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Life insurance is the best method to secure your life and your family’s future. Financial commitments and their priorities keep changing at different stages in life. It is your primary responsibility to make sure your loved ones are financially protected even in your absence.
Life insurance policies provide a wide range of benefits to satisfy your requirements. You can choose the best plan according to your financial stability, long term commitments and the extent of debt. There are life insurance and death insurance products.
Let us discuss them and understand which is better.
Life Insurance is a basic contract between the insurance company and an individual. The insurance company will agree to pay a sum assured as against the premiums paid by the individual through a policy tenure.
In death insurance, the sum assured is provided to the nominee if the policyholder meets unexpected death during the policy tenure. Commonly, these are known as term insurance plans that offer pure death coverage at affordable premium rates.
In other life insurance policies, such as an endowment plan, the sum assured is paid to the policyholder if he or she survives the policy term or to the nominee in case of sudden death. Therefore, there is a maturity benefit and death benefit in life insurance, whereas death insurance has only a death benefit.
Having seen the basic difference between the two plans, let us discuss the features to better understand the two.
Here are some of the basic features of Death Insurance:
Death Insurance, also called term insurance, is the purest form of life insurance. It has the most affordable premium amount.
For an affordable premium, the sum assured is high for a term policy on a comparative scale.
Sum assured can be extended by opting for additional riders# as follows:
Accidental Death Rider# – The sum assured becomes payable if the policyholder dies due to an accident against natural death insurance.
Terminal illness rider# – The insured amount is payable when the policyholder is diagnosed with a terminal illness.
Disability Rider# – The premium amount can be waived off for future payments in the policy period in case of a permanent disability. A monthly income is also paid to the Life Assured and is continued to be paid to the nominee on the death of former
Critical Illness Rider# – The insured amount becomes payable when the policyholder is diagnosed with a critical illness mentioned in the list of the policy document.
Return of Premium option in Rider# – The policyholder can get a refund of the premium amount of all attached riders paid if there are no claims made in the policy duration and if he or she survives the policy period.
You can opt for different payout methods for the death insurance claim based on future financial commitments.
Death Insurance is ideal for a person who is the only earning member in the family. It is also for a person with huge family commitments like children's education, marriage, etc. and does not have sufficient investments. People who have other debts like a car loan, home loan etc., should buy term plan to assist their loved ones in managing the repayment.
Let us now read through the features of Life Insurance:
It provides maturity benefit apart from the death benefit.
It contributes to the practice of disciplined savings.
Liquidity is comparatively more in this case; partial withdrawal can be made as and when required.
Following are the types of life insurance plans that satisfy savings and investment needs.
Endowment plans – Endowment plans without profit provide the sum assured on maturity to the policyholder if he survives the policy duration and the nominee in case of his sudden death. The sum assured received during maturity can be the savings you made through the policy term. Endowment plans with profit provide the sum assured with additional bonuses declared by the company at different time intervals.
ULIP – Unit Linked Insurance Plan is a type of insurance-investment plan wherein the premium is paid or two benefits: life cover and investment. One portion of the premium is used to purchase units in equity, debt or hybrid funds. The returns are market-linked and can be subject to risk. However, with smart decision-making techniques, you can choose the best fund. You can also opt to switch between the different funds during the policy duration, depending on your risk appetite.
Guaranteed Return Insurance Plan (UIN- 110N152V08) – According to this plan, there is a general life insurance cover and guaranteed1 insurance returns. The returns are decided and ensured during inception of the policy and remain unchanged throughout the policy term.The payouts can be a lump sum amount, a combination of lump sum along with regular fixed income and just regular monthly income.
If the intention is to get insured and have disciplined substantial savings, these are ideal options for a person.
Tata AIA insurance provides a wide variety of life insurance plans that can be customized as per your needs:
Term Insurance (or death insurance plans)
Savings Solutions (endowment plans, guaranteed1 returns plans, etc.)
Wealth Solutions (ULIPs)
Retirement Solutions (Income plans and annuity solutions)
Both life insurance (Except annuity plans) have tax* benefits. The premiums paid thereof qualify for tax deductions under Section 80C of the Income Tax Act, 1961. The returns are also exempt under Section 10 (10D) in some options, subject to conditions.
Having discussed the different features of life insurance and death insurance, you should make a smart decision that will best suffice your requirements. You must or you should have to take into account the premium amount that is affordable for you and the basic requirements you want to fulfil. Keep a long-term plan in mind and strike the best plan. However, you must take the right decision at an early age to avail the best returns!
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Insurance cover is available under the product.
The products are underwritten by Tata AIA Life Insurance Company Ltd.
The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions please read 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.
1Guaranteed Returns/Pay-outs depend on Plan Option, Policy Term, Premium Payment Term and Age at entry
#Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office
*Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implication mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.
IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER
THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER 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 advisor.