HANDBOOK ON
LIFE
INSURANCE
SUBMITTED BY
DEEPTI KHURANA
(2K21/BAE/46)
01 WHAT IS LIFE INSURANCE POLICY ?
02 BENEFITS OF LIFE INSURANCE POLICY ?
03 TYPES OF LIFE INSURANCE POLICY ?
04 DOCUMENTS REQUIRED FOR LIFE INSURANCE
05 TERM VS PERMANENT LIFE INSURANCE POLICIES IN INDIA
TABLE OF 06 HOW TO CHOOSE RIGHT KIND OF POLICY ?
CONTENTS 07 HOW TO FILE LIFE INSURANCE ?
08 HOW TO CLAIM IN CASE OF DEATH ?
09 HOW TO CLAIM FOR MATURITY ?
10 CONCLUSION
A life insurance policy is a legal agreement between an insurer and a policyholder. In exchange for the premiums paid by
the policyholder throughout their lifetime, a life insurance policy promises that the insurer will pay an amount of money
to designated beneficiaries when the insured dies.
The life insurance application must correctly state the insured's previous and present health issues, as well as high risk
behaviours, in order for the contract to be enforceable.
This Life Cover protects your loved ones' future by providing a lump sum in the event of an untimely death. At the end of
the policy term, you may be paid an amount known as the Maturity Benefit in some plans.
There are two types of life insurance policies: term and permanent.
1.Complete Safety
2. Safety and Savings
BENEFITS OF LIFE INSURANCE
FINANCIAL SAFETY
Among the numerous benefits of life insurance, financial stability
and peace of mind are very important. You may be confident that
in the event of a disaster, your family will not be forced to make
sacrifices due to financial constraints. It will also assist them in
meeting financial obligations such as loan payments.
BENEFITS UPON DEATH
Life insurance death benefits comprise the payment of a specified
sum to the insured individual's family in the event of death. While
nothing can replace the worth of life, financial assistance in such a
time may significantly alleviate the load.
MATURITY BENEFIT
The maturity benefits of life insurance allow the policy to function
as a saving instrument as well. When the policy matures, some
plans offer the insured the total amount of premium paid during
the tenure.
TAX ADVANTAGES
Section 80C allows for some tax advantages associated with life
insurance. It qualifies the premiums paid for the coverage as a tax
deduction, lowering taxable income. Furthermore, Section 10(10D)
assures that any payments made under the policy are tax-free. The
tax advantages of life insurance provide a strong incentive to
obtain a policy.
TYPES OF LIFE INSURANCE POLICIES
1. TERM INSURANCE PLANS
Term insurance is the most basic form of life coverage. It is affordable life
insurance that one can buy easily, without any hassles.
Simply put, a term insurance plan offers death cover for a stipulated time period.
God forbid, in the event of the sudden demise of the insured during the policy
tenure, the insurance provider offers a pre-decided death benefit as a lump sum,
as a monthly/ annual pay-out, or as combined benefits to the nominee. The best
term plan offers comprehensive coverage at a competitive premium.
2.UNIT LINKED INSURANCE PLANS
A unit-linked insurance plan or ULIP is a type of life coverage plan
that offers a perfect blend of insurance & investment. It comes
with a long-term investment opportunity along with valuable
investment flexibility.
The premium paid towards a ULIP is partly used as a risk-cover for
life coverage plan and the remainder is invested in market funds
such as debts, equities, bonds, market funds, hybrid funds etc. The
selection of the market funds depends purely on the risk appetite
of the insurance buyer. Based on that, the insurer invests the
amount in the capital market as per the insured’s preference.
3.ENDOWMENT PLANS
Endowment plans are also known as traditional life insurance plans. These
plans come with an element of saving. As compared to the risk factor of
other investment products, the risk involved is lower (so are the returns).
An endowment policy is a combination of a life coverage plan and a savings
plan. It invests a particular amount in life coverage and the remaining
amount is invested by the provider. In case the policyholder outlives the
policy term, the insurance provider offers a maturity benefit to him/her.
Furthermore, some insurance endowment policies may offer bonuses on
pre-specified periods. If applicable, the bonuses are paid either to the
policyholder at the time of policy maturity or to the nominee in case of a
death claim
4.MONEY BACK PLANS
True to its name, this type of life coverage plan offers a stipulated
percentage of the assured sum. It is paid back to the policyholder at
pre-decided intervals. This payback benefit is known as a survival
benefit. Money back policy is the best insurance policy for individuals
who want their investments to be accompanied by an element of
liquidity. Furthermore, these plans are eligible for bonuses as declared
by the provider (if any).
5.CHILD PLANS
A child plan acts as a tool to generate funds for the policyholder’s child. A child
plan helps one build a corpus for their child that can be used for the child’s
education and wedding. Generally, child plans either provide benefits as
instalments on an annual basis or a 1-time payout once the insured child is 18
years of age. In the unfortunate event of the untimely demise of the
policyholder during the policy term, immediate premium payment is payable by
the insurer. In such cases, some insurers waive off future premium but the plan
continues till the opted policy term.
6.WHOLE LIFE INSURANCE PLANS
A whole life insurance plan offers life coverage as
long as the insured lives. There are a few providers
that offer life coverage up to 100 years of age.
Contrary to the coverage offered by term plans, this
plan offers extensive coverage. The sum assured is
computed when the life coverage plan is purchased
and is payable to the nominee after the demise of
the insured. Along with the sum assured, bonuses (if
any) are also paid to the nominee. It is one of the
best policies that offer coverage up to whole life at
low premiums.
DOCUMENTS REQUIRED FOR LIFE INSURANCE
At the time of applying for a policy, the life insurer will ask for the below-mentioned KYC documents:
1.INCOME CERTIFICATE
This is vital to estimate the sum assured or cover that could be presented to the insured. In most cases, the existing insurers
provide cover up to 20 times the proposer’s annual profits. The standard income proofs encompass:
*Salary slips of last 3 to 6 months (depending on the insurer)
*Income Tax Returns (ITR) of the 2 to 3 years
*Last 6 months bank statements with continuous entries of 3 months credited salary
*If the person is self-employed then a certificate issued by CA
*Latest from 16
2. ADDRESS PROOF
Insurance companies would ask for the address details of the applicant. The following documents can be used as address proof:
*Voter ID card* Aadhar card *Saving account bank statement* Passbook with latest 6 months entries *Latest 3 months credit
card statement *Driving license 3 months utility bills *Passport *Ration card
3.IDENTITY PROOF
One can provide the following documents like ID proof
*Passport
• PAN card
• *Aadhaar card
• *Voter ID card
4. AGE PROOF
Some of the aforementioned documents would be considered as age proof as well. However, below is a comprehensive list of
documents that can be used as age proof:
*PAN card* Aadhaar card *Voter ID card *Driving license *Passport Ration card *Marriage certificate* School/College leaving
certificate *Birth certificate
5. OTHER DOCUMENTS
Apart from the KYC documents, here are some other documents that an applicant would have to submit at the time of buying
the policy: *Insurance application or proposal form.
*Policy assertion that's necessary if someone aside from the insured has crammed the policy idea shape.
*A very last assertion declares that each one of the provided statistics is accurate and that if something is determined unfaithful,
the insurer has the proper to reject the application. Subsequently, the contract might be rendered null and void, and the top
class paid might be surrendered. Thus, as soon as the proposer is declared, the complete technique is completed with utmost
faith. If the coverage is needed to be registered under the Married Women's Property Act, a separate form needs to be filled and
submitted to the insurer, citing the nominee.
*The policy concept also includes a personal statement attached to the announcement shape. Any incorrect announcement may
lead to the rejection of the software.
TERM VS PERMANENT LIFE INSURANCE
If you plan to buy a life insurance plan, you can have heard of several types
of policies, including permanent life coverage. While both the guidelines
provide an advantage to the own family in case of the unlucky loss of life of
the policyholder, those plans vary in various ways:
1.TERM
Term coverage plans offer safety for a set
tenure, while permanent insurance has flexible
terms. It generally covers till the life assured 3. COVERAGE
reaches 100 years of age. A term coverage plan is a protection plan, while
permanent life insurance is a safety cum savings plan.
2. PREMIUM
The premium quantity paid for permanent life insurance 4. MATURITY BENEFIT
coverage is invested in different funding tools. If the Maturity payout is commonly payable in most life
insurance organisation makes an income, its proportion is insurance guidelines, aside from the term coverage
paid to the existence assured as a bonus or funding return. plans.
The life assured in a term plan does not get any returns.
HOW TO CHOOSE RIGHT KIND OF POLICY
1.Set your destiny goals.
2. Decide for what reason you've got to buy a license, that is, for
future financial desires or your family, once you are not present
anymore.
3.Study the coverage market cautiously.
4.Check all of the businesses supplying existing insurance
policies, compare them, and pick the one that suits you the nice.
5. Study the coverage's inclusions, exclusions, range, claim
settlement ratio, and other crucial details carefully earlier than
deciding on.
6. Consult a professional for more readability and higher
decision making
HOW TO FILE A LIFE INSURANCE CLAIM
Filing a claim and getting the assured amount can be cakewalk if all the necessary
steps are taken care of. It is important to have the right approach to file a claim.
Here’s how nominees of the policyholder or policyholder can file a claim in India
under the following scenarios:
1. Upon the demise of the policyholder
2. Upon maturity of the policy
HOW TO FILE A CLAIM IN CASE OF DEATH
Inform the Insurance Company: Contact the insurer as quickly as possible on their toll-free variety or tell them over electronic
mail. It is constantly most suitable to tell the insurer at once over a call to initiate the technique. Share Important Details: The
beneficiary or the claimant while lodging a claim with the life insurer needs to share all the important details like –
1.Policy Number
2. Name of the policyholder
3.Place of death
4.Name of the claimant
If the policy has been purchased offline, the insurer would have provided a claim intimation form at the policy purchase.
If it is an online policy, it is simple to apply for the claim settlement through a claim form online. Claim Processing: In case of
accidental or natural death, the beneficiary or the nominee must submit all the supporting documents to the life insurer as a part
of the claim process. The claim support team will verify the insurance documents and claim declaration. In some cases, they
might ask the beneficiary to submit a few other documents.
Documents to be submitted
1.Original copy of the policy
2.Duly filled claim form
3. Death certificate of the policyholder
4.Deeds of assignment, if any.
5.Discharge form signed by the witnesses.
6. Supplementary documents like post-mortem reports, hospital certificates, and doctor's certificates (if required).
7.The investigation report in case of police inquiries.
Note- If someone other than the nominee files the claim, the insurance company can ask for the legal title of succession
Approval and Pay-out
Once all of the files have been submitted and the existing insurer has demonstrated it, the claim can be settled through the
insurer. The lifestyles insurer can ask for the beneficiary's financial institution details - a cancelled cheque or a copy of the bank
account passbook, which must be attested with the aid of the financial institution authorities. For the nominee's identification
proof, a replica of passport, voter identity card, PAN card, Aadhaar card, etc. It needs to be submitted. Generally, the declared
settlement process takes 30 days. Once approved, the insurer might also straight away make the payout. Some insurers make the
bills through the Electronic Clearance Service or ECS, an opportunity method to make bulk payments.
1.If the insured outlives the policy term, he/she may be eligible to avail coverage adulthood advantages. However, the
insured must ensure that the coverage is ongoing and that each of the charges has been duly paid. Here is an easy way to
file an adulthood claim with minimal office work.
2.When the coverage is about to mature, the existing insurer typically intimates the policyholder at least 1-2 months
earlier. All the information concerning the maturity date, maturity amount, and discharge voucher are provided to the
insured.
3.The discharge voucher (much like a receipt) must be signed via the policyholder in the presence of the witnesses. The
coupon is then sent returned to the insurer in conjunction with the authentic coverage bond, on the idea of which the
policy maturity advantages are provided. In case the policyholder has nominated another individual or entity for the
policy, then the nominee must sign the discharge voucher to the insurer, in order to receive the claim amount
HOW TO CLAIM FOR
MATURITY ?
CONCLUSION
Insurance is a significant investment, and you will almost certainly
acquire numerous policies throughout the course of your life. To make
the best decision about what to buy, you must first understand what
each form of insurance covers and how it operates. Don't only go with
the lowest option; consider what it offers as well.
Take the time to look around for the best coverage for your needs.
When unforeseen problems emerge, it can save them hundreds of
dollars in unanticipated costs. You don't want to waste money on
insurance plans that aren't suited for you, but the correct coverage can
protect you and your family from unexpected calamities.
