What is Life Insurance

Life insurance is a legal contract undertaken for specific years(known as the policy term) between the insurance company and the customer (known as the insured), where the insurance company provides a life cover (known as the sum assured)on payment of a price (known as the premium) to attain the protection amount. Life insurance policy offers financial security to the insured's dear ones by providing the sum assured in case of an untimely death of the insured during the policy term. If the insured survives the policy term, he gets a maturity benefit, and the policy is terminated. So, under a life insurance policy, there is a death and/or maturity benefit (whichever event occurs first) based on the type of life insurance policy opted for.

A life insurance policy is an important foundation to protect your family financially. It acts as your saviour in the following scenarios:

1. Death: Death is a hard fact of life, but it leaves behind a financial and emotional vacuum for the loved ones of the deceased. A lumpsum payout as a death benefit under a life insurance policy will certainly support your family members in that hour of distress and give them financial stability to surpass the moments of sorrow and get out of the financial crisis.
2. Accident: Accidental deaths are on the rise. Usually, people at an early age are more prone to die an accidental death as compared to a death due to any illness. Under a life insurance policy with an accidental death benefit, your nominee gets an additional                                                 accidental death sum insured over and above the base policy sum insured amount if the cause of death is an accident.
3. Debts: A life insurance policy is your financial asset and is considered collateral security to take home loans, etc. In case of an untimely death of the person indebted (also the person insured), the financial burden shifts to his family to pay off the outstanding loan. The family members can use proceeds from a life insurance policy in such scenarios to pay off the deceased's outstanding loan. This way, it safeguards your loved ones from a traumatic financial burden.
4. Child's Future: A life insurance policy can be used to accomplish various goals an individual sets. One such goal is to fulfil our kids' dreams by giving them the best education and talent-driven training. All such things come at an enormous cost. With child insurance plans, you can plan for your child's education expenses well in advance by creating a corpus that will help in important milestones in your child's life.
5. Old Age: Post-retirement age is generally considered the second inning of life, but you can live it to the fullest if you have a regular flow of financial income in the form of a pension. A pension plan offers you an income in the form of a pension amount—by planning well in advance. Pay your premiums during your working years and enjoy your pension in your retirement years.

How Life Insurance Plan Works

A life insurance plan is a contract between an individual and an insurance company where financial protection is provided to the insured person's beneficiary in the event of their demise. Here's how it typically works:

• Policy Selection: The individual chooses a life insurance plan based on their financial needs and future goals. The type of plan, coverage amount, and terms are selected accordingly.
• Premium Payment: The policyholder pays premiums, which can be monthly, quarterly, or annually. These payments are calculated based on the policy's terms and the insured's age, health, and life expectancy.
• Coverage Period: The insurance coverage remains active as long as premiums are paid. If the insured passes away during this period, the policy pays out a death benefit to the designated beneficiary.
• Benefit Payout: Upon the insured's death, the beneficiary files a claim with the insurance company, providing necessary documentation. After verification, the company disburses the benefits to the beneficiary.
• Policy Maturity: Some life insurance plans also offer maturity benefits if the insured outlives the policy period, providing the policyholder with a lump sum.

Individuals can protect their family's financial future by ensuring a life insurance plan is in place, covering everything from everyday living expenses to major life goals.

Types of Life Insurance Policy 

Life Insurance Plans can be classified into four broad categories:

• Term Plans: This is the purest form of insurance, which only offers a death benefit to your nominee. There is no maturity benefit. The premiums for term plans are cheapest and affordable.
• Endowment Plans: These plans are usually guaranteed benefit saving plans which offer death benefit or maturity benefit based on whichever event (death or maturity) occurs first. § Unit Linked Insurance Plans (ULIPs): These plans are the combination of a pure term insurance plan and investment plan. The returns under this plan are market-driven and volatile in nature which can be managed by the customer based on his risk-taking abilities.
• Money Back Plans: As the name suggests, such plans offer periodic payback to the customer under regular intervals. The sum assured is paid back in installments (known as money backs) to ensure the customer has enough funds at regular time frames. On death, the complete sum assured is payable to the nominee irrespective of any earlier payout made by the company.

It is important to secure your life for your loved ones so that they can lead a happy life in your presence and also in your absence. Different types of Life insurance policies along with providing protection also help you to achieve various short terms and long-term financial goals.

Additional Read- Different Types of Life Insurance Policies

Key Factors that Affect Life Insurance Premium

Understanding the factors that affect your life insurance premium is crucial when shopping for the right policy. Here are key elements that determine your premium:

• Age:Younger applicants usually pay lower premiums due to a reduced risk of health issues, allowing a longer period to pay premiums before the insurer is likely to face a claim.
• Health: Your health and medical history are critical. Conditions like hypertension or diabetes can increase premiums. Insurers often require a medical exam to evaluate these risks.
• Lifestyle:: Habits such as smoking or heavy drinking can dramatically raise premiums. High-risk activities like skydiving or racing also increase costs.
• Occupation:: Jobs with higher risks, such as working in hazardous environments, can increase premiums.
• Policy Duration:: Longer policies typically have higher premiums as they cover more extended periods during which claims could be made.
• Coverage Amount::: The more coverage you choose, the higher your premium since the potential payout from the insurer is greater.
• Gender:r: Women who statistically live longer often receive slightly lower premiums.

By understanding these factors, you can make informed choices about your life insurance premium, ensuring you select a policy that fits your budget and provides the necessary protection for your family’s future.

How to Choose the Best Insurance Policy?

Choosing the right life insurance plan involves understanding your financial needs and securing the future for your loved ones. Here’s how to select the best policy:

• Assess Your Needs: Identify the main reasons for buying life insurance, like income replacement, debt settlement, or funding future financial obligations (e.g., education, retirement).
• Understand Policy Types: Get familiar with different types of life insurance—term life, whole life, and universal life. Each serves different financial goals.
• Compare Insurance Providers: Research insurers' reliability, financial stability, and customer service. Use regulatory websites for reviews and ratings.
• Check Coverage Details: Ensure the policy covers your needs comprehensively, including death benefits and any additional riders for disabilities or illnesses.
• Evaluate Premiums and Benefits: Compare costs and benefits across policies. Consider premiums, payment terms, and claim process ease.
• Seek Professional Advice: Consult a financial advisor if you need help understanding complex details or to tailor advice to your situation.
• Review Regularly: Life changes might necessitate policy updates. Regular reviews ensure that continued coverage aligns with your needs.

By following these steps, you can choose a life insurance plan that offers peace of mind and meets your financial goals.

Steps to Buy Life Insurance Online from Aviva Life Insurance 

Purchasing life insurance online from Aviva Life Insurance is streamlined and user-friendly. Follow these steps to secure your policy:

• Visit the Website: Start by visiting Aviva Life Insurance’s official website. Look for the life insurance products section.
• Choose a Policy: Explore the available life insurance plans. Aviva offers a variety of policies tailored to different needs and budgets. Read through the features and benefits of each to find one that suits your requirements.
• Calculate Premiums: Use the online premium calculator provided on the site to estimate the cost of your chosen life insurance plan based on the coverage amount, term, and your age.
• Fill Out the Application: Complete the online application form. You must provide personal information, medical history, and a beneficiary designation.
• Undergo Medical Screening: Depending on the policy and the amount of coverage selected, you might be required to undergo a medical examination to assess your health status.
• Review and Pay: Review your policy details and premium amount. If everything is in order, pay online through a secure payment gateway.
• Receive Policy Documentation: Once your payment is processed, you will receive your policy documentation via email. You can also access your policy details through your online account.

Following these steps, you can conveniently buy life insurance from Aviva directly from your home or office.

How to File a Life Insurance Claim After the Policyholder's Death? 

Filing a life insurance claim after the death of a policyholder involves several key steps to ensure the process is smooth and the benefits are disbursed promptly. Here's what you need to do:

• Obtain the Death Certificate: Secure a certified copy of the policyholder's death certificate, as it's the primary document required for filing a claim.
• Locate the Policy Documents: Gather all policy-related documents, which include the life insurance policy contract and any other relevant paperwork.
• Contact the Insurance Company: Inform the life insurance company about the policyholder's death as soon as possible. Most companies have a dedicated claims service or helpline.
• Complete Claim Forms: Fill out the claim forms provided by the insurance company. Provide accurate and complete information to avoid delays.
• Submit Required Documents: Along with the claim form, submit the death certificate, policy document, and any other required documents like proof of identity and relationship to the deceased.
• Follow-up: Once the claim is submitted, contact the insurance company for updates. If additional information is needed, provide it promptly to expedite the process.

These steps will help you through the claim process, ensuring you can secure the policy benefits efficiently.

Importance of Nominees in Life Insurance Plan 

Designating a life insurance nominee is crucial for managing life insurance policies effectively. 

Here's why having a nominee is vital:

• Financial Security: Nominees receive the policy benefits upon the policyholder's death, ensuring immediate financial support to dependents without delays.
• Simplified Claims Process: Having a nominee streamlines the claims process, allowing for quick and straightforward benefit disbursement.
• Protection for Minors: If the nominee is a minor, appointing a custodian to manage the funds ensures the child's financial future until adulthood.
• Avoids Legal Issues: Without a nominee, the benefits might be tied up in legal disputes or probate, delaying distribution.
• Peace of Mind: Knowing that the policy benefits will reliably reach the intended individual provides reassurance to the policyholder.

Selecting a life insurance nominee ensures that the policy's benefits fulfil their purpose—offering support when needed.

Tax Benefits of Life Insurance Investment 

Investing in life insurance secures financial protection and offers notable tax benefits. Here’s how you can save on taxes through life insurance investments:

• Income Tax Deductions:: Premiums paid are deductible under Section 80C of the Income Tax Act, allowing up to Rs.1.5 lakh in deductions annually, which lowers your taxable income.
• Tax-Free Maturity Benefits:: Under Section 10(10D), the payout on the maturity of a life insurance policy is tax-free, provided the premium is within 10% of the sum assured for policies issued after 2012.
• Death Benefit :: The death benefit received by beneficiaries is also tax-free, ensuring they get the full amount without deductions.
• ULIP Benefits:: Unit Linked Insurance Plans offer tax-free investment returns, enhancing their appeal for efficient wealth growth.

These life insurance tax benefits not only reduce your tax liability but also reinforce your family's financial security.

FAQs Addition

• What is Life Insurance Policy?     
  A life insurance policy is a contract between an insurer and a policyholder that pays a designated beneficiary a sum of money upon the death of the insured person.
• What are the 4 main types of life insurance?    
  The four main types of life insurance are term life, whole life, universal life, and variable life insurance.
• What is the main goal of life insurance?    
  The main goal of life insurance is to provide financial protection and security to surviving dependents or other beneficiaries after the death of an insured.
• What are the benefits of life insurance plan?    
  Benefits include financial security for beneficiaries, tax advantages, peace of mind, and, in some policies, investment growth opportunities.
• What is the maximum number of life insurance beneficiaries?    
  There is no maximum limit to the number of beneficiaries one can name in a life insurance policy; however, insurers may set their own policy limits.

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