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Popular Questions About Life Insurance

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In ULIPs, the investment risk in investment portfolio is borne by the policyholder.

Why should I buy life insurance?

Life is unpredictable. A life insurance policy makes sure your family isn’t financially unprotected, covering EMIs, bills, and future goals. If something happens to you. Think of it as their financial safety net. 

What types of life insurance policies are available?

Take your pick: term plans, ULIPs, whole life, endowment, money-back, or even child plans. Each comes with its own flavour depending on your goals.

Who receives the claim amount in case of the policyholder’s death?

The nominee specified in the policy receives the claim amount. If no nominee exists, the legal heir(s) or assignee receives the benefit as per applicable laws.

 

What tax perks* do I get with life insurance?

Life insurance premiums offer tax deductions up to ₹1.5L a year under Section 80C*. Plus, death/maturity payouts are usually tax-free under Section 10(10D)*. Sweet deal, right?
 


*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law

What is “free-look” period?

You typically get 30 days to read the fine print. If you don’t vibe with the policy terms, you can cancel and get your premium back (minus stamp duty charges and medical examination expenses).

What if I have a complaint or dispute?

Step 1: Talk to your insurer’s grievance cell.
 

Step 2: Still stuck? Reach out to IRDAI’s grievance cell.
 

Step 3: Next stop - the Insurance Ombudsman.
 

Step 4: Worst case (If unresolved), you can take it to court.

I already have a few policies, do I still need term insurance?

Absolutely! Think of it like walking onto a cricket pitch wearing only knee pads, without full protection, you’re still exposed. Employer cover, credit card insurance, or govt schemes are great, but having a term insurance policy gives your family a big payout to manage expenses and stay secure especially if you’re the breadwinner.

Do women pay lower premiums?

Yes. That’s because women tend to live longer than men. And if you live longer, the insurer perceives it as a lower risk, and charges a lower premium!

Will premiums remain the same throughout the policy?

Yes, assuming that your existing life cover remains the same and you do not add any policy benefits (such as riders), your term insurance premium amount will not increase. It’s a promise from your life insurance company.

Do I pay for medical tests? What if my application gets rejected?

Medical test costs are usually adjusted against your premium refund if the policy is not issued, unless the insurer has waived these charges.

How to ensure my term insurance payout goes to my spouse and not to the debtors?

If you are a married man, buy term insurance under the Married Women's Property Act, 1874 (MWPA). With this, only your wife and kids get the payout, no one else, not even lenders or relatives, can touch it. Just ask for MWP Act at the time of buying your policy. The insurer will handle the rest.

What will be my term insurance premium?

Your premium depends on factors like your age, income, health, and lifestyle. The easiest way to know your exact premium is by using the KlarifyLife Term Guide. It calculates the right life cover for you and shows the estimated premium in minutes.

I am earning quite well and already have a good investment plan. Why should I still buy term insurance?

Your investments may give significant returns, but only in the long run and they need active management. If something happens to you, they may not be enough, or may not even materialise. Term insurance ensures your family is financially protected when you’re not around.

Can an NRI buy term insurance in India?

Yes, NRI can buy term insurance from an Indian insurer either when you’re in India or from abroad. The good part is you don’t have to pay extra just because you’re an NRI. If the risk is the same, your premium will be similar to what a resident Indian pays.

What is a term plan with return of premium?

In a pure term plan, you don’t get any returns if you outlive the policy. However, a term plan with return of premium (TROP) gives you your paid premiums back if you outlive the policy duration. If you are someone who feels the need to get their paid premiums back, you can opt for a TROP.

My spouse already has term insurance. Do I still need one?

Yes, you do. If you both earn and share financial responsibilities, your income matters. It pays for EMIs, bills, kids’ education, parents’ care, etc. If something happens to you, your term plan makes sure your family can still manage. Also, your spouse’s policy may not cover your family in every situation (like separation or divorce). Having your own term plan means your loved ones stay protected, no matter what.

Can I buy multiple term plans?

Yes, you can buy multiple term plans from the same insurer or different insurers if your current coverage is not enough. However, the total life cover across all policies cannot exceed your Human Life Value or HLV.

For example, if your HLV is ₹1 crore and you already have ₹80 lakh, covered you can buy an additional cover of up to ₹20 lakh.

Can I buy term insurance for someone else ?

Yes, you can if you can prove you have an insurable interest in them, meaning their unexpected death would cause you financial hardship.

For example, you can buy a policy for a parent, spouse, or business partner. But you can’t buy it for a random acquaintance since there’s no blood or legal relationship to show financial dependence.

Can I port my term plan?

Nope, you cannot switch insurers and keep all your term plan benefits, it is not like porting a mobile number! Each insurer has different features, rules, and underwriting policies. Moving your plan would mean higher premiums or new medical tests. Hence, one cannot port a term plan.

I am 45 years old, my premiums will be high. Should I still buy term insurance?

Yes, you should. Even if the premium is higher, the life cover makes sure your family is financially secure if you’re not around. And here's how you can save smartly:
 

• Cover only till retirement.
 

• Pick a cover that replaces your income + riders you actually need.
 

• Choose a payment term that fits your budget.
 

• Buy online, often 5–10% cheaper.
 

• Compare insurers for the best deal.

Can I avail any tax benefits on riders?

The non-health-based rider premium payments can help you get deductions under Section 80C* of the Income Tax Act, 1961 and health-based rider premium under Section 80D* of the Income Tax Act, 1961.


*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law

What is the best term life insurance plan?

The best term life insurance plan in India is one that provides sufficient coverage to secure your family’s financial future. It should ensure that their daily expenses, outstanding debts, and long-term goals are taken care of even in your absence, giving you peace of mind knowing they are protected.

Is it worth it to get medical tests done while taking term insurance?

Absolutely. Medical tests help the insurer understand your health and offer you the best premium. If you skip the tests and a pre-existing condition is found later, your claim could be rejected. A policy with medicals gives your family a much stronger case for a claim. Plus, the insurer usually covers the cost, so why miss out on a free health check?

What are the risks involved in ULIPs?

Since a part of your premium is invested in market-linked funds, ULIPs carry market risks. You can manage this risk by choosing or including debt funds, which are generally more stable than equity funds.

What is the lock-in period in ULIPs?

All ULIPs have a mandatory 5 year lock-in period. You cannot withdraw or surrender before this period. If you stop paying premiums early, your money moves to a Discontinued Policy (DP Fund), earning a fixed interest (currently around 4% p.a.) until lock-in ends.

What charges apply in a ULIP?

ULIPs come with a few charges that vary by plan. These usually include a premium allocation charge taken upfront, a fund management charge capped at 1.35% per year*, a mortality charge for life cover, policy administration charges, and fees for switching funds or making partial withdrawals if applicable. Some plans may waive certain charges or not have them at all, so it is always good to check the plan details

 

*Source - As per the Insurance Products regulations 2024.
 

Disclaimer: Refer to the policy document for complete list of charges. 

What is the death benefit in a ULIP, and how is it calculated?

This is the money your nominee gets if you pass away during the policy term. In ULIP, the death benefit is typically the higher of the sum assured or the fund value. For eg., if your sum assured is ₹10L and fund value is ₹12L, the nominee will get ₹12L.

What is the difference between ULIP and term insurance?

A ULIP gives you life cover plus the chance to grow your money through market-linked investments. Since it offers dual benefits, the premiums are higher than a term plan. A term plan, on the other hand, is for pure protection. It gives your family a large financial cushion if something happens to you, but no returns if you survive.

What are the different fund options in ULIPs?

ULIPs let you choose funds based on your risk appetite and investment goals. Equity funds come with higher risk but higher return potential. Debt funds are safer and give steady returns. Balanced funds mix equity and debt for a middle path.

What life goals can a ULIP help achieve?

ULIPs are designed for long-term financial planning and can help with wealth creation, retirement planning, children’s education, home purchase, funding major life events like marriage, dream vacations.

Why is it better to stay invested in a ULIP for the long term?

Staying invested for the long term helps you make the most of compounding, where your returns start earning returns, letting your corpus grow faster. ULIPs also have higher charges in the initial years, which means a smaller portion of your premium is invested early on. Over time, these costs get spread out and diluted, improving your net returns. And because ULIPs invest in market-linked funds, staying invested longer helps you ride out short-term volatility and benefit from overall market growth.

Can I surrender my ULIP before the lock-in period ends?

Yes, but it’s not recommended. If surrendered early:


•The life cover ends immediately.


•You receive your fund value only after the 5-year lock-in.

•Discontinuation charges apply.



*Disclaimer: Other terms and conditions may apply, depending on your insurer.

How do I track my ULIP fund performance?

Check your insurer’s online portal or mobile app for the latest NAV and fund performance. Compare returns against benchmarks like NIFTY or Sensex.

How do ULIP fund switches work?

ULIPs let you move your money between equity, debt, and balanced funds as your goals or market conditions change. Most plans offer a set number of free switches each year, and these switches are not taxed* while you stay within the ULIP.

 

*Disclaimer: Tax benefits are subject to conditions under the Income Tax Act, 1961 and may change with prevailing tax laws.

How are ULIPs taxed at maturity?

As per Budget 2021, if the annual premium for ULIPs issued on or after 1 Feb 2021 exceeds ₹2.5L, maturity proceeds are taxed like mutual funds (capital gains tax). ULIPs with premiums below ₹2.5L retain tax-free maturity under Section 10(10D)*.


*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law

Is GST applicable on ULIP?

As per the latest GST rules, there is no GST applicable on ULIPs on individual life insurance policies effective from 22 September, 2025.

How much life cover do I get in a ULIP?

The life cover(sum assured) is usually around 10 to 15 times your annual premium, depending on the insurer and policy terms. On your death, the nominee receives either the sum assured or the fund value, whichever is higher.

For eg., if your annual premium is ₹1L, the sum assured would typically be between ₹10L and ₹15L, providing reasonable protection while keeping a significant portion invested.

Some ULIPs also let you increase or customize the sum assured through riders.

Can I increase my ULIP premiums?

Yes, you can use top-up* premiums to add extra investment on top of your regular premium. Each top-up also increases your life cover. Charges such as premium allocation and mortality charges apply to top-ups. Please note, most insurers do not allow top-ups in the last five years of the policy.


*Disclaimer: Top-up is allowed based on product terms and conditions.

What is the maximum loss possible in a ULIP?

ULIPs are market-linked, so your returns move with the market. In the short run, they may fluctuate, but over time markets usually bounce back and reward patience. Plus, your family always stays protected with life cover. Staying invested beyond the lock-in period helps compounding do its magic and can make your fund grow stronger.

Are ULIP returns guaranteed?

No, ULIP returns are not guaranteed. ULIPs are market-linked, so returns depend on how the funds you choose (whether equity, debt, or balanced), perform in the market. The value of your investment moves with the market.

What happens to my ULIP if I die during the policy term?

If you pass away during the policy term, your nominee receives either the sum assured or the fund value, whichever is higher, depending on your policy. Some plans may even pay both.

How do I evaluate the historical performance of ULIP funds?

You can check the NAV history and compare it with benchmarks on the insurer’s website or in IRDAI disclosures*. Look at the 5 to 10-year CAGR for equity and debt options to understand long-term performance.


*Source: https://irdai.gov.in/life2

Can I surrender a ULIP before the lock-in period ends, and what will be the implications?

Surrendering before the lock-in period is usually not allowed. But if you surrender early, the insurer deducts charges and your money goes into a Discontinued Policy Fund (DP Fund). Implications are as follows:

 

• Funds earn a guaranteed 4%* per year till lock-in ends, minus a small fund management charge (0.5%).
 

• Life cover stops immediately.
 

• Early surrender = payout taxable + reversal of 80C** tax benefits.

 

**Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law.


*Source: Page 26. Para: 40.1.5.

https://irdai.gov.in/documents/37343/991022/%E0%A4%85%E0%A4%82%E0%A4%97%E0%A5%8D%E0%A4%B0%E0%A5%87%…

What is premium redirection, and how is it different from fund switching?

Premium redirection means your future premiums go into different funds while your existing units remain unchanged. Fund switching moves your existing units from one fund to another.

What's the process for switching funds within a ULIP, and how many switches are allowed?

ULIPs let you switch funds, but free switches are limited each year. You can request a switch online or through your insurer’s forms, and it usually takes a couple of days to process. These switches help you adjust your portfolio to match changing goals or market conditions.

How are ULIPs taxed at maturity?

ULIP maturity proceeds are tax-exempt under Section 10(10D)* of the Income Tax Act, 1961.
 



*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax benefits are subject to change. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law

How can I reduce my risk in ULIP?

You can manage risk by switching between equity and debt funds based on market conditions. Staying invested for the long term also helps. If your plan offers automatic portfolio rebalancing, use it. Always choose funds that match your risk comfort and financial goals.

Is it mandatory to pay mortality charges?

Yes, mortality charges are required to provide the life cover in a ULIP. They depend on your age, sum assured, and policy terms, and are deducted regularly from your premium amount.

How soon should I start my investment in ULIPs?

It is best to start early. A longer investment horizon, and the power of compounding make a big difference. Starting early also helps you ride out market fluctuations and stay disciplined with long-term goals.

What are ULIP benefits?

A ULIP gives you both life cover and the chance to grow your investments. You also get the flexibility to choose and switch between funds based on your comfort with risk and market trends. On top of that, you get tax benefits with deductions under Section 80C* and tax-free maturity under Section 10(10D)* subject to conditions.


*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law

Who should consider buying a ULIP?

ULIPs are suitable for people who:
 

•Want both insurance and investment in one plan.
 

•Have medium to high risk tolerance.
 

•Can stay invested for 5+ years.
 

•Prefer goal-based, disciplined investing with the ability to switch funds.

Should I consider a life insurance retirement plan?

Totally worth thinking about. These plans do more than just save money, they mix guaranteed or market-linked returns, steady income post-retirement, tax perks, and most importantly, protection for your family if life throws a curveball. Think of it as retirement, insurance, peace of mind, bundled together.

What mistakes should I avoid?

Watch out for these common slip-ups:

 

• Waiting too long to start. The earlier you begin, the lighter the load.

• Forgetting inflation and healthcare costs. They can quietly eat up your savings.
 

• Parking all your money in one product like FD or PPF. That can be too risky.

How often should I review my retirement plan?

At least once every 2 to 3 years, or whenever your financial situation changes like a job switch, salary hike, buying a house, or even welcoming a new family member.

Will ₹1 crore be enough in 20 years?

Maybe not! ₹1 crore sounds big, but with inflation it can lose value over time. In 20 years, with 6% inflation*, ₹1 crore could feel like just around ₹30L and that may not be enough for your retirement needs.

 

*Source: 

https://www.financialexpress.com/money/inflation-calculator-what-will-rs-1-lakh-become-in-30-years-…

Article: Inflation calculator: What will Rs 1 lakh become in 30 years? How your retirement savings could derail. Date: Aug 9, 2025.

How do I handle market risk in retirement planning?

Play it smart with your money mix. When you are younger, go a bit heavier on equities for growth. As retirement comes closer, move toward safer options like debt and annuities.

 

Pro tip: Keep checking your investments and rebalance periodically so market ups and downs don’t shake your plan too much.

Why is retirement planning more important now in India?

With limited formal government support in India, longer life spans, fewer joint families, and inflation eating into savings, retirement planning becomes non-negotiable. And with medical bills only going up, the case for early retirement planning is stronger than ever.

What is National Pension Scheme (NPS) and what it does?

NPS is a voluntary, government-backed market-linked defined contribution scheme that helps you save for your retirement. You get the flexibility to decide how much to contribute and where to invest, along with tax benefits under Section 80C* and 80CCD(1B)*.

 

When retirement hits, NPS gives you a mix of regular income through annuity and a partial lump sum to use as you like. It keeps your savings disciplined and your future steady.

 

*Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions and tax Laws are subject to change from time to time. You are requested to seek tax advice from Chartered Accountant or personal tax advisor with respect to personal tax liabilities under the Income-Tax law

What is a monthly pension scheme and how does it work?

Think of it as your paycheque after retirement. You contribute regularly in your working years, and once you retire, the scheme pays you a fixed income every month. It’s a simple way to make sure your expenses are covered for life or for a defined period.

How much do I really need to retire comfortably?

There’s no one-size-fits-all, it depends on the lifestyle you want post-retirement. Start with your current monthly spend, adjust it for inflation, and then multiply by the estimated years you expect to live post-retirement. That gives you a rough idea of the retirement corpus you should aim for.

What is a defined pension plan?

A defined pension plan, also called a defined benefit plan, guarantees you a fixed payout at retirement. How much you get usually depends on your salary and years of service.

 

The best part? The employer mostly funds it, and market ups and downs don’t affect your payout. You can receive it as a lump sum or as a regular monthly income.

What is a private retirement pension scheme and how does it work?

Private pension schemes are retirement plans from insurers or investment firms including annuity plans, ULIPs, private pension funds, and mutual fund retirement products.

 

You get a mix of guaranteed and market-linked returns, plus flexible ways to contribute and get payouts so your retirement income can match your lifestyle.

What is a Systematic Withdrawal Plan in retirement planning?

A Systematic Withdrawal Plan, or SWP, lets you take out a fixed amount from your pension or mutual fund savings regularly. It gives you steady cash flow, plenty of flexibility, and can work like your personal monthly pension from your retirement investments.

What is Voluntary Retirement Scheme & how does it affect pension?

Voluntary Retirement Scheme (VRS) lets employees choose to retire early, usually before the standard age of 58–60. It’s great for anyone looking to step away sooner for personal reasons.

 

Companies provide retirement benefits like provident fund, gratuity, and compensation, so employees can pursue hobbies or just relax. Your pension benefits are usually based on your years of service and the scheme rules.

Can Fixed Deposits (FDs) and PPF alone secure my retirement?

FDs and PPF are safe and predictable, kind of like your financial comfort blanket. But on their own, they usually can’t beat inflation and might fall short if your retirement lasts long.

 

Smart move: Spread your money across equities, pension plans, and insurance annuities. This mix can help your wealth grow while keeping your retirement secure.

Is early retirement possible in India?

Yes, you can retire early in India, but remember, the earlier you stop working, the longer your retirement funds need to last. The average Indian lives about 69 years*. So, if you retire at 40, your savings must cover almost 30 years without paychecks! That means you’ve got to plan extra carefully, save aggressively, and invest wisely to make sure your money stretches through those long golden years.

 

Source: https://www.pib.gov.in/

Article: Average Life expectancy. Date: 13 March 2020

How do I estimate inflation’s impact?

Using the 6%* inflation rate, if your monthly spend is ₹50,000 today, in 25 years it could shoot up to more than ₹2L. So, plan your retirement corpus accordingly.

 

 

*Source: 

https://www.financialexpress.com/money/inflation-calculator-what-will-rs-1-lakh-become-in-30-years-…

Article: Inflation calculator: What will Rs 1 lakh become in 30 years? How your retirement savings could derail. Date: Aug 9, 2025.

Disclaimer: The Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Linked Insurance Products completely or partially till the end of fifth year. Life Insurance Coverage is available in this product. For more details on risk factors, associated terms and conditions and exclusions please read sales brochure carefully or contact your relationship manager before concluding a sale. Unit Linked Life Insurance products are different from the traditional insurance products and are subject to the risk factors. The premium paid in Unit Linked Life Insurance policies are subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. HDFC Life Insurance Company Limited is only the name of the Insurance Company, HDFC Life is only the name of the brandand . The name of the company, name of the brand and name of the contract does not in any way indicate the quality of the contract, its future prospects or returns. Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

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