Life insurance is becoming a necessity all across the world today as it is one of the ways to ensure that your family is financially secure at all times and free from any mental stress about their finances. Your health, wealth and your family’s well-being are important aspects of your life that insurance can look after. With this understanding, let us look into what life insurance means and what essentially it covers for you.
What is Life Insurance?
Life Insurance is a basic contract between the insurance company and the policyholder. The insurance company will pay a lump sum amount to you or your dependents after a defined policy duration or in case of your sudden demise. The amount is provided as a return to a premium amount paid regularly during the policy duration.
The sum assured of life insurance can serve a variety of purposes. It can manage the funeral expenses, daily utility bills for the family members, payments on mortgaging assets, large scale debts like car and housing loan, children education and marriage expenses in the future and any medical expenses.
There are different types of life insurance under which term insurance plan and the endowment insurance plan are the two broad heads.
In a term plan, the sum assured is paid to the nominee if the policyholder meets with an unexpected death during the policy duration. However, there is no maturity benefit.
In an endowment plan, the maturity benefit is paid if you survive the policy duration. Alternately, the death benefit will be paid to your loved ones in case of your demise. Tata AIA life insurance provides various life insurance plans to help you serve and acknowledge your family's financial requirements.
The following are some of the prime benefits of a life insurance policy:
- In case of an unfortunate eventuality, your family will always have financial safety that can help them lead a dignified life without monetary hassles.
- If you are diagnosed with a critical illness covered by your insurance policy, the medical expenses and your family’s needs during that period are well looked after.
- The premium payments of an insurance policy are eligible for tax* deductions, while the death benefits qualify for a tax exemption. Hence, life insurance is not only a protective measure but also an efficient tax-saving tool.
- When you buy a life insurance plan at a younger age, you can lock in lower premium rates that enable you to pay affordable premiums for extensive life insurance coverage.
- If you have an endowment policy, you not only ensure your family’s safety in case of your death but can also plan major future expenses that can be fulfilled by the endowment corpus on maturity.
The premium amount that we pay depends on various factors. Some of the prominent features include age, medical history of the family, total coverage required, lifestyle and the job. Based on these aspects, the risk is assessed using a statistical method considering the probability of death. The expenses incurred by the insurer will be included as operational costs in the premium.
Tata AIA life insurance premium calculators, such as the Tata AIA term plan calculator, will help you get a fair idea about the premium amount that needs to be paid. It will calculate the premium based on the factors discussed here and will provide a substantial amount. There are options to choose between monthly, quarterly, half-yearly or annual premium payments. With the insurance premium calculator, you can customise the result by providing variable inputs.
What do the term plan premium amount and life insurance cover?
The life insurance premium amount cover takes care of a variety of risks. These include –
- Natural death due to old age or death caused by a sudden stroke or heart attack and providing financial assistance to your family in your absence.
- Death caused by accident resulting in a financial loss for your family members
- Permanent and total disability resulting in loss of income for your dependents
In an endowment plan, the life insurance premium also covers maturity benefits which you can receive as a lump sum amount on maturity. The life insurance coverage also protects you against various illnesses and conditions, provided appropriate riders# are added to the policy for an additional premium.
How do Life Insurance Riders# Help your Insurance Policy?
To increase the life cover and extend the sum assured, you can opt for various riders. The insurance premium calculator will help you calculate the premium and decide on the riders. The basic riders# are listed below:
- Terminal illness rider# – The sum assured is payable early before the death or when the terminal illness is diagnosed.
- Accidental Death rider# – The sum assured is payable to the nominee if the insured person dies unexpectedly due to an accident. There are specific accidents detailed in the term insurance plan for which the death benefit can even be doubled.
- Permanent Disability Benefit rider# – In the case of this rider#, the insured amount is payable if an accident has caused a total or permanent disability to the insured person.
- Critical Illness rider# – With this rider#, the sum assured is payable when the insured person is diagnosed with a critical illness listed and covered in the policy. Some of the major illnesses listed are cancer, cardiac conditions, Alzheimer's disease, blindness, deafness etc.
- Return of Premium1 (ROP) rider#– With this benefit, the insured person can get the total premium amount paid if there are no claims made and the person outlives the policy duration. It can be availed before the policy term gets terminated.
It is also important to know what is not covered in a life insurance policy. Although there are specific terms and conditions concerning every cause of death or rider, here are a few exclusions:
- Death caused due to an accident because of alcohol or drugs.
- Death due to a pre-existing disability or health condition that was not declared during policy purchase.
- Death due to committing a crime.
- Death due to suicide in the first 12 months of the policy tenure.
Having understood the importance of life insurance and the benefits that you can derive, it is high time you purchase term insurance. Consider life insurance at an early age to avail the benefits of less premium, long-term tenure and a sum assured.
It is your responsibility to protect your family when under financial distress, and Tata AIA Life Insurance plans can provide the best access for it. Our life insurance plans will secure the financial requirements of your family in your absence in the best possible manner!