Features and Characteristics of Life Insurance

Life insurance is a unique financial product that can achieve various financial objectives. It can be utilized as a financial cover for your beloved family and dependents, provide a second source of income during retirement, and build a corpus for the child's future higher education and marriage. Also, life insurance policies can be used as a tax-efficient legacy tool to pass on wealth from one generation to the next.

Features of Life Insurance Plans

Below are some features of life insurance:

Premium Payment

Premium payment is a crucial aspect of life insurance. The premium is the cost of purchasing a life insurance plan. It differs based on the sum assured, tenure, riders and other aspects of your plan. There are multiple ways to pay the premium, such as monthly, quarterly or annual payments. Life insurance plans offer these options to cater to the diverse preferences of policyholders.

Maturity Benefits

Maturity benefits are given to you at the completion of the policy term if you survive the tenure. Life insurance plans have a maturity date when you receive these benefits in a lump sum. The maturity benefit helps you cater to future goals and plan ahead. These benefits can differ as per the policy you have, such as endowment plans, Unit-Linked Insurance Plans (ULIPs) and others.

Sum Assured

The sum assured is one of the key features of life insurance. The sum assured is the guaranteed amount that is given to the plan’s nominee in case of an unfortunate event during the policy term. This sum helps the policyholder’s family cover their financial needs.

Policy Term

The policy term refers to the duration for which the life insurance policy is active and provides coverage. It is the period during which the plan’s nominee is eligible to receive the insurance payout. It is important to select a suitable policy term that aligns with your long-term financial objectives.

Claim settlement

Another essential feature of insurance that you must know about is the claim settlement. Claim settlement is the process where the insurer gives the policy benefits to the beneficiary upon the untimely absence of the policyholder. A smooth and prompt claim settlement process is vital to ensure financial support for the beneficiaries in a timely manner.

Riders

Riders are add-on benefits that can be added to a life insurance plan at an additional cost. These are optional covers that can be used to enhance a life insurance plan’s coverage. Some common examples of riders include a terminal illness rider, critical illness cover, permanent disability cover and comprehensive accidental benefit among the other rider options.

Nominee

The nominee is the person who receives the sum assured of the life insurance plan. Policyholders may nominate their spouse or children as nominees for a plan. Life insurance policies usually offer option to update the nominee as per your evolving personal relationships.

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What are the Benefits of Buying a Life Insurance Policy?

Below are some benefits of buying a life insurance policy:

Financial Security

Financial security is one of the primary advantages of purchasing a life insurance plan. In the event of the policyholder's unfortunate absence, the life insurance plan offers a guaranteed payout to ensure the family’s financial security. This offers peace of mind and financial stability during challenging times.

Investment Component

Many life insurance policies like ULIPs include an investment component that allows you to invest in different funds of your choice. This can be a good way to build wealth with market-linked assets and cater to various financial goals.

Add-on Benefits & Riders

Riders are one of the most versatile characteristics of life insurance. Life insurance policies can be customised with add-on benefits. Riders, such as terminal and critical illness coverage, permanent disability benefits or comprehensive accidental benefit covers can’ help you address specific needs and circumstances.

Stress-free Retirement

A life insurance policy can play a crucial role in offering you a stress-free retirement. Adding life insurance to your investment portfolio can help you accumulate wealth over the years while simultaneously securing your loved ones financially. Life insurance can provide you with a comfortable and worry-free retirement with long-term financial stability.

Why should Life Insurance be a part of your financial planning?

There are many important features of a life insurance policy which make it a must-have component of your financial planning. Below are some of them:

Long term financial goals

Life insurance plays an essential role in long-term financial planning. It offers comprehensive financial protection for your loved ones in case of any unforeseen events. Furthermore, life insurance policies with a cash value component serve a dual purpose. Not only do they provide a safety net for your family, but they also help you accumulate savings that can be used for your personal long-term goals, including retirement planning, children education, major future expenses and other similar needs.

Securing your Child's Future

Life insurance becomes valuable for you as it can help your children to continue with their goals in your absence. It can help you to leave a financial safety net for your children, ensuring they have adequate funds to rely on.

Current Loans & Liabilities

In your absence, the onus of clearing all your loans and other liabilities like credit card dues will fall on your next of kin, such as your spouse or children. In the case of non-payment of your dues, creditors can seize your property, bank account, or other similar assets to procure the pending dues.

A life insurance plan can protect your loved ones and your financial assets by offering your nominee the necessary funds to settle your outstanding liabilities. The payout from a life insurance plan can adequately cover your debt and allow your family to carry on with their life without any financial strain.

Post Retirement planning

Life insurance can play a vital role in retirement planning. Various life insurance plans are designed to help you accumulate funds for your future needs, including retirement. These plans offer a steady flow of income during your golden years and help you cover expenses such as housing, groceries, healthcare and more.

Additionally, since life insurance policies come with built-in coverage, you can simultaneously provide financial protection for your loved ones and secure their financial future even after you are gone.

Tax benefits

The premiums paid for the life insurance plan are eligible for tax deductions subject to section 80C*. Therefore, life insurance is an ideal product for financial planning as it benefits you today by reducing tax obligations and secures your family for tomorrow.

Conclusion

Life insurance is a multifaceted financial tool. With several beneficial features of life insurance, ranging from multiple premium payments to riders and quick claim settlements, you can secure your loved ones and enjoy peace of mind.

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Frequently asked questions

1. What are some of the common types of life insurance?

Some common types of life insurance include term insurance, Unit-Linked Insurance Plans (ULIPs), endowment plans, guaranteed income plans and annuity plans. Each of these serves different purposes and offers varying combinations of coverage and investment components. You can select a suitable plan as per your diverse financial needs.

2. Can I buy life insurance riders without first purchasing a base policy?

No, you cannot buy a life insurance rider without first purchasing a base policy. Riders can be added on top of a base policy at an added premium to enhance the plan’s benefits. They cannot be bought as stand-alone product.

3. Can I customise the coverage and benefits of my life insurance policy?

Yes, life insurance plans offer options to customise the coverage and benefits according to your needs. You can select features of life insurance, such as the policy term, riders, coverage and other similar options to customise the policy to your requirements.

4. Are there any age restrictions for purchasing a life insurance policy?

You can buy a life insurance policy between the age of 18 and 60 years. However, this may differ from insurer to insurer and plan to plan. It is advised to check with the insurance company and read all the policy related documents beforehand.

5. What are the tax implications of life insurance policies?

The premium paid towards a life insurance plan is eligible for a deduction up to ₹ 1.5 lakh per annum subject to conditions under section 80C^* of The Income Tax Act, 1961. Also, proceeds from the life insurance policy received by the beneficiary is exempt subject to conditions prescribed under Section 10(10D)^* of The Income Tax Act, 1961.

COMP/DOC/Dec/2023/1412/4972

6. How long does it take to get life insurance amount after a death?

The duration for receiving the life insurance amount after a death can vary from insurer to insurer. Typically, an insurance company takes 30 to 90 days from receiving the last document of the claim. The timeline depends on whether any investigation is necessary or not. It is recommended that all required documents be submitted as soon as possible for a speedy claim settlement.

7. How many beneficiaries can be on a life insurance policy?

There is no limit to the number of beneficiaries on a life insurance policy. You can add your spouse or children as beneficiaries. However, these should also match your will. If the policyholder has a specified will, the insurance benefit will be directed according to the will, regardless of the nominated beneficiaries.

8. How do you claim life insurance after death?

To claim life insurance after a death, you need to first report the claim online through the website, reach out to a physical branch or send an SMS. The ClaimCare team will ask you for relevant documents to support your claim, such as the death certificate, medical reports and others. Once all documents have been received and verified, your claim will be issued.

The ClaimCare team guides you through the process to ensure a smooth settlement process.

9. Can I have multiple life insurance policies at the same time?

Yes, it is possible to have more than one life insurance policy simultaneously as per your specific insurance needs and financial goals.

10. What happens if I don’t make premium payments on time?

The insurance company provides you with a grace period to pay the premium. Failure to make premium payments within the grace period will result in the cancellation of the life insurance plan. Timely payments are crucial to maintain your plan’s continuity and ensure all the benefits remain in force.

COMP/DOC/May/2024/95/6068

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Disclaimer

^{^} The premium for a 22 year old healthy male for a life cover of ₹1 crore for the ICICI Pru iProtect Smart – Life Option under the regular income payout option for a policy term of 19 years is ₹ 5,824 p.a (inclusive of all taxes).

^` Return of mortality and policy administration charges is subject to all due premiums being paid and the policy being in force on the date of maturity. This feature is only available under ICICI Pru Signature Online version. This is not applicable for Whole Life option.

^* Tax benefits are subject to conditions prescribed under Sections 80C, 80D, 10(10D), 115BAC and other provisions of the Income Tax Act, 1961. Goods and Services Tax and Cesses will be charged extra as per prevailing rates. Tax laws are subject to amendments made thereto from time to time. Please consult your tax advisor for details.

^# Refer the product brochure for the definitions, exclusions and other terms and conditions applicable for Permanent Disability due to accident and Terminal Illness.

⁺ Critical Illness Benefit is optional and available under Life and Health and All in One options. This benefit is payable, on first occurrence of any of the 34 illnesses covered. The CI Benefit, is accelerated and not an additional benefit which means the policy will continue with the Death Benefit reduced by the extent of the CI Benefit paid. The future premiums payable under the policy will reduce proportionately. If CI Benefit paid is equal to the Death Benefit, the policy will terminate on payment of the CI Benefit. To know more in detail about CI Benefit, terms & conditions governing it, kindly refer to sales brochure. Critical Illness benefit is available till age of 75. The CI Benefit for Angioplasty is subject to a maximum of ₹ 5,00,000. On payment of Angioplasty, if the ACI Benefit is more than ₹ 5,00,000 the policy will continue for other CIs with ACI Benefit reduced by Angioplasty payout.

^{^}The premium of ₹540 p.m. has been approximately calculated for a 18 year old healthy male life with monthly mode of payment and premiums paid regularly for the policy term of 36 years with income payout option with Life Cover of ₹1 crore. Goods and Services tax and/or applicable cesses (if any) as per applicable rates will be charged extra.

ICICI Pru iProtect Smart UIN:

ICICI Pru Signature UIN:

W/II/0431/2019-20

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