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How Life Insurance has Evolved Over Time in India?

Life insurance plans were traditionally looked upon as the apt financial instrument to provide financial security to the family members in case of the policyholder's death. It was also considered one of the apt saving tools. Yes, life insurance plans are still known for the same benefits. However, it has evolved to provide various monetary benefits, including savings, market-linked returns, retirement solutions, etc.
 

Journey of Life Insurance


The year 1818 marked the beginning of life insurance in India with the dedicated service of the first insurance provider, The Oriental Life Insurance Company in Calcutta. It is an establishment of the British Company. However, it failed in its operations and was folded in 1834.
 

Indian leaders stepped forward, realised the benefits of life insurance, and founded the first Indian Insurance Company, the 'Bombay Life Insurance Society', in 1870. Since then, various other institutions have introduced their insurance business activities, leading to the Indian Life Assurance Companies Act in 1912.
 

The sector further evolved to include many private players, both foreign and Indian, in the early 90s. In 1956, the Life Insurance Corporation was formed by amalgamating 245 entities. And, in 2000, the Insurance Regulatory and Development Authority was incorporated as a statutory body to regulate the insurance sector and develop its objectives.
 

The life insurance sector has been developing features and services for the benefit of the policyholders to provide maximum protection to their families and additional financial assistance to manage uncertainties in life.
 

With that brief, let us get ahead and understand the evolution concerning various factors surrounding life insurance.
 

Evolution in Factors Surrounding Life Insurance
 
  1. Type of products - Traditionally, life insurance plans offered pure term insurance plans that provide the sum assured to your loved ones in case of the policyholder’s demise during the policy term. Today, we have the term insurance plan with comprehensive coverage that provides financial assistance for serious illnesses, medical consultations, return of premium options, etc.

    Savings insurance solutions provide life cover with guaranteed1 returns on maturity. It helps policyholders save funds for their future financial commitments precisely. The Unit Linked Insurance Plans(ULIP) help individuals invest a portion of the premium in financial securities for market-linked returns. Investors can choose to invest in equity, debt or hybrid funds based on their risk appetite. One of the best features of ULIP is that it provides the option to switch between funds during an economic downturn.

  2. Maturity benefits - Life insurance plans were considered a financial advantage for people who lost their sole earning member in the family. People hesitated to invest in it because it did not provide a maturity benefit. However, life insurance trends changed, bringing in maturity benefits that include savings and other market-linked returns.

    A savings insurance plan will provide a guaranteed1 return on maturity. You can receive it as a lump sum, regular income for a chosen income, or as a combination of both. Term insurance plans can also provide a maturity benefit.

  3. Rider# benefits - As stated earlier, life insurance plans provide a lump sum death benefit to the family in case of the policyholder's death. With the expansion of life insurance product features, you can get optional riders# for additional financial assistance.

    For instance, the critical illness rider# provides a portion of the sum assured during the policy term to manage hospitalisation and other medical expenses when diagnosed with a critical illness. It will reduce the financial burden that will stress the family members. And, in case of an accident that leads to a total and permanent disability, one can waive future premium payments while ensuring a death benefit in case of the policyholder's unexpected death.

  4. Digital revolution - Traditionally, customers bought life insurance plans offline by visiting a specific branch office. The insurer received the required personal details as hard copy documents. Cash, cheque and demand draft were the available payment modes. However, with the increasing new trends in life insurance, accessing life insurance plans, customising it as per preferences, and making the payments became online. It is quick, secure and cost-effective.

  5. Flexible features - Life insurance plans had only one mode of payment, and it used to be monthly, predominantly. And the payout was provided as a lump sum death benefit. However, insurers have customised life insurance plans to provide flexible premium payment options to help policyholders pay the premium monthly, quarterly, semi-annually or annually. And the payouts can be a lump sum or a regular income for a specified period.
     
Conclusion


The life insurance sector has surpassed several developments through the centuries in Indian history. We have seen a brief of it since its inception. Apart from the overall development as an industry, the life insurance sector has evolved to introduce different features to customise the plan for personal needs and maximum financial security. Therefore, you can purchase a life insurance plan for a life cover, savings benefit and investment needs.


And, with the digital revolution, you can access life insurance plans, compare the features, and evaluate the products for the best choice online! Therefore, the evolution of the life insurance industry is commendable in terms of its expansion and services.


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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Disclaimers

  • Insurance cover is available under the product.
  • The products are underwritten by Tata AIA Life Insurance Company Ltd.
  • The plans are not guaranteed issuance plans, and they will be subject to Company’s underwriting and acceptance.
  • For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale.
  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
  • #Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums, and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch
  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
  • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICYHOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.
  • Past performance is not indicative of future performance.
  • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.
  • Please make your own independent decision after consulting your financial or other professional advisors.