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Life Insurance : A Detailed Overview

Updated on May 17, 2024 , 20606 views

What is Life Insurance?

Life is full of unexpected surprises. We have no idea what might come next but we keep going and face that is ahead of us. One thing that is certain throughout is the surety of death. No one has ever escaped this ultimate truth and can never will. Also, life is too precious to put a price on it. But we still do it with Life insurance policy. We try to cover the monetary void that might arise due to the sudden departure of the key breadwinner in the family. Thus, having a good life cover is essential for you and your family.


In technical terms, Life Insurance is the contract between the company and the client where the former agrees to reimburse the latter's death or other events like an accident or terminal illness. A Life Insurance can be a Whole Life Insurance, Term Insurance or Endowment Plan. In return of this cover, the insured agrees to pay a certain amount to the company called as premium. Life Insurance thus becomes the most important form of Insurance Offering protection against life.

Different insurer give out different life insurance quotes for their insurance policies. Thus, it is important to compare Life Insurance plans and make a correct choice.

Who Needs Life Insurance?

Do you need a Life Insurance policy? Why not? No one can escape from the certainty of death and thus needs to prepared. You need to think about your loved ones and what will happen to them in your sudden absence. Life Insurance will not be able to fill the void left by the departure of your loved one but it can certainly help to fill the financial gap that might arise. The cash provided by the insurance company can make sure dependents are not burdened with large debts. You need to have a good life cover so as to be prepared for the worse and keep yourself and your family safe.

Death is not the only reason to get covered by Life Insurance. You have a healthy life and will live long, but you cannot work all your life. There will be a stage - retirement - where you will take a break and look back on the work you have done. But as you will look back, the regularity of the Income over the years will surely start declining. There might be some unexpected health issues as well. A good life cover will take care of the above-mentioned problems. You can find uses of life insurance in many other ways like child's education and marriage, buying a house, pension or post-retirement income.

Life Insurance Policy: Types

There are five types of life insurance plans offered to customers by the Insurance companies:

1. Term Insurance

In term Insurance, you get covered for a specified period of time. It provides cover with no profits or savings component. Term life protection is the most affordable as the premiums charged are cheaper compared to other types of Life Insurance plans.

2. Whole Life Insurance

As the name suggests, the insurance cover is for the whole life as long as you live. The main highlight of the policy is that the validity of the insurance is undefined. Thus, the policyholder enjoys the cover all through their life.

3. Endowment Plan

There is one big difference between endowment plans and term insurance that the endowment plans have a maturity benefit. Unlike term insurance, the endowment plans pay out the sum assured for both death and survival.

4. Money Back Policy

It is a variant of endowment Insurance. Money back policy gives out payments at regular time intervals over the term of the policy. A part of sum assured is paid during these regular intervals. If the person survives the term, they get the balance sum assured by the policy.

5. Unit Linked Insurance Plans (ULIP)

ULIPs are another variant of the traditional endowment plans. ULIPs are mostly invested in stock Market and are thus more suitable for people with a high-risk appetite. The sum assured is paid at the time of death or maturity.

How Life Insurance Quote is Calculated?

As mentioned above, it is nearly impossible to put a price tag on a human life, but nevertheless, it is very crucial to estimate the value of your life. You need to calculate how much money your family might need in your absence to be stable financially. In Insurance Terms, the financial quote of your life is called Human Life Value or HLV. And it is also the sum assured for the given Life Insurance policy.

The basic method of calculating HLV involves two steps:

  1. Sum up all expenses like household, lifestyle, etc.
  2. Calculate future liabilities like loans, debts, etc. that your family might have to pay in case of your sudden absence.

Once you add these points, you get the sum assured for your Insurance policy.

So, after calculating the HLV, your Life Insurance quote or premium is calculated. While calculating, it considers the above HLV and other physical factors such as your age, health, financial power etc.

Best Life Insurance Plans of 2024

Plan Names Plan Type Entry Age (Min/Max) Policy Term (Min/Max) Bonus Yes/No Sum Assured (Min/Max)
HDFC Life Click 2 Protect Life Term 18 to 65 years 10 years to 40 years No Minimum Rs. 25 Lakh, no maximum limit
PNB MetLife Mera Term Term 18 to 65 years 10 years to 40 years No Minimum Rs. 10 Lakh, no maximum limit
HDFC Life Click2Invest ULIP 0 yrs to max 65 yrs 5 to 20 years No 125 % of Single Premium 10 times the annual premium
Aegon Life iTerm Insurance Plan Term 18 to 65 years 5 years to 40 years or upto 75 years No Minimum Rs. 10 Lakh, no maximum limit
LIC New Jeevan Anand Endowment 18 years to 50 years 15 years to 35 years No Minimum Rs. 10 Lakh, no maximum limit
SBI Life – Shubh Nivesh Endowment 18 to 60 years 7 years to 30 years No Minimum Rs. 75 Lakh, no maximum limit
SBI Life – Saral Pension Pension 18 years to 65 years 5 years to 40 years Yes Minimum Rs. 1 Lakh, no maximum limit
LIC New Jeevan Nidhi Pension 20 years to 60 years 5 years to 35 years No Minimum Rs. 1 Lakh, no maximum limit
ICICI Prudential Wealth Builder II ULIP 0 years to 69 years 18 years to 79 years No Multiples depending on age
Bajaj Allianz Cash Secure Endowment 0 to 54 years 16, 20, 24 and 28 years No Minimum Rs. 1 Lakh, maximum is subject to underwriting

Life Insurance Claims

Claims under this section can be classified as under:

Death Claims

In the case of a death claim of the policyholder, the beneficiary needs to produce following documents:

  • A correctly filled claim form
  • Original copy of policy contract
  • An original or certified copy of the insured death certificate.
  • Identity proof of the beneficiary

Maturity Claim

To enjoy the benefits on the maturity of the Life Insurance policy the policyholder needs to produce these documents:

  • Original copy of the policy contract
  • Maturity claim form

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Life Insurance Companies

There are 24 Life Insurance Companies in India:

  1. Aegon Life Insurance Co. Ltd.
  2. Aviva Life Insurance Co. India Ltd.
  3. Bajaj Allianz Life Insurance Co. Ltd.
  4. Bharti AXA Life Insurance Co. Ltd.
  5. Birla Sun Life Insurance Co. Ltd.
  6. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.
  7. DHFL Pramerica Life Insurance Co. Ltd.
  8. Edelweiss Tokio Life Insurance Co. Ltd
  9. Exide Life Insurance Co. Ltd.
  10. Future Generali India Life Insurance Co. Ltd.
  11. HDFC Standard Life Insurance Co. Ltd.
  12. ICICI Prudential Life Insurance Co. Ltd.
  13. IDBI Federal Life Insurance Co. Ltd.
  14. IndiaFirst Life Insurance Co. Ltd
  15. Kotak Mahindra Old Mutual Life Insurance Ltd.
  16. Life Insurance Corporation of India
  17. Max Life Insurance Co. Ltd.
  18. PNB MetLife India Insurance Co. Ltd.
  19. Reliance Life Insurance Co. Ltd.
  20. Sahara India Life Insurance Co. Ltd.
  21. SBI Life Insurance Co. Ltd.
  22. Shriram Life Insurance Co. Ltd.
  23. Star Union Dai-Ichi Life Insurance Co. Ltd.
  24. Tata AIA Life Insurance Co. Ltd.

Important Points to Remember

  • No Life cover plan covers for everything you need. It need not be similar to your friend's or colleague's insurance plan. You must set proper Financial goals and those goals must reflect in the insurance plan.
  • It is better to start early because as you age, the cost of insurance rises.
  • Term plans are more affordable than other plans, and you get larger life cover at a lower premium.
  • Life Insurance riders add more value to your existing cover. A rider is an add-on to the primary insurance policy, which offers benefits over and above the promised cover to certain specified conditions.
  • Consult an experienced Insurance agent/financial advisor to know which plans suits you the best and thus buy the right cover for yourself.
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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