Simplifying Life Insurance in India
9 Features of a Life Insurance Policy You Need to Know
What Is a Life Insurance Policy?
A life insurance policy is a contract between the insured person and an insurance provider. Accordingly, the policyholder will pay a fixed premium at regular intervals to the insurer during the plan duration. Upon the premature demise of the insured person or the maturity of the policy, the nominee or the policyholder, respectively, can claim the amount.
There are several features of this policy that one can benefit from purchasing a life insurance plan.
Important Features of a Life Insurance Policy Explained
1. Substantial Coverage
Individuals can opt for sumptuous coverage, keeping in mind their family members' current and future requirements. Also, it becomes essential to consider several other factors while deciding on the right coverage amount.
This is crucial so that you can ensure the availability of sufficient funds when the policy matures. Also, a substantial amount safeguards the future needs and goals in case of your untimely demise.
2. Flexible Payout Option
Deciding on the right payout option is imperative to ensure wise usage of funds after your demise. You can go for a bulk payout of the claim amount if you have complete faith in your family that they can manage funds wisely.
Otherwise, if they have a habit of overspending and cannot manage funds properly, you can opt for monthly payouts of the claim amount. This would be a monthly income for your family and ensure wise use
3. Coverage for Longer Duration
You can choose the duration of the policy as per your requirement. Choose a longer duration that ensures that you can get coverage till your retirement and beyond. Thus it saves you the trouble of purchasing a second policy on its expiry.4. Availability of Additional Riders
You can select multiple riders at your convenience along with your plan. This helps you to get extended coverage on your current plan. However, you must select only those add-ons that are beneficial for you. Otherwise, selecting riders that are not useful can cost extra premiums and pose an unnecessary financial burden on you.5. Inclusion of Terminal Illness Cover
Some life insurance covers also have terminal illness plans. For this, you will not have to pay any additional amount. At the same time, you can enjoy its benefits and stay financially protected if diagnosed with one.6. Availability of Death Benefit
If you pass away before the policy's maturity, your nominee can get the sum assured on raising a claim. However, it is essential to ensure that all the terms and conditions of the policy are fulfilled. Otherwise, it can also lead to claim rejection.7. Availability of Tax Benefits
You can get a tax benefit on your policy's premiums according to Section 80C of the Income Tax Act. According to this Section, you are eligible for deductions of up to ₹ 1.5 Lakhs on your policy's premiums.
Also, you can avail of tax benefits on the claim amount under Section 10D of the Income Tax Act. Besides, tax benefits under Section 80C on the premium paid and 80D in some cases are also available as per the prevailing tax laws.
8. Premium Payment
You will have to pay a fixed amount as premiums periodically. You can choose the frequency of premiums at your convenience. You also have a choice of paying premium as a single premium or regular ones, depending on your kind of plan and insurer.
This enables you to plan your periodic budget more efficiently and avoid any additional burden on your finances.
9. Availability of Maturity Benefit
In case you outlive the policy term, you can claim a maturity benefit on it. This might include the sum assured, some additional bonuses, and terminal bonuses. It is beneficial as you can make some profit simultaneously from your plan.
Considering these features of insurance plans, you can purchase a life policy to suit your needs. This ensures that you and your family stay financially protected and worry-free in case of financial urgencies or any unfortunate situations.
FAQs about Features of Life Insurance Policy?
What factors should you consider while deciding the coverage amount?
Some essential factors that you can take into consideration are as follows:
- Number of dependent family members
- Any pending liabilities
- Current financial status
- Current lifestyle of your family
- Future goals of family members
What are the benefits of terminal illness cover?
The benefits of terminal illness cover are as follows:
- Your family can receive the claim amount sooner than other plans.
- You can quickly draw out about 25% of the sum assured that you can use for the treatment of your illness.
- No additional costs are associated with this cover.
- Offers financial benefit to policyholders on having a life expectancy of less than 12 months.
Can you get a waiver on the premium for a life insurance policy?
How long does a life insurance policy stay valid?
How many riders can you add to a term insurance policy?
Other Important Features of Life Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
Latest News
Read More
Renew & Download Policy Document, Check Challan, Credit Score, PUC & more
Anytime, Anywhere. Only on Digit App!
Rated App
Rated App
Scan to Download
