factors that affect my life Insurance premium?
Life insurance is an essential financial investment you must have to protect your loved ones financially, but it’s also important for your sound financial health. Therefore, understanding which factors affect your life insurance premium is very important before you purchase your insurance policy.
Here's a list of key factors:
● Age - One of the most vital factors that influence life insurance premiums is your age. While you are young, it's assumed that you are less likely to suffer from serious illness and pass away prematurely. Hence, if you avail a life insurance policy in your early-stage of life, you may expect a lower premium.
● Medical history/Family history - A history of illness, especially critical ones like cancer, heart disease, etc. might negatively impact your premium. Usually, an insurance company will ask for a medical examination and would also look at metrics like your blood glucose level, cholesterol, blood pressure, etc. before deciding your premium. If your family has a history of certain critical medical conditions, it might increase the premium.
● Occupation - Your premiums could be higher if your occupation involves higher than usual risks, for example, you are a pilot or you perform dangerous duties.
● Avocation/lifestyle – You may be charged a higher premium if you have high-risk hobbies. For example, scuba diving, rock climbing, flying, etc. Also, tobacco and alcohol consumption habits affect your premium amount negatively as smokers and alcohol consumers have a higher mortality rate.
● Gender - Statistically, women have a longer lifespan than men. Hence if you are a woman, you can expect a better offer from your insurance company.
● Sum Assured – Higher the Sum Assured, higher would the total policy premium.
● Policy Term – Longer the Policy Term, higher would be the total policy premium.
● Premium Payment Term – Longer the Premium Payment Term (PPT), lower would be the monthly premium
Can life insurance policy offer hospitalization benefits?
A life insurance policy covers your life risk; however, it does not offer hospitalisation benefits directly. Hospitalisation coverage benefits are offered by health insurance policies.
Life Insurers offer fixed benefit health insurance products/ rider which are also known as critical illness product or rider. A critical illness product/ rider provide coverage on diagnosis of specified illnesses and help you deal with your financial burdens.
To know more:https://www.sudlife.in/products/life-insurance/riders
What is a Critical Illness Insurance?
A Critical Illness benefit provides coverage against specified life-threatening illness/ diseases. A fixed amount/ benefit amount is paid in lump sum payment if the policyholder is diagnosed with a covered critical illness.
Buying a critical illness product is a prudent decision.
To know more our health insurance product click: https://www.sudlife.in/products/life-insurance/riders