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Types of life insurance we offer
Life insurance plans are characterized by the fact that they pay a benefit on death of the insured. The most popular plans have a fixed period of time for which the policy is in force, and death benefit will be paid. Term Life, Endowment, ULIPs, Pension Plans, and Child Plans all have fixed terms. On the other hand, Whole Life Plans offer cover for the entire lifetime. Read on to know more about each of these.
Term Life:
Term Insurance plans provide a death benefit for a fixed tenure. This is the most basic and also the most important type of life insurance policy available in the market. There are certain sub-types of term life plans like level term plans, increasing term plans, decreasing term plans & term plan with return of premium.
Endowment plans:
Endowment plans are savings-oriented life insurance plans. These plans have both death benefit as well as maturity benefit.
Death Benefit is paid to the nominee if the life insured dies within the policy tenure and Maturity Benefit is paid to the policyholder if he survives the entire policy tenure.
ULIPS:
Unit Linked insurance plans (ULIPs) are investment oriented insurance plans. Under these plans, the premiums paid are invested in the capital market. There are different types of investment funds and the policyholder can choose the fund in which the premium should be invested. ULIPs allow a fund option to choose from equity, debt, balanced, liquid etc.
Child Insurance plans:
Child plans are life insurance plans created specifically for providing financial stability to the child. The parent or the child is the life insured under the plan. Usually, the parent is covered in a child plan.
There are 2 types of child insurance plans:
- One being the traditional child insurance plans with maturity, bonus (if applicable) and death benefit, if the parent dies.
- Unit-linked child plans with maturity (investment premium + growth) and a death benefit if the parent dies
Whole life plan::
Whole Life Plans are unlimited Term Plans. These plans cover individuals till 99 or 100 years of age.
Pension plans:
Pension plans are retirement-oriented life insurance plans. Under these plans, the policyholder creates a corpus from which regular annuity payouts are given till the insured is alive. Pension plans come in two variants – Deferred pension plans and Immediate annuity plans.
Summary table of benefits
Here is a summary table for you to understand the main differences between the different types of life insurance plans easily-
| Type of life insurance | Death benefit | Maturity benefit | Term of Cover | Tax saving | Primary purpose |
|---|---|---|---|---|---|
| Term Life | Yes | No | Fixed | Yes, Premium paid is tax-free till Rs 1.5 lakhs p.a. U/S 80C and Death Benefit is tax-free in the hands of the nominee | Protect family against the loss of income so that living expenses can be taken care of after your death |
| Endowment plan | Yes | Yes | Fixed | Yes, Premium paid is tax-free till Rs 1.5 lakhs p.a. U/S 80C Death Benefit is tax-free in the hands of the nominee Maturity benefit is tax-free U/S 10(10)D | Create a saving corpus |
| ULIP | Yes | Yes, market linked | Fixed | Yes, Premium paid is tax free till Rs 1.5 lakhs p.a. U/S 80C Death Benefit is tax-free in the hands of the nominee Maturity benefit is tax-free U/S 10(10)D | Create a saving corpus while investing in capital markets |
| Child Plan | Yes | Yes | Fixed | Yes, Premium paid is tax free till Rs 1.5 lakhs p.a. U/S 80C Death Benefit is tax-free in the hands of the nominee Maturity benefit is tax-free U/S 10(10)D | Cover child’s education or major expenses |
| Pension Plan | Yes | Yes | Fixed | Yes, Premium paid is tax free till Rs 1.5 lakhs p.a. U/S 80C Annuity is taxable in the hands of the annuitant but 1/3rd of the corpus can be withdrawn tax-free at the time of vesting U/S 10(10)A. | Saving for regular income post retirement |
| Whole life plan | Yes | Yes | Until death (up to 100 years) | Yes, Premium paid is tax free till Rs 1.5 lakhs p.a. U/S 80C Death Benefit is tax-free in the hands of the nominee Maturity benefit is tax-free U/S 10(10)D | Create a legacy benefit for heirs |
Life insurance premium calculator
Every life insurance policy is different and so are their premiums. The reason why no two insurance premiums are the same is because there are a lot of factors that are considered while calculating an insurance premium. Some of the factors responsible for this are the age of the policyholder, policy duration, type of policy, policyholders debts, if any, etc.
Many companies provide life insurance premium calculators on their websites wherein a policy aspirant can calculate his premium amount. These premium calculators are free, handy, and easy to use.
Steps to using a life insurance premium calculator:
- Visit the Life insurance premium calculator page on DIVIDE ‘n RULE
- Next, enter the required details like your gender, date of birth, tobacco habits and annual income
- Select your desired sum assured
- Fill in your name and contact details to view quotes of different insurers.
There are many reasons why you should consider using a life insurance premium calculator before buying an insurance policy. First of all, it’s free of cost and takes the least amount of time. Next, it helps any policy aspirant in comparing different types of plans and selecting the one under their budget. Moreover, it tells the exact amount to be spent on premiums which is very helpful for a policy aspirant.
How to buy life insurance with DIVIDE 'n RULE ?
When you are buying insurance online you need to be double sure about everything. DIVIDE ‘n RULE is a reputed insurance aggregator that offers you the best quotes on life insurance plans from the most popular insurance companies. At DIVIDE ‘n RULE you can read about the features and benefits of a plan, compare it with other plans and apply for the same in the easiest way possible.
DIVIDE ‘n RULE is connected with a number of life insurance companies and thus brings you the best of their plans. If you are someone planning to go for a life insurance plan then you can start by logging into DIVIDE ‘n RULE official website and navigating to the life insurance section. The website will present all the necessary information related to life insurance policies and will also showcase the best plans of the year. You can go through the page, compare plans as per your requirements and apply for the same within minutes.
7 things to know about life insurance
According to Maslow’s Hierarchy of needs, Life Insurance or Protection should be one’s primary importance. Theoretically, everyone knows about it, but rarely do we understand the real importance of the same. Life insurance is a safeguard against financial deficiency at the time of insured Individual’s death. Practically, life insurance grants you and your family the financial security. It also provides you assurance to deal with any unforeseen events. Life insurance is preferred according to the needs and goals of the insured. So, buying a life insurance policy is important. Read more about Reason to buy life insurance now
However, before you invest in a life insurance plan, here are 7 things that you absolutely need to know –
- Insurance is NOT an investment
This is the first thing you need to acknowledge and accept that insurance should never be considered as an investment. Insurance is a vital part of financial planning. But a lot of people consider it as an investment.
This is primarily because there are some life insurance plans in India that double up as investments. For example, Endowment Policies have a lump-sum maturity benefit, Money Back Plans have regular payments during the entire policy tenure as pre-defined schedule and Unit Linked Insurance Plans have an opportunity to choose your investments even in equity! But what you need to keep in mind while choosing your Life Insurance Policy is the coverage amount you wish to purchase for your family. Insurance is synonymous to protection and that is the primary and most important objective of ANY life insurance product. They should not be evaluated on the basis of their return, bonus, etc. - Required Coverage amount
The required coverage amount for your insurance policy is the most important aspect of choosing a plan. It depends on your lifestyle and priorities. You have to consider your standard of living, inflation, needs, liabilities etc. Then, accordingly, decide your coverage amount which would be sufficient for your family.
For instance, if your family’s monthly expenses are say ₹50,000. You need to opt for a Life Insurance coverage of at least ₹ 1 crore so that a post-tax interest earning is enough to provide for the family’s regular monthly expenses! So, ensure that your coverage amount is sufficient to meet the monthly expense of your family in your absence. - Policy Tenure
The tenure of Life insurance policies depends on the type of plan you opt for. You can choose any tenure that you think is necessary for you and your family. However, the best way to select an apt tenure for your insurance policy is as long as you are earning and providing for your family. This is typically till the age of 60 or 65 years post which your children will definitely start earning and so your financial dependence will gradually reduce! - Type of Life Insurance best suited for you
There are varieties of plans offered and available in the market. It all depends on your needs as to which plan you opt for. Some of the insurance plans are:- Term InsuranceWhole life insurance plansEndowment Assurance PlansMoney-Back PlansChild PlansPension PlansUnit Linked Insurance Plan
Out of the above-stated plans, Term Plan is the basic and the purest form of life Insurance. It is the cheapest plan. This plan covers only the death risk and has no maturity benefit. The payment is made in lump-sum amount if the insured person dies during the tenure of the plan.
Read more about Why is term insurance is an absolute buy
So, if you need a high coverage at a low cost, term plan is the best choice! - Claim Procedure:
You and your nominee should be completely aware of the claim procedure so as to expedite the claim as and when the requirement occurs. - Benefit Offered: Death and Maturity Benefit
There are two types of benefits in life insurance plans.- One is Death Benefit, where the beneficiaries will receive a lump-sum amount if the life insured dies within the policy tenure.
- The other one is Maturity Benefit, where the claim arises when the policy is matured. It is paid only when all premiums are paid on time.
Maturity Benefit is payable to all life insurance policies except term plans. Endowment Plans are a type of Life Insurance with maturity benefit. Even ULIPs have maturity benefits. These kinds of policies are relatively quite expensive compared to term insurance, but it protects your family with a coverage amount in case the insured dies within the policy tenure. Alongside, these policies have a maturity benefit payable to the policyholder, if you happen to outlive the entire tenure. Hence, the money is not completely foregone in case you survive past the policy term; as is the case with term plans!
- Tax Advantages
Life Insurance plans, apart from providing funds, also save taxes. Under Section 80C of Income Tax Act, 1961, premium amount contributed to life insurance plans are eligible for tax rebate. The limit for premium contribution is up to ₹1,50,000. Also, under Section 10(10D) of Income Tax Act, 1961, amount of sum insured paid on maturity or death or surrender of policy is completely tax-free. So, life insurance is preferred by many as it protects your family and is also tax efficient.
Know these important aspects of life insurance and then choose the right plan.
FAQ
Basics of life insurance in India
A life insurance plan pays your family a certain sum of money as death benefit (as mentioned in the policy) in event of your death while the policy is in force and/or provides returns as maturity proceeds after a set period (called policy term) when the policy terminates; in exchange of a premium.
There are different types of life insurance plans broadly the pure protection or term-life plans and investment plans.
In comparison to investment-type life insurance plans, term life plans only get you a death benefit and not any other return. However, the death benefits you get is substantial in comparison, typically 500-1000 times your annual premium. It would take an investment earning 10% interest for more than 65 years – a lifetime – to get a 500X return!
Term insurance is also quite cheap, e.g. for a 30-year-old, a cover of 50 lakhs, costs about Rs. 4,000 per year.
Life insurance plans are classified into two major types:
Pure protection policies or term life plans: Life insurance term plan pays your family the death benefit as mentioned in the policy in case of your death while the policy is in force.
In comparison to investment-type life insurance plans, term life plans only get you a death benefit and not any other return.
Investment policies: Investment-type life insurance plan pays your family a certain sum of money as maturity returns after a set time period (called policy term) or the death benefit in event of your death (while the policy is in force); in exchange of a premium.
Typically maturity periods are ten, fifteen or twenty years upto a certain age limit, usually 65 years. Furthermore, these policies are traditional with-profits or unit linked (ULIP) plans. The death benefit you get is lesser in comparison to pure protection (term insurance) plans, typically 7 -10 times your annual premium.
If you have family members who are dependent on your income, you must buy a life cover (a term-life protection plan at the least) to secure their future in your absence.
Life insurance provides financial protection against several risk-hazards in the life of every person:
That of dying too soon leaving a dependent family without any means of regular income
That of living till old age without visible means of support
Paying off loans and other expenses like illness or accidents in your absence
Moreover, the death benefit is tax free to your family u/s 10(10D), and premiums get tax exemption u/s 80C.
The rule of thumb is that you should buy a life cover of at least 10 times, and ideally 20 times your annual salary, so that your family can continue to have similar quality of life even after the breadwinner dies.
Why would you need so much cover? Consider a simple scenario, where Anil, who’s salary is 5 lakhs, took the recommended minimum cover of 10 times salary, i.e. 50 lakhs. On his death, his family puts the 50 lakhs of payout corpus in a fixed deposit. With interest of 8% this would give 4 lakhs of substitute income for his family, to manage their day-to-day expenses. It’s less than before but should be fine since Anil’s expenses are no longer to be borne. Now if Anil had loans to pay or other unplanned costs come up, then the corpus will reduce and so will the interest income. Also with effect of inflation the interest income may not be enough as years pass by. So, to be fully safe ideal cover would be 20 times the salary.
Our experts can help with determining your cover need based on your income and savings. We also can help you and your family, plan for the best way to use the benefit payout, in case of an unfortunate event.
Life insurance provides two types of tax benefits:
The premiums you pay for a life insurance policy are eligible for tax deductions upto Rs1.5 lakhs under Section 80C (to the extent of 10% of sum assured or actual premiums paid whichever is less)
The death benefit (including any accumulated bonuses) received by the nominee is fully tax- free as per section 10 (10 D).
Any maturity proceeds received (other than death benefit) are tax-free provided, the premiums paid in any of the years during the term of the policy do not exceed 10% of the actual Sum Assured.
You can always cancel your life insurance policy by informing your provider about your wish to cancel within the free look period which is 15 days. When you cancel your life insurance policy, you are officially ‘surrendering’ the policy.
Alternatively, if you stop paying your premiums, the insurance policy shall stand cancelled or lapsed and the cover will no longer apply. However, surrender of policy is not recommended since the surrender value would always be proportionately low.
You pay a small premium every year to the insurance company, in return for which you get a large cover, typically 30-100 times the premium you paid. The insurance company collects many such small premiums from a large number of customers to create a pool from which they pay your claim. Insurance companies are able to offer you a cover several times the premium you paid simply because not everyone in the pool falls sick in the same year!
How to save money on your life insurance
The prices on DIVIDE ‘n RULE are the lowest you can find anywhere, including insurance company websites. In addition, with us you get the benefit of smart choices, personalized recommendations, and life-long claims support.
Insurance companies price policies based on mortality tables that capture data on death rates for various customer segments. Higher the risk of death higher the premium. Some of the factors that can influence your price include:
- Your age: older people pay more
- Your gender: women pay less than men
- Your tobacco consumption habits: pay more if you consume tobacco
- Add-on benefits: pay more if you include optional benefits like critical illness cover, etc.
- Medical history: pay more if you have certain medical conditions/complications
However, once bought, the premium stays constant throughout, as long as the policy is renewed without a break. Prices differ across insurers – so make sure you compare before you buy.
First and foremost, compare quotes across companies. Use our proprietary Value for Money (VFM) score and benefit illustrations to find policies that offer the most bang for your buck.
Choose a company that has a good and fast claim settlement record. You can see this data on Turtlemint.
Choose the right cover amount. Remember the thumb rule of 20 times your annual salary.
Turtlemint helps you with all of the above decisions. In addition, we offer free claims support to all our customers. So, give us a try right now!
How to make claims for your life insurance policy
Once you buy a Life Plan, keep your nominee aware of the latest policy copy. To make the claim, your nominee has to intimate the insurance company and provide necessary documents which will include copy of death certificate, hospital records, if any, identity and bank account proofs.
Your claim could be denied for any of the following reasons:
- Policy was not in force, i.e. you had not paid the premium or policy was cancelled for some reason
- You did not fully disclose required information in your insurance application
- Death cause was in excluded list; currently the only exclusion for life plan is suicide in first 12 months since start of policy