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.

L&C/Advt/2022/Nov/2848