FAQs Life Insurance

• What is Life Insurance?

• Who is a beneficiary?

• How is my premium on life insurance calculated?

• What is a Whole Life policy?

• What is an Endowment Policy?

• What is Money back policy?

• What is an annuity Scheme?

• What are Joint Life Policies?

• What are Survival Benefits?

• What is Bonus?

• What are With Profit and Without Profit Plans?

• What are Guaranteed additions?

• What are Disability Benefits?

• What is meant by Double Accident Benefit?

• What is Salary Savings Scheme?

• What is Nomination?

• What is Surrender Value?

• When is policy lapsed?

• What is a Death Claim?

What is Life Insurance?
Life insurance is a legal agreement between you and the Insurance Company to secure your Family’s future in case of your untimely demise. It provides with a pre-determined amount to the beneficiary during the contract period.
The primary purpose of Life Insurance is the protection of your entire family in case of your death. Now a day’s Life insurance also acts as a tool to plan effectively about your future Savings, your child’s education needs etc. So apart from covering your life, it is an effective tool to augment your wealth

Who is a beneficiary?
Beneficiary is the person who will be paid off any benefits through your Life Insurance policy.

How is my premium on life insurance calculated?
The life insurance premiums is primarily based on four factors-
• Age & health of the policyholder.
• Term of the policy.
• Amount assured.

What is a Whole Life policy?
Whole Life is the policy where benefits are payable only on the death of the policy holder within the term, you have to pay a fixed premium depending upon your age & other factors, you also earn interest on the policy’s cash value as the years roll by and your beneficiary gets a fixed amount at the time of your death. It provides permanent protection by accumulating cash values that can be used during emergency. Moreover the Surrender value provides you an extra source of retirement money.

What is an Endowment Policy?
Endowment Policy provides with an Insurance coverage and at the same time acts as a Savings instrument, a plan where the benefits are paid on death within the term or at the time of maturity of the policy whichever is earlier. Unlike Whole life it is a policy designed principally for providing Living benefit. Thus it is more of an Investment policy and premium for an endowment life policy is much higher than that of a whole life policy

What is Money back policy?
Under Money back policy, survival benefits are spread over the term of the policy i.e. certain percentage of sum assured is paid at regular intervals before the maturity date. Full sum assured is payable on death within the term irrespective of earlier survival benefits i.e. even after payment of survival benefits the risk cover on the life continues for the full sum assured and bonus is also calculated on the full sum assured. If the policyholder survives till the end of the policy term, the survival benefits are deducted from the maturity value.

What is an annuity Scheme?
An Annuity scheme is an investment wherein you have to make regular contributions over a period of time either in a single lump sum or through installments made over a certain number of years which yields a regular income until death starting from your desired retirement age. In some annuity schemes upon the death of the annuitant, or at the expiry of the period, the invested annuity fund is refunded usually along with a small bonus to the survivors. In nutshell the Annuities offer a guaranteed income for a certain period or for life and are bought to generate income during your retired life and are also called Pension Plans.

What are Joint Life Policies?
Joint Life policies are similar to Endowment Policies but are categorized as they cover two lives simultaneously, thus offering a unique advantage in some cases, notably, for a married couple or for partners in a business firm.

What are Survival Benefits?
These Benefits are there in some policies where a part of the sum assured is paid to you (policyholder) at fixed intervals before the maturity date. The risk cover for Life is continued for the full sum assured even after payment of survival benefits and if the policyholder survives till the end of the term, these benefits are deducted from the Maturity value.

What is Bonus?
Insurance Company distributes its profits to its Policyholders every year in the form of a Bonus, it is declared as a certain amount per thousand of sum assured. Bonuses are credited to the policyholder’s account and paid at the time of maturity

What are With Profit and Without Profit Plans?
With Profit Plans are those where bonus declared is allotted to the policy and is paid at the time of maturity/death. The Without Profit Plans are those where the contracted amount is paid without any profit share, therefore the premium rate for With Profit Plan is higher than the Without Profit Plan.

What are Guaranteed additions?
In some policies Bonuses/Profits are guaranteed declared as a certain amount per thousand of sum assured and are payable at the end of the term or early death of the Policy holder.

What are Disability Benefits?
These are those Benefits which are given to the insured in case he becomes totally and permanently disabled due to any accident where he need not pay future payments and the policy shall continue for the full sum assured.

What is meant by Double Accident Benefit?
It is that benefit where payment of double the amount of designated benefit is made if the Policyholder is died due to certain kind of accident, also called Double Indemnity.

What is Salary Savings Scheme?
It is that scheme where the premium is paid from the employee’s salary through monthly deductions by the employer & there will be waiver of 5%, the additional charge of the premium which is added usually for the monthly mode of payment.

What is Nomination?
It is the process wherein a person is identified for receiving the Policy money in the event of the death of the insured. Nomination can be done at the inception of the Policy by providing the nominee’s details in the proposal form, however if it’s not done at that point it could be done at a later date.

What is Surrender Value?
It is that value which is payable by the insurer whenever he desires to terminate the contract before the expiry of the Policy term. The insured can surrender the policy if the policy is kept in force for 3 years and Bonus is also added to that value if the policy has been there for atleast 5 years.

When is policy lapsed?
The Policy lapses, when you don’t pay the premium within the grace period provided after the due date

What is a Death Claim?
It is the claim payable at the time of death to the nominee or any legal successor, if no person is nominated by the insured or no will is made, the claim is paid to the holder of a Succession Certificate