Life Insurance Plans

Why it is important to buy a Life Insurance Policy?

• A life insurance policy helps you get life cover for yourself and makes sure your immediate family has some financial support in the event of your death.

• It also helps to finance your children's education and other requirements.

• A life insurance policy can also help you to save for the future so that you have a continuous source of income after you retire.

• It can help save your business, pay off debts and ensure that you are ready to meet any unforeseen contingencies in life.

Important Terms About Life Insurance Plans in India

Some important terms revolving around life insurance policy in India are:

• Sum Assured:

  It is the amount the insurance company will pay the insured person’s nominees in case of the insured’s demise. Suppose a person purchases a life insurance plan of Rs. 2 crores and pays for the life insurance policy. Now, in the case of that person's demise, his nominee will receive the sum of Rs. 2 crores. The sum assured should cover at least 15-20 years of annual income as a general rule.
  

  
  

• Life Assured:

  It refers to the person for whom the insurance policy is purchased. The policyholder and the life assured need not be the same person. For instance, if you purchase the policy for yourself, you are the policyholder and the life assured. However, if you purchase a policy for your wife and pay the premiums, you will be the policyholder while your wife will be the life assured.
  

  
  

• Death Benefit:

  It is the sum that the insurance company will pay the policyholder in case of the insured person's demise during the policy term.
  

  
  

• Maturity Benefit:

  Some insurers pay a certain amount to the policyholder It’s the amount that the person receives if he survives his policy term.
  

  
  

• Riders:

  These are optional add-ons that can provide additional coverage at the discretion of the insured person.
  

  
  

• Free Look Period:

  If you have bought a life insurance policy but want to cancel it, you have the option of returning the policy to us stating the reasons thereof, within 15 days from the date of receipt of the policy. The Free-Look period for policies purchased through Distance Marketing (speci­ed below) will be 30 days. On receipt of your letter along with the original policy documents, we shall arrange to refund the premiums paid subject to deduction of the expenses incurred by us on medical examination, if any, and stamp duty. Distance Marketing refers to insurance policies sold through any mode apart from face-to-face interactions such as telephone, internet etc
  

How to Save Tax with Life Insurance Policy?

Life insurance plans protect you financially from mishaps and act as a tax planning tool. The premiums paid for life insurance policy can be claimed as deductions under Section 80C¹ of the Income Tax Act, 1961². The amount of deduction available is up to Rs. 1,50,000 per financial year. Also, the proceeds received from the life insurance policy are exempt under section 10(10D)³ of the Income Tax Act, 1961², provided the premiums do not exceed 10% of the sum assured.

¹ Subject to conditions mentioned u/s 80C of the Income tax Act, 1961

²As per Income Tax Act, 1961. Tax benefits are subject to changes in tax laws.

³Subject to conditions mentioned u/s 10(10D) of the Income tax Act, 1961