Life Insurance Benefits

The living benefits of life insurance plans are as follows:
 

• Add-on rider options - Add-on rider options provide additional financial support to manage a financial crisis during specific scenarios during the policy period. For example, the rider for the critical or terminal illness benefit provides the applicable sum assured to manage the hospitalisation and medical expenses if you are diagnosed with a critical illness or a terminal illness during the policy term. 

• Cash value - A part of the premium paid for permanent life insurance plans will be accumulated as a cash value, and interest is earned on the same. It can be used to avail of loans or withdrawn during a financial emergency subject to the policy conditions.

• Return of premium option - You can avail of the return of premium option to receive the premium paid during the policy tenure as a maturity benefit if you survive the policy period.

• Savings and investment benefit - With savings insurance and wealth creation plans, you can utilise a portion of your premium to save and increase your wealth and receive it as a maturity benefit.

The benefits of life insurance for your family can be listed as follows:

• Provide a lump sum to manage their financial commitments in your absence.

• If you have chosen the regular income payout, it can help them manage their routine expenses.

• The life insurance benefits can help them reduce their financial burden by clearing debts, loans, and other liabilities. 

• Choosing the appropriate riders^{^} can help them avoid contacting other sources for finances to manage a financial crisis, such as paying for the hospitalisation expenses if you, the family's sole earning member, are diagnosed with a critical illness during the policy term.

• With the savings and investment benefits, you can accumulate funds for accomplishing your family’s future financial goals, such as starting a family business, paying for your child’s marriage, etc.

Life insurance plans are predominantly purchased for the death benefit. However, they provide a maturity benefit based on the type of life insurance plan purchased. For example, term insurance with the return of premium option provides the option to receive the premium paid as a maturity benefit. 

Furthermore, savings insurance plans and wealth creation insurance plans provide guaranteed returns and market-linked returns as the maturity benefit subject to the policy terms and conditions.

If you do not pay your premiums for the life insurance plan on time, your life insurance plan expires and ceases to provide the life insurance benefits. 

However, you will get a 30 days grace period to pay the premium for the policy. And if you fail to pay the premium even during this period, your life insurance plan will lapse.

Further, your life insurance provider will offer a revival period post the grace period to reinstate the insurance policy. And if you fail to revive it during this period, the life insurance plan is considered completely lapsed and terminated.

Term life insurance plan provides a life cover to secure your family for a specific policy period. On the other hand, a whole life insurance plan will provide life cover until death. The better among the two will depend on your personal and family financial commitments. 

You can choose term insurance if you have a family to take care of all the financial responsibilities after a specific timeframe. And if you have a dependent family throughout your life, whole life insurance is a suitable option.

Life insurance is a good investment tool as it is devised to provide financial protection to your loved ones in your absence. 

Furthermore, if you purchase the Unit Linked Insurance Plan (ULIP Plan), you can ensure to secure your family with a life cover while also investing funds in the financial market for market-linked returns as the maturity benefit based on your risk profile.

No restriction is defined on the number of riders^{^} that can be purchased with a life insurance policy.

The various life insurance options are:

• Term Insurance Plans

• Savings Insurance Plans

• Unit Linked Insurance Plans

• Retirement Plans

• Combo Plans

No restriction is defined on the number of policy years for a life insurance plan. You can purchase it for a definite period or until 100 years of age.

Riders^{^} cannot be purchased independently. It can be purchased as an add-on option with a base life insurance policy.

The sum assured required in life insurance will depend on your financial requirements. You can consider your income, expenses, future financial commitments, loans, and liabilities to decide on the required funds.

Here are a few steps for a better understanding:

• Find the required future earnings - It is based on income and years to retirement.

• Find current annual expenses and future financial goals - You must account for the inflation rate while determining this cash flow projection. Therefore, find the present value for these future cash flows by using current interest rates for discounting.

• Find the financial loans and liabilities - Add it to the above-calculated value.

• Consider your savings and investments - If you have a life cover or have been saving or investing in varied financial products, subtract the total value from the value calculated above.

• Determine the sum assured - The total amount calculated from adding the current expenses, future financial goals, loans, and liabilities and subtracting the savings and investments from this value, as described in the previous steps, will give the approximate value for the sum assured required.

You can utilise our Tata AIA Life Insurance Human Life Value Calculator to determine the sum assured and simplify the process.

The life insurance benefits such as the death benefit, the rider benefit, or maturity benefit are exempt from taxation under Section 10(10D) of the Income Tax Act 1961 if the premium is less than 10% of the sum assured for life insurance policies issued after 1st April 2012 and 20% for those purchased before 1st April 2012.

Life insurance coverage is based on the type of policy chosen.

• Pure protection plan covers the policyholder's death due to natural reasons such as ageing, illness, and accident. It does not cover death due to the influence of alcohol or drugs, pre-existing illness not disclosed during policy inception, suicide within 12 months of the policy tenure, or committing a crime.

• Life insurance with savings and investment benefits covers the maturity benefits.

• Life insurance with riders^{^} covers specific illnesses and conditions, such as critical illnesses, total and permanent disability due to an accident, etc.

The life insurance premium is calculated based on the following factors:

• Type of life insurance plan 

• Age

• Gender

• Lifestyle 

• Life insurance benefits, policy options, and riders^{^} chosen

• Sum assured required

• Policy period

You can choose our online tools, such as the Tata AIA Life Insurance Term Insurance Calculator, to determine the premium for your life insurance plan based on your requirement and desired features.

Here are a few steps to help you choose the best life insurance policy:

• Analyse your financial needs and decide on the sum assured required.

• Analyse your current financial condition and decide on the extent of premium you can afford to pay regularly.

• Compare the life insurance providers based on their products, processes, digital services, and claim settlement ratio to choose the best life insurance provider.

• Understand the different features, add-on riders^ and benefits of life insurance policy options.

• Research the flexible features, rider options, sum assured, policy term, etc., based on your affordability.

• Compare the options, try to customise, and choose the best life insurance policy to suit your financial needs.