Insurance for life in India was introduced more than 100 years ago. However, in our nation, one of the most significant worldwide, the importance of insurance is not widely recognized as it should be. The following article attempts to help readers understand the basic concepts behind life insurance, particularly about LIC.
However, it should be understood that the content below is not an exhaustive explanation of the conditions and terms for a LIC policy or of its advantages or advantages.
For more information, please call our branch or divisional office. Any LIC Agent is happy to assist you in choosing the right life insurance plan to fulfil your needs and provide service to your policy.
What Is Life Insurance?
A life insurance policy is a type of contract that promises to pay the amount pledged to the insured (or his designated nominee) upon the occurrence of the event that is insured against.
The contract is in force for the payment of the amount insured during:
The date of maturity or
Specific dates with periodic intervals,
Unfortunate death if it occurs earlier.
In addition, it also allows for the regular payment of premium in installments to the Corporation by the person who is insured. Life insurance is widely recognized as an institution that eliminates risk, ensuring no uncertainty and bringing assistance to families in the unfortunate occasion of the loss of the family breadwinner.
In general, life insurance is the only solution to the issues that result from the death of a person. In short, life insurance concerns two risks that are present in the lives of each person:
It is the possibility of dying too early, leaving a family managed on its own.
The possibility of living to old age with no apparent means of assistance.
Life Insurance vs. Other Savings
The Contract Of Insurance:
Insurance contracts are an insurance contract that is of the highest quality and trust, technically referred to as Berrima fides. The principle of disclosure of the truth of all facts is codified in this crucial principle that applies to all kinds of insurance.
In signing a contract, the insurance company must make sure that all questions on the proposal form are addressed. Any false representation, non-disclosure, or fraudulent information in any form that leads towards the assumption of risk will make the insurance contract null and null and.
Life insurance and savings plans provide total protection from the risks of death of the person saving. Additionally, if the insured dies, the life insurance policy guarantees full payment of the amount insured (with bonuses if applicable); unlike other savings plans, only the money saved (with an interest rate) is due.
Aid To Thrift:
Life insurance encourages “thrift”. It can be used to save for the long term as it is easy to pay thanks to the ‘accessible instalment facility included in the plan. (Premium insurance premiums are either quarterly, monthly or half-yearly).
For instance: The Salary Saving Scheme, popularly known as SSS, offers a simple method to pay the premium every month through deductions from your salary.
In this scenario, the employer pays directly the premium deducted to LIC. The Salary Savings Scheme is an excellent option for any establishment or institution subject to specific guidelines and terms.
For insurance policies, it is simple to obtain loans based on only the security provided by any insurance policy with an amount of. Additionally the fact that a life insurance policy is often accepted as security even for commercial loans.
It is also the ideal method to get tax deductions for income tax as well as wealth tax. In addition, the tax deduction is available for the amount paid through the premium of life insurance, which is subject to the current tax rates for income.
Assessees may also benefit from laws that provide tax relief. In these cases, the insured will pay less cost for insurance than if they had not.
Cash When You Need It
A policy backed by an appropriate insurance plan or a mix of methods can be used to satisfy specific financial requirements that may arise from time to time.
Education for children, starting-in-life and wedding arrangements, or even periodic demands for cash over an extended period could be made easier thanks to these guidelines.
In addition, the policy funds could be available upon the person’s retirement and utilized for any use, such as purchasing a house or other investments. In addition, loans can be granted to policyholders for the construction of homes or the purchase of flats (subject to specific conditions).
Who can purchase a Policy?
Anyone at the age of majority and has the right to sign a valid insurance contract can insure themselves and others who have an insurable interest.
It is also possible to take out policies with specific conditions to cover the lives of spouses or children. While underwriting proposals, particular aspects like the health status of the person who is applying and the income of the person who is proposing it, and other pertinent factors are considered in the Corporation.
Insurance For Women
Before the time of nationalization (1956), many private insurance companies would provide life insurance to women with an additional premium or under strict terms. After it was nationalized, life insurance policies were no longer offered the terms and conditions that life insurance is provided to females has been periodically reviewed.
At present, women who are employed and earn income are treated the same as men. However, in some cases, the restriction clause is placed in place, but only if a female’s age is not more than 30 years old and doesn’t earn an income that is attracting income tax.
Medical and Non-Medical Schemes
Life insurance is typically provided following a medical exam of the life that is to be protected. However, LIC has been extending insurance coverage with no medical exam with certain conditions to facilitate a wider distribution of insurance and prevent discomfort.
With Profit and without Profit plans
An insurance policy may be “with” or “without ProfitProfit. In the first case, if they are disclosed following periodic evaluations, the bonuses are allocated to the policy and are due along with the contract amount.
In the ‘without’ profit policy, the agreed amount is paid with no additional. Therefore, the premium rate charged for a profit ‘with’ approach is greater than that of a ‘without’ profit plan.
A company purchases keyman insurance in the event of the death of an important employee(s) to shield the company from financial losses that could result in the premature death or death of the Keyman.
Information on long-term health insurance and the benefits it provides
Medical expenses are now unaffordable for the average person, and with the growing rate of medical inflation, the cost is expected to increase over the next time. Due to the high cost of medical expenses, an insurance policy for health is the most crucial part of your portfolio of financial assets. In addition, it covers medical expenses incurred when you or a family member becomes hospitalized, providing the patient financial assistance. The health insurance policies are available as annual contracts required to renew each year to maintain coverage. In addition, with the option of lifelong renewal offered by all health insurance plans when you continue your policies in time, you will be able to benefit from protection for the duration of your life.
Health insurance plans are typically sold as an annual contract. However, there are long-term health insurance policies that offer you continuous coverage for a specific time. Are you aware of what these long-term insurance policies include?
What is a long-term medical insurance plan?
The long-term health insurance plan is an insurance plan for health care that is available for a period of two or three consecutive years in a row. It is required to pay the total premium for the entire duration of the policy when you purchase the plan. Then the policy will provide uninterrupted coverage for the period without annual renewals.
The features of long-term insurance plans
Long-term health plans include the following key features:
The insurance policy is valid for two or three years based on your preference
The cost is typically paid in one lump sum when you purchase the insurance policy. However, some firms are also offering the option of installment premiums that allow you to avail of long-term insurance policies by paying the premium in installments.
There is a significant discount when you select the long-term duration
No-claim bonuses are offered annually, even when you are covered by an insurance policy that’s long-term
Long-term vs short-term health insurance plans The pros and Long-term insurance plans have advantages and disadvantages when as compared to short-term medical insurance. Let’s look at what they offer –
No hassles with annual renewals
Health insurance plans for short-term use will require renewal after the close of each year to ensure that you have coverage for the entire. This can lead to a potential loss of coverage if you don’t renew before the deadline. With long-term insurance plans, there is no stress with annual renewal. When you purchase the policy, it is secured with the insurance for an extended period of 2 or 3 years.
A lower chance of the lapse
A renewal that is annually renewed has a greater chance of being a lapse due to the frequency of regeneration every year. In contrast, the renewal rate is lower; therefore, the risk of reversal also decreases.
There is an obvious benefit to opting for longer-term insurance policies as you will receive a premium discount when you choose a multi-year plan. The value can range from 5% up to 10% and lower the premium you pay for the annual insurance plan. However, the discount is not offered under short-term health insurance plans, making the premiums more expensive.
Loss of tax benefit
If you purchase a time insurance plan and pay the cost in one go, you will be allowed to claim a deduction from your tax-deductible income for the year your premium is paid. The following year, if there is no premium to pay and the tax deduction is not claimed. Therefore, even though you could lower your tax bill in the initial year, however, in the following years that the policy is in operation, it will lose the tax-saving benefits of purchasing the health insurance policy. Short-term plans need annual premiums. This means that they give tax savings each year for the premiums you pay.
Incapacity to port the policy
When you buy a long-term policy, if you’re dissatisfied with your policy or the insurance company, it is unlikely that you will be able to transfer the policy to another insurance company for the duration of coverage you’ve previously selected. This means that you’re stuck with the procedure for the period you have chosen. Because short-term health insurance plans are annually renewed plans. They can be transferred to another program upon renewal if you’re unhappy with the goal you purchased or with the insurance company.
A larger pocket pinch
Since you have to pay for the premium of a long-term insurance plan in advance when you purchase the program, you are subject to an increased pinch in your pocket. While the annual premium is estimated to be less than the amount due for a shorter-term plan, the total amount of dividends payable could not be affordable for sure.
Advantages of purchasing long-term insurance plans
The above-described pros and cons point out the advantages and disadvantages of long-term insurance policies; here’s an overview of the benefits of these health insurance policies –
You’re free from the stress of renewing your policy each year
You will be assured of the long-term coverage without the risk of a lapse within the coverage period
You are eligible to claim a larger tax deduction when you purchase the long-term insurance policy since you pay more upfront to buy the policy
You can get premium discounts as high as 10%, believing the long-term health insurance policy
To not have to renew the policy each year, consider purchasing long-term insurance plans. This will reduce your efforts to maintain your health insurance and will ensure that you can pay the medical expenses incurred in the event of a medical emergency.
How do you choose the best long-term plan of insurance?
Many long-term health insurance policies are on the market. Therefore, when you purchase an insurance policy for yourself, it is essential to be aware of your select policy. The following aspects must be considered when choosing the ideal long-term insurance policy –
Select an all-inclusive range of coverage
The various health insurance policies provide various coverage benefits, so you must select one that offers the highest coverage benefits that pay for all medical expenses. A plan with an extensive coverage scope will cover the highest medical costs, thus decreasing your out-of-pocket expenses.
In some long-term healthcare insurance, you could be room rent sub-limits. The sub-limits restrict the amount of coverage and, when you are admitted to the room that has more expensive rent, your total amount of claim will be reduced. Therefore, you should choose plans that don’t limit sub-limits to ensure that you get the most coverage from the policy.
Find out the cost of premiums based on coverage.
It is not wise to compare apples with oranges. So, when choosing health insurance plans, you must constantly evaluate the cost of the premium with the coverage offered through the policy. First, compare rates of programs that provide similar benefits to your range. Then, pick the one that has the lowest price without compromising coverage.
Look up the hospital network list.
If you are interested in gaining the advantages of cashless treatments, You must go to a medical facility affiliated with an insurance company. If you are in a not networked hospital, they settle claims through reimbursements, which can put a substantial financial burden on you. Therefore, before purchasing the plan, make sure you check the list of networked hospitals. If there are tie-ups between the hospitals near you, select them to avail quick settlement of claims.
Long-term insurance plans offer attractive premium discounts when choosing the long-term coverage period and bringing family members into the program or being fit or otherwise. Find these discounts provided by the various plans, and pick one that offers the highest value. The greater the discount you receive, the less will be the price charged.
To ensure that all of these aspects are considered, be sure to compare and pick the best long-term insurance plan for your requirements. Make sure that all of your household members have coverage by the program, and select the amount of insurance that is enough to pay for the anticipated medical expenses.
How do I purchase long-term insurance plans?
You can purchase long-term health insurance policies on the internet after comparing the plans available and selecting the most appropriate program. Online policies are available to buy at any time from the company’s website or the site of an insurance aggregator. Turtlemint is also a platform that allows users to purchase a lengthy-term insurance plan online following an analysis. Turtlemint is partnered with the top health insurance providers, giving customers the choice of the most effective long-term health insurance plans offered on the market. Then, you can look over the plans available in terms of coverage benefits and the cost of premiums before settling on an appropriate policy. Once you have selected the procedure, you can purchase it on the internet directly through Turtlemint by paying the premium online. Once the policy is purchased, it will be issued, and you will receive a policy’s copy in your email. Turtlemint will also help clients with their insurance claims for health insurance. If you need to file a claim, you just need to contact Turtlemint as well as its claims department will assist you in getting your claim resolved at the most convenient time.
Frequently Answered Questions
Do I have the option of switching insurance companies in a long-term coverage plan?
Moving insurers is referred to as portability, and it is permitted when the policy is renewed after the period of the policy is at the expiration date. In an insurance policy with a long duration, you cannot switch insurers for the time of your coverage. It is necessary to wait for the period to run out before changing would be permitted.
Can my no-claim bonus be affected by an insurance policy for long-term health? Policy?
There would be no impact on the no-claim bonus you receive when you have a long-term insurance policy. However, no claim bonuses will be available after each year of no claims, regardless of whether you’ve purchased the long-term health insurance policy or a short-term one.
Can senior citizens purchase long-term insurance?
Yes, a lot of senior health insurance plans provide long-term coverage for seniors. Therefore, you can opt for these plans to enjoy the long-term range.
Do I have the option of adding riders to an insurance policy for the long term?
Yes, you can add riders to your long-term insurance policy. The policies can be purchased when buying the policy or when renewal of the insurance policy.
Can a new member be included in the insurance coverage under the long-term insurance policy?
Yes, it is possible that a new member of the family could be added to coverage at the mid-point of a long duration insurance program. This can be accomplished by paying an additional cost for the insurance company and submitting an application in writing to add the person to the insurance coverage.
What is the effect on the waiting period of long-term policy for health insurance?
The waiting period for pre-existing conditions is not affected when you purchase an insurance plan that is a long-term plan. The waiting time is shorter after the conclusion of the policy year, regardless of whether you choose an extended-term health insurance plan or an annual plan.
Are you aware of the extended time frame for premium payments for life insurance in India?
The current Coronavirus epidemic has led to extraordinary changes in the economic landscape. With the lockdown being extended to stop the spread of the virus and the focus on social distancing, companies are exploring innovative ways to conduct business. The Insurance Regulatory and Development Authority of India (IRDAI) has issued updated guidelines to the insurance industry to protect the policyholders. All of the procedures are designed at providing relief to customers who have insurance policies. One of the guidelines issued through the IRDAI was to extend the grace periods for paying Life insurance rates.
It’s a relief, isn’t it? However, do you know how long the extension can be granted or what the grace period is specifically for?
It is a term used in the insurance policy context. However, it’s relatively easy to comprehend. This is the definition of the grace period and the modifications that IRDAI proposes IRDAI has proposed.
What is a grace period?
Grace period is a time frame that can be extended in a life insurance policy to cover the premium after payment. The grace period is a time when the insurance coverage doesn’t end. If the policyholder can pay their compensation in the grace period, the policy will continue without lapse. However, if the premium isn’t paid within the grace period, the policy will be cancelled.
The grace period’s duration
For policies in which premiums are paid each year, quarterly or semi-annually or half-yearly, the insurance company offers a period of either 30 (or 31) days (one month) as an extra grace period. In this case, the date for premium payments in a life insurance plan is June 30. If the premium is paid annually, the owner has until July 30 to pay the premium due. The time between June 30 and July 30 would be termed a grace time in which the insurance would be maintained. If, however, dividends are not paid by the thirty days of July 30, the insurance will expire on July 31.
However, if premiums are due monthly, the grace period that is allowed can be 15 days. Therefore, if, in the previous example, dividends were paid monthly and the grace period was 15 days, then the grace period will be granted until July 15. After the 16th of the day, July 15, the plan will end.
IRDAI’s guidelines on the extensions of grace periods
The Coronavirus pandemic led to an order to lockdown by the Government from March 25, 2020. The lockdown was a barrier to the free movement of people and businesses and the closure of their establishments. This meant that policyholders who had life insurance policies due to renew in March could not pay the cost of premiums because of the lockdown. So, in the interests of insurance policyholders, IRDAI allowed an extension of the grace period to pay dividends. According to the new guidelines of IRDAI, the policyholders with premiums due on March 20, 2020 will be able to make their payments for life insurance before May 31, 2020, and the policy will not be cancelled. Therefore, the grace period that policyholders are granted is extended until May 31, 2020.
Justification for prolonging the grace period
The primary reason for IRDAI’s policy to increase this grace duration is to enable policyholders to renew their insurance easily. This will reduce the time between renewals, allowing policyholders continuous coverage on the life insurance policy. Suppose the lockdown caused an economic crisis for people. In that case, they want to plan their financial plans during the extended grace period before paying the amount to ensure that their life insurance policies remain in effect. Additionally, the extended grace period is also designed to stop policyholders from going to the insurance company’s offices to renew their insurance policies during the lockdown. IRDAI has requested that insurance companies offer online payment methods for premiums for customers to renew their insurance policies online at the convenience of their homes.
How will the guidelines affect the policyholders?
The IRDAI’s guidance is an essential comfort for those concerned about paying the premiums for life insurance in the lockdown. For example, if you didn’t pay your premiums in March 2020, you might be able to pay your tips in the grace period extended and still enjoy the full benefits of your insurance. On the other hand, if you face financial difficulties due to the lockdown, you might arrange for the funds in the extended time to pay for the premium and maintain your insurance without expiring. From the policyholder’s standpoint, the extension is advantageous because it lets them stay clear of lapsing.
What impact will the guidelines have on the insurance industry?
The insurance companies, too, have been gratified by the extended grace period since it will mean more enduring policies for their customers. The number of policies in force measures persistency at the close of the fiscal year compared to the total amount issued through the company. A higher level of persistency is advantageous because it provides insurance companies with profits from premiums to cover their costs and earn an income. In addition, because customers can enjoy an extended grace period, the policies are less likely to expire and result in a better collection of premiums for insurance businesses.
The new IRDAI guideline for the extension of grace periods thus is advantageous for both the policyholder and the insurance businesses. Moreover, this measure was necessary for this uncertain period of national lockdown, and it is anticipated that it will help the insurance industry.
Frequently asked questions
Does the grace period extension extend to health insurance policies, too?
This particular rule is only applicable to life insurance coverage. Health insurance policy where the premium payment date falls between March 25, 2020, between May 3, 2020, and March 25, 2020, The grace period permitted is until May 15 2020. (Source: Economic times)
What happens If the insured passes away during the grace period and does not pay the premium due?
During the grace period, the insurance coverage is still in a life insurance policy. Therefore, if an insured passes away during the extended grace period, the insurance company will provide the funeral benefit following taking out the premium amount due.
If I make the payment within the grace period, will I be charged added interest?
It is not true that the premium you pay by the due date does not require any interest charges. It is only necessary to pay the amount of compensation.
What happens when the policy is due to mature during the extended grace period and the premium has not been paid?
In the event of the policy’s maturity, the maturity benefit will pay the insurance company after subtracting the amount of premium due.
Medical tests and information for short-term insurance coverage in India
An insurance term is considered to be the simplest type of insurance that covers the possibility of premature death. It provides financial security for the family if the insured dies within the period of coverage. The policy permits the insured to have a substantial sum assured since the premiums are affordable. The high amount confirmed consequently allows the owner to build an amount of money that is sufficient to provide for his family in the event of his death before it occurs. This plan assists in ensuring income replacement in the event of the loss of a breadwinner.
A term insurance policy, consequently, is crucial protection that shouldn’t be ignored. Furthermore, when purchasing insurance, you should select a large sum assured should be picked to provide the best security for your family members during your absence. But, if you choose for a large amount of money, you must meet an obligation to undergo an examination by a doctor to purchase term insurance before the policy is approved.
The requirement for an examination by a doctor could deter individuals from purchasing a term plan. But, these tests can be advantageous for both you and the insurance company. Are you aware of when an insurance medical examination is required and for what reason?
When is the term “insurance” medical exam required?
A medical examination to determine the insurance coverage term is required in one or both of these situations. In the following conditions.
You are over 35 years old.
You select a maximum assured amount in the amount of 10 lakhs INR or more than
Specific plans are not required to take a medical examination to obtain term insurance as long as 40 or 45 years old. The sum assured limit is reduced for medical exam requirements. Usually, levels of coverage that exceed INR 20, 25, or 20 lakhs can be obtained without medical examinations when you’re aged between 45 years old.
Additionally, suppose you suffer from pre-existing medical conditions, an unfavorable medical history, family history of the disease, hereditary ailments, or other medical conditions. In that case, the insurance company may need a medical examination to be considered for term insurance, even if you are young or choose a small amount of the sum guaranteed.
The requirements for medical tests for insurance term vary between plans and is contingent on the underwriting guidelines for the particular insurance company. Therefore, it is recommended to look up the medical grid provided by your insurance company to determine the age and the amount of money insured when a medical examination for term insurance is required.
What is the reason a medical exam for term insurance is required?
If you choose to take out the highest amount of money assured, or if you’re in the senior age group and are in the older age bracket, the insurance company takes on a risky position when it insures you. If you have a claim, the amount will have to be paid, which could make a difference to the financial part of the company. For example, suppose the chance of being sued is exceptionally high. In that case, the company could be in the red because the insurance premium must be paid out in the initial period of the policy. Therefore, the company is looking to evaluate your health to determine whether you suffer from any health issues that might make it more likely to claims. With a medical examination, the company will therefore check your health status. For example, suppose you are suffering from an illness that could increase your risk of death and disability. In that case, the company could increase the cost or limit the amount insured or even refuse the insurance proposal. If, however you are in normal health condition, the company would provide you with a policy without any additional requirements or terms.
How many medical examinations are needed to be taken for term insurance?
The tests for medical exams to be conducted are based on the medical grid utilized for insurance by companies. The variety of tests required is increased with age and the amount assured. The initial stage of the medical exam is a standard medical examination that includes the following areas:
- Blood pressure
- Height and weight
- Routine Urine Analysis
- Complete Blood Count
- Lipid Profile
- Differential blood count
- Hemoglobin levels
- The Fasting phase and the Post Prandial glucose levels
As the sum assured rises, the need for medical tests will also increase for older ages and higher sums guaranteed, other medical tests to be taken in addition to those mentioned above. According to the medical grid used by insurance companies, these tests include treadmill tests, EEG, etc.
The advantages of medical tests for term insurance
While many are scared of the medical checks required before purchasing an insurance policy for a term, they can be beneficial. Here are a few reasons you should consider them.
If you take the term insurance medical test, it is possible to determine your health condition on your own. You can then adopt preventive measures to ensure your well-being.
If you decide to take the medical exam for term insurance, you could benefit from high coverage levels that will help ensure financial security for your family members.
In the event of a claim in the event of a death because of a medical issue, the insurance company will not be capable of refuting the claim when medical tests are conducted before the case to the insured. Therefore, the medical tests that are part of the term insurance policy can boost the likelihood of quick settlement of claims.
If your health is determined to be healthy in medical tests, you will not have to pay considerable costs to purchase a term insurance policy that has a substantial amount of money as assured.
Medical tests are an essential element of purchasing a high-value term insurance policy and should be taken to ensure optimal coverage.