Life Insurance

Life insurance is chiefly a risk management tool destined to offer financial guard to your dependents in the ill-fated occasion of your death. If you are sufficiently insured, your life insurance should enable your dependents; spouse, children or parents to maintain their current lifestyle and pursue their life’s financial goals till such time are able to set up an alternate income stem on their own.

Capital protection

He summation assured in a life insurance policy is assured as per the terms of the policy as long as the premiums are paid regularly and the policy is in force.

Inflation Protection

Life insurance is not price rises protected because insurance is a set cover-fixed term product, in which the sum guaranteed is fixed. On the other hand, a few policies do offer a cost of living adjustment {COLA} option where the cover and premium increase to match increasing need for insurance cover over time.


The summation guaranteed and the premium is fixed for the term of the policy. There are only some with profit policies that may assurance a bare minimum return, which varies crossways insurers and policies. Policies from the Life Insurance Corporation of India carry a sovereign guarantee.


Life Insurance policies are liquid depending on the policy type and the number of years a policy has been in force. There are some policies that are liquid such as pure term insurance policy.

Credit Ranking

Life insurance policies do not carry credit ratings.

Exit Option

Premature closing of the policy is permitted at financial loss.

Other Risks

The risk of payment going down after you have buy a policy exists and so does the risk of premium departing up. In attendance is also the risk of new policies up-and-coming that suit your financial necessities better.

Tax Implications

Premiums rewarded towards a life insurance policy are eligible for tax assumption under section 80C with a limit of Rs. one lakh in a financial year.

Where to Buy Life Policy

  • Life insurance can be bought from different sales point such as:
  • Individual life insurance agents representing a particular insurer
  • Banks representing a particular insurer
  • Corporate agents representing a particular insurer
  • NBFCs representing a particular insurer
  • Brokers representing a particular insurer
  • Direct Mail from an insurer
  • Telemarketing
  • Retail stores and Malls
  • Policies packaged with banking products
  • NGOs or SHGs for rural and social sectors
  • Internet sales

How to Buy a Policy

Once you have evaluated the amount of insurance you need and the insurer offering the policy, you need to fill the proposal from provided by the insurer and will need to provide for:

  • You will need document that provides your date of birth and identity proof such as a copy of the passport, driving license, voter ID or Aadhar Card.
  • Income proof in case of high value covers.
  • You may have to undergo a medical examination depending on your age or the cover that you seek.
  • Choose a nominee and get a witness sign.

How to manage the policy

  • Premium payments can be made by cash or cheque and through electronic Clearing Services {ECS}.
  • A policy certificate is issued with details including your name, premium, policy tenure and terms and conditions.
  • Premium receipts confirmation payment is issued on premium payments

Pointer to Ponder

  • Free lock period to return the policy which varies from 15 days to a month depending on the insurer.
  • Additional cover in the form of riders.
  • Provisions to make late premium payments with penalties
  • Costs and charges on facilities offered to policy holders
  • The workings of the policy through its tenure
  • Policy terms and conditions

Visit Profit Krishna to know more about Life Insurance.

Life Insurance Policy Variants

Policy Type

Salient Features

Term Plan

  • This is essentially a no-frills insurance policy in which, the nominee gets the sum assured if the policyholder dies during the tenure period
  • Nothing accurse if you outlive the policy term.

Endowment Plan

  • If you die during the term, your nominee acquires the sum guaranteed plus some returns depending on the policy performance.
  • If you stay alive the policy term, you still get reverse the sum tool guaranteed and returns earned by the policy

Child Plans

  • Similar to endowment plans, these are savings-oriented plans that are used to create savings for child’s education or marriage.

Money Back Plan

  • Similar to endowment plans, a part of the sum assured is returned to the policyholder at periodic intervals throughout the policy tenure. The balance sum assured, along with profits earned is returned at the end of the tenure

Whole Life Plan

  • A variant of endowment plans, these provide cover to the policyholder throughout their lifetime, and just over a fixed term


  • The policy works in two ways. One; it is an accumulation tool that collects premiums and earns a return. Two; on attaining the vesting age {the year the payout happens}, the accumulated fund is paid back as an annuity. This also offers insurance cover.


  • In a pension, the insurer agrees to pay the insured a fixed sum of money occasionally.
  • The reason of a pension is to protect against risk as well as give money in the form of pension at usual time.

ULIP {Unit Linked Insurance Plan}

  • Ulips combine insurance and investments
  • Ulips are expected to deliver inflation-beating returns in the long-term, irrespective of the short-term market fluctuations.
  •  UIlips offer several fund investment option with insurance and leave the asset allocation in the hands of investors.

 All about Riders

Riders are additional {protection} benefits attached to the basic {life} insurance policy. They are generally, limited in size relative to the base sum assured and may have separate terms and conditions, possibly with additional exclusion clause. Just put, riders are options that permit you to enhance your insurance cover, qualitatively plus quantitatively.

Riders cover three aspects that may need to be covered – critical illness insurance, medical expenses covers and disability insurance cover, they may be termed differently but, these are the three areas that they cover broadly, of course there is another set of riders that do not fall under any such category such as wavier of premium.

  • Critical Illness: Added life insurance policy, it provides an additional cover to the insured in the event of a ‘critical illness’. In most cases, the extra cover is paid upon diagnosis of a critical illness. The sickness roofed and the premium you have to pay vary among insurers, but the majority insurers cover cancer, coronary artery bypass, kidney or else renal failure, major organ transplant plus paralytic stroke, the catalog can get very extended.
  • Medical Expenses: Riders under this category cover risk for ailments that may require medical treatment. With living expenses on medical treatments going up, riders under this category are useful, especially with age, when most often medical conditions start to alter
  • Hospital Cash Benefit: The worry of settling hospital bills {room rent charges} add to trauma of hospitalization. This rider decreases this financial load and helps you to get well with peace of wits. But these come in with huge exclusions, do check before you sign on, as most insurers cover hospitalization with a minimum stay of 48 hours.
  • Major Surgical Assistance: This clause provides financial support in the event of medical emergencies. Specified surgical procedures are covered under this rider, with clear stated exclusions.
  • Disability Benefits: It is probably the worst thing that can happen to an individual- disability, which can seriously impair the ability to earn a livelihood. While most of us cover life and medical insurance the thought of disability never arises. However, it is one cover that everyone must consider. The riders that fall under this category address exactly the situations that arise in case of disability.
  • Disability or Dismemberment Benefit: This rider provides for an additional cover equal to the sum assured on the base policy, in the event of disability as a result of an accident. If the accident consequences in total and enduring disability, the rider provides for other benefits: a proportion of the reimbursement will be paid to the cover person every year until he recovers. Some insurers provide the ‘wavier premium’ benefit as well, in the event disability.
  • Wavier of premium: This rider gets make active in the occasion of a person {who has in use a life insurance plan} becoming ‘completely disabled’ {or lose his ability to earn a living due to the disability} owing to an injury. In that case, the premiums due on the base policy are waived till the person is able-bodied again. Even though the premium is not paid during this period, the policy cover is not terminated; it continues as if the premiums were being paid. In other words, this rider acts as a ‘disability insurance’ against your life insurance policy.

Other Riders

  • Accident Death Benefit: this rider gets into effect in case of death due to accident during the term of the policy. This adds to the sum assured in the life policy but excludes normal causes of death and it comes into effect only in case of death due to an accident
  • Level term cover rider: This rider provides you additional life cover for a specific interval which is less than the tenure of the policy. These are useful when you are in a stage in life with additional responsibilities or financial liabilities
  • Guaranteed insurability option rider: In effect, this rider ‘insures your insurability’ in future. It gives you the right to purchase additional insurance {of the nature of your base policy} at different stages in your life, without having to undergo any further medical examination.



  • You need to be a Resident Indian.


  • You need to be over 18 years old
  • Upper limit varies across Insurers and policy types


  • Up to 40 years, which depends on the policy type Insurer


  • Depends on the policy type, tenure, premium, your health condition and income


  • Depends on the Insured’s age
  • Depends on the sum assured
  • Depends on the policy type and tenure
  • Premiums frequency can be monthly, quarterly, half yearly, yearly or single {premium]


  • Individual
  • Joint


  • Facility is available

Insurances – SIPs in Mutual Funds

  • The Indians are zealous savers of the hard earned money we earn. But while doing our investments be it for our retirement or children education / marriage, we seldom feel the need to insure ourselves. In our busy daily lives (mostly of city dwellers), we often ignore or procrastinate, the decision to insure ourselves and our family adequately.
  • Nevertheless now here’s some good news. In order to compete with Unit Linked Insurance Plans (ULIPs) of domestic insurance companies, now domestic mutual fund houses are reviving a scheme, whereby you’ll be provided with an insurance cover as you invest in equity mutual fund scheme(s). It is noteworthy that such an investment- cum-insurance scheme was kept on the backburner almost for three years as the capital market regulator – Securities and Exchange Board of India (SEBI) and the insurance regulator – Insurance Regulatory and Development Authority (IRDA), had crossed swords, after SEBI demanded part-regulation of ULIPs (as they were investment products as well). Thus, mutual fund houses that were set to launch an equity-insurance product too dropped plans to launch such schemes.
  • Excluding at present with the regulatory impasse easing, domestic mutual fund houses have once again started rolling out insurance-wrapped funds. Asset managers such as Birla Sun Life Mutual Fund, Reliance, ICICI Prudential Mutual, among others have launched funds with an insurance cover over the past two to four months. Fund marketers are trying to make use of the negative perception surrounding ULIPs, especially about its cost structure and disclosures, to push their products.
  • The majority of the mutual fund houses have schemes with a maximum cover of up to Rs 20 lakhs. These mutual fund schemes are structured in a way to pay out about 50 – 100 times the Systematic Investment Plan (SIP) amount provided that an investor stays invested in the fund for two to three years. But, in case of redemption from a respective fund, the benefit of an insurance cover will not be offered. Moreover, the insurance cover shall start only after a waiting period of 60-90 days of enrolment; but in case of accidental death, the waiting period is not applicable.
  • During consequence in case an investor wants to enjoy an insurance cover a She / She SIPs into mutual funds, it will be imperative for one to stay invested over a long-term period of time.
  • Despite the fact that insurance-wrapped mutual fund schemes is an innovative idea aimed at promoting long-term investing habits amongst investors, and certainly a luring proposition; we think that investors should not enroll into a SIP of any mutual fund scheme merely because it is providing an insurance cover for free. One should select a winning mutual fund prudently, and thereafter opt to invest vide the SIP mode, and avail the insurance benefit, if available. Moreover one should not rely merely on insurance-wrapped mutual fund schemes to meet their insurance requirement, but instead also look at “pure term insurance plans” which are a cost-effective proposition to insurer you optimally.