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- What Is a Life Insurance Policy?
- Life Insurance Plans for Different Life Stages
- Why is it important to buy a Life Insurance Policy?
- Who can purchase a Life Insurance Policy?
- Types of Life Insurance Plan
- Life Insurance Plans are Simple to Understand!
- Differences Between Types of Life Insurance
- Tax Benefits of Life Insurance (Section 80C and Section 10(10D))
- How Does A Term Insurance Policy Work?
- Life Insurance Coverage Amount Explained
- Benefits of Life Insurance Plans
- Important Terms About Life Insurance Plans in India
- How To Choose A Life Insurance Policy?
- Factors to Evaluate Before Deciding on Life Insurance Protection
- Do’s and Don’ts When Dealing With Life Insurance Policies
- How to Select the Right Life Insurance Plan for Yourself and Your Family?
- How much Life Insurance cover does one need?
- Life Insurance Plans offered by HDFC Life
- What Is Human Life Value, And Why Should You Consider It Before Deciding On Your Life Cover?
- Should One Buy More Than One Life Insurance Policy?
- Riders in Life Insurance
- Steps to Buy Life Insurance Policy Online
- Documents Required to Buy a Life Insurance Plan in India
- Important Documents to Get Your Life Insurance Claim Amount Smoothly
- How to Save Tax with a Life Insurance Policy?
- How to File a Life Insurance Claim?
- How to Avoid Life Insurance Claim Rejection?
- Why Should Women Consider Investing In A Life Insurance Policy?
- Crucial Situations When You Should Consider Reviewing Your Policy
- FAQs on Life Insurance Policy
- Here's all you should know about life insurance
- Popular Searches
- Disclaimer
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Francis Rodrigues
Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.
Written By:
Vishal Subharwal
Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.
Reviewed By:
What Is a Life Insurance Policy?
Life insurance is a legally binding contract that exists between an insurer and a policyholder in which financial protection is provided to the policy’s beneficiaries upon the policyholder’s death. The insurance company is responsible for paying death benefits to the nominee in the sudden demise or accident of the insured individual.
To continue with a life insurance policy, the policyholder must continue paying premiums over the period or pay a lumpsum premium upfront. Considering types of policies, a policyholder can choose critical illness benefits or additional protection as coverage against an unfortunate accident. Some life insurance policies also have a savings or investment component. They allow you to save money for your goals and get different types of returns based on the type of policy.
Different life insurance solutions are designed to cater to different financial needs. For those living abroad, Life Insurance for NRI provides essential financial protection for families and dependents in India, ensuring their security even when the policyholder resides abroad.
Life Insurance Plans for Different Life Stages
With the right insurance policy, policyholders can secure financial protection for their loved ones and achieve their future goals. Here are the best plans for different life stages:
Starting Your Career
If you begin to earn, opt for a basic term life insurance policy. This is an affordable way of securing your family’s financial security during times of any unfortunate accident. Check out the premiums applicable for term insurance for young professionals.
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Getting Married:
After marriage, your financial responsibilities are shared. By opting for a joint life insurance policy, both partners can be protected over the foreseeable future. The coverage applicable for a newly married couple will differs per the policy chosen.
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Becoming a Parent
When you become a parent, choose a policy offering a combination of protection and savings. These might include a whole life or endowment plan applicable to securing your child's future. Calculate the future costs of education for your child and calculate the required life coverage.
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Retirement Planning
To experience stress-free days after retirement, choose a plan offering a stable income and financial stability, such as an annuity or pension plan. To lead a hassle-free life post-retirement, compare returns on different retirement plans.
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Why Is It Important to Buy a Life Insurance Policy?
Buying a life insurance policy is of utmost importance as it provides financial security to your loved ones during any unexpected death or unfortunate incident. This lets your family members maintain their standard of living and pay off debts hassle-free. Also, by purchasing life insurance coverage, you can secure your family's future and maintain your peace of mind.
Let’s explore the reasons behind purchasing life insurance coverage in detail below:
Financial Security for Loved Ones
A life insurance policy offers financial security to your loved ones. All life insurance plans provide death benefits. Your family members (covered by the plan) will receive the sum assured on your sudden demise. Thus, your family members will be financially secure even in your absence.
Debt Repayment
Debts taken in the name of an individual can become an undue burden in the event of their sudden demise. If there is no other alternate source of income, the family members of a deceased individual might find it difficult to repay debts on time. With life insurance, you can take care of your family’s expenses and liabilities even in your absence.
Income Replacement
Life insurance policies provide financial assurance to your family members for paying the mortgage, covering tuition fees or maintaining a family business. With the death benefit, they can also afford healthcare and other emergencies. Certain insurance plans like endowment policies and ULIPs also let you invest money.
Funeral and End of Life Expenses
Proceeds from a life insurance policy can cover funeral costs and end-of-life expenses. Thus, your family members are relieved of financial burden. They can thus concentrate on healing without worrying about immediate financial expenses.
Estate Planning and Inheritance
Life insurance provides a tax-free inheritance to your beneficiaries. Thus, assets are distributed equally and provide financial security to your family members after your demise.
Tax Benefits
Life insurance premiums for your chosen policy qualify for tax deductions of up to ₹1.5 Lakh deductions under 80C of the Income Tax Act, 19611. The death benefits are exempted from taxes applicable under Section 10(10D). The premiums applicable for medical care riders qualify under section 80D of the Income Tax Act.
Business Continuity
Investing in a term plan is essential if you are the owner of a company. Opting for this short-term plan will let you avail low premiums but a high lumpsum amount to provide financial assistance during times of need. This sum assured amount will let your business partner handle all pending accounts seamlessly.
Peace of Mind
Investing in an insurance plan provides you with peace of mind. Opting for an insurance plan is essential to provide financial security for your family in the future. There are a plethora of options available for you to choose from regarding an insurance policy. There are affordable plans for every individual.
Affordable Premiums
The earlier you begin investing in your chosen insurance policy, the more you will benefit. If you are in good health, your premium amount will be lower while the insurance coverage will be higher.
Future Financial Planning
Choosing the right life insurance plan is important for securing your savings and investments for the future. If you are looking to save or invest through life insurance plans, consider an endowment or money-back plan with guaranteed2 returns. Life insurance plans, as an investment plan, also provide you the opportunity to grow your wealth either with guaranteed2 returns or market-linked returns, depending on your risk appetite and financial goals. Additionally, you can pay premiums monthly or quarterly, as per your preference, based on the flexibility offered by the policy.
Saving for Retirement
Solving for your retirement needs is crucial as you might not have a regular source of income post your retirement. Pension plans can provide you with a sustained regular income that can help you live a stress-free retirement. If you are behind in retirement planning, start with buying a life insurance plan. Investing in a plan at an early age will let you pay lower premiums. So, maintaining a monthly, quarterly, or annual fee, you can begin with an investment plan, thereby gradually contributing to your retirement fund.
Risk Management
If you are the sole earner of your family, managing your family financially during any unfortunate incident will be your major concern. Here, life insurance is an ideal solution for risk mitigation. The main objective of life insurance is to mitigate risk and offer financial assistance to your loved ones in your absence.
Coverage Options
Opting for the right life insurance, including whole life insurance, term insurance or annuity plan, will provide you with sufficient contingencies based on your needs. Select a plan considering your financial goals and objectives.
Who Can Purchase a Life Insurance Policy?
A life insurance policy is a safety net and provides financial security to yourself and your family members. It assures beneficiaries receive a lump sum payment and maintains a decent standard of living in the absence of a policyholder. Here’s who is eligible to purchase a life insurance policy:
Citizenship
In India, life insurance policies are available to Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). Both NRIs and OCIs can buy life insurance in India to provide financial protection to their family members. However, there is a need to submit proof of residency and citizenship during the application process.
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Age Group
A life insurance policy is an important financial tool that provides protection and security across all age groups. Irrespective of your age group, life insurance protects your near and dear ones, even in your sudden demise.
For Young Adults: Life insurance is important for young adults. Starting to invest at an early age allows policyholders to pay lower premiums and build a strong financial foundation. Alongside this, it promotes disciplined planning to address any unforeseen situations.
For Families: For families, life insurance offers protection to dependent individuals. Investing in a life insurance plan assures financial support to your family so that they can maintain a decent standard of living even in your absence. The larger your family, the more life insurance coverage you should get.
For Seniors: Through proper retirement planning and estate management, seniors can avail benefits from life insurance. Annuity plans provide a regular source of income after retirement and ensure financial security. Additionally, life insurance provides support in estate planning, thereby allowing seniors to provide financial support to their loved ones.
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Other Aspects
Alongside citizenship, there are other aspects for every insurer to consider, such as income, occupation, lifestyle, eligibility, and rates of premium. Insurance buyers must fill out the application form with accurate details regarding their health and undergo medical tests, if necessary. Covering all these aspects helps to meet the respective needs and preferences of each policyholder.
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Types of Life Insurance Plan
There are different types of life insurance plans designed specifically to meet the diverse financial needs of policyholders. From providing basic financial protection to offering different investment opportunities, these plans provide financial security for yourself and your loved ones.
Here are the different kinds of life insurance policies explained in detail:
1. Term Insurance Policy
Term insurance plans are one of the simplest and most affordable insurance policies. It lasts for several years before it expires. The premium amounts are pocket-friendly as these plans only provide death benefits. If the policyholder's death occurs within a specific period, the sum assured amount is then paid to the nominee.
2. Money Back Life Insurance Plans
This life insurance plan provides a return periodically with life insurance coverage benefits. A certain percentage of the sum assured is returned to the policyholder at regular intervals during the entire tenure of the policy. The remaining portion is paid at the end of policy maturity. In case there is a sudden demise of the policyholder, the entire sum is paid to the nominee in addition to the previous payouts.
3. Savings Plans
Savings plans are a kind of life insurance policy that offers protection with investment. Over time, policyholders can build a substantial corpus with this plan. Alongside, this plan helps policyholders arrange for funding to meet long-term goals such as marriage and education expenses with a monthly payout or lump sum at maturity.
4. Retirement Plans
Investing in a Retirement plans, allows you to be worry-free about future finances. Also known as a pension plan or annuity, these are designed specifically to provide a regular source of income to the policyholder after retirement. However, if the policyholder passes away during the policy term, the nominee is provided immediate financial support.
5. ULIP Plans
With ULIP Plans, you can avail flexibility in investment. In this plan, a certain percentage of the premium amount is used to provide life coverage, while the remaining portion is contributed towards investment in the capital market. The policyholder can choose from different funds invested in debts, equities, money market instruments, etc.
6. Whole Life Insurance Plans
The Whole Life Insurance policy provides comprehensive coverage till 100 years of age. It provides death benefits and a cash value that provides interest at a fixed rate. Each month, a significant portion of the premium is deposited into the cash value of the policy at a fixed rate of return.
7. Group Insurance Plans
Group Insurance Plans offer financial coverage to a group of individuals, be it employees or members involved in an organisation. These are cost-effective plans offering basic protection and strong financial support during the sudden demise of the policyholder's death.
8. Child Insurance Plans
Child insurance plans offer an easy way of securing your child's future. These plans are designed specifically to meet your child's future financial needs. It provides annual instalments, and you can withdraw them once your child reaches adulthood. In case of the parent's unfortunate demise, both death benefits and maturity benefits are paid.
Life Insurance Plans are Simple to Understand!
Yes, life insurance plans are simple and quite easy to understand. Being an insured individual, you must have a sum assured amount in mind that you want your life insurance policy to cover. This amount should be adequate to provide financial support to your family members in case of any unfortunate incident.
Because of the availability of a wide range of life insurance policies, policyholders are confused at times. But in most cases, life insurance policies function similarly, making it easier for policyholders to understand them.
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Differences Between Types of Life Insurance
Here is a detailed overview of the different types of life insurance plans in India:
|
Term Life Insurance Policy |
Endowment Life Insurance Policy |
Money Back Insurance Plan |
Unit Linked Insurance Plans (ULIP) |
Whole Life Insurance Plan |
Overview |
Affordable plan that provides financial protection to your family |
Provides a death benefit upon the policyholder’s death or a maturity benefit |
Provides a return amount periodically along with life coverage benefits |
Policyholders invest in debt funds and diversified equity funds with a lock-in period of 5 years for partial withdrawal |
Provides coverage till 100 years of age and cash value at a fixed rate of interest |
Maturity Benefits |
Nomaturity benefits |
Offers maturity benefits |
Offers maturity benefits |
Offers maturity benefits |
Offers maturity benefits |
Death Benefits |
Offers death benefits |
Offers death benefits |
Offers death benefits |
Offers death benefits |
Offers death benefits |
Purpose |
Provides pure risk cover |
Provides insurance cover plus low-risk savings |
Returns the premium paid plus additional income, bonuses and death benefit |
Provides insurance cover plus investments |
Provides a fixed risk cover over your life |
Tax Benefits of Life Insurance (Section 80C and Section 10(10D))
Purchasing life insurance will allow you to be eligible for tax deductions of up to ₹1.5 Lakh under Section 80C of the Income Tax Act, 19611. The amount you receive upon maturity will not be subjected to taxes as per the conditions laid out in Section 10(10D) of the Income Tax Act, 19611. Tax laws, however, can be amended from time to time.
How Does A Term Insurance Policy Work?
A term insurance policy lends coverage for a specific period, which could vary from person to person. If the policyholder passes away within this term, the beneficiaries receive the death benefit. For example, Raj, a 30-year-old, buys a 20-year term policy with a ₹1 crore death benefit. He pays an annual premium of ₹10,000 to keep the policy active. If Raj passes away at 40, his beneficiaries receive the said ₹1 Crore. The same amount will be paid if Raj expires at 35 or 45 years. The death benefit amount remains the same, irrespective of the total premium paid by the policyholder. However, this applies only if the policyholder has died within the covered term. Now, if Raj survives the 20-year term, the coverage ends, and no payout is made unless he has opted for a return of premium rider.
Life Insurance Plans Coverage Amount Explained
Here is the list of things to consider while looking into the amount of coverage in a life insurance plan:
Current and Future Income
Choosing the best life insurance policy with a good payout option is ideal for covering both your current and future income. This will let your family members maintain their standard of living and meet financial obligations in your absence.
Thus, keep paying the premiums on time to keep your chosen policy going. Choose a life insurance cover that enables you to support this expense every year with your current income. Consider your other expenses and liabilities when choosing the coverage amount.
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Loans and Debts
Closing all pending loans and debts is important for living worry-free. If you have pending automobile loans, credit card debt, student loans or mortgages, you will need enough life insurance coverage to repay them. This lets the family members stay less worried, knowing all debts will be paid off through death benefits. Moreover, it lets them avoid the loss of pledged property.
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Financial Goals
Policyholders should consider their financial goals, including saving for post-retirement days, covering educational expenses, medical treatment costs for older parents, and so on. These goals and the coverage amount help to determine the insurance coverage needed.
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End of Life Expenses
Make sure to take into consideration the end-of-life expenses that include funeral and burial, treatment costs, and others. Hospital care is one of the largest financial factors when considering end-of-life expenses. Alongside, memory care, nursing home care, and in-home care are other categories of care that may need expense coverage.
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Other Coverage
If you have other insurance plans like employer-provided plans or government schemes providing life cover, you do not need an expensive plan. Take the sum assured amount provided by these options when choosing a life insurance policy.
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Benefits of Life Insurance Plans
The following are some of the benefits of purchasing a life insurance policy:
Financial Support
One of the main benefits of life insurance plans is the financial support it provides to your family. Investing in a proper life insurance policy at an early age will provide a lump sum amount in case of any unfortunate incident. Without any life insurance, your family may remain financially worried and struggle to maintain the standard of living and pay off existing debts in your absence.
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Loan Collateral and EMI Payments
In the event of your sudden demise, debts and loans won't disappear. In your absence, your family will remain responsible for paying off outstanding debts that include car loans, personal loans, mortgages, and others. Thus, a life insurance policy can provide financial support for managing these financial obligations without feeling overburdened.
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Tax Benefits
A policyholder can avail tax benefits relating to life insurance under Section 80C of the Income Tax Act1. A deduction of ₹1.5 Lakh is allowed in a financial year. The premiums paid towards the policy are eligible for tax deductions, reducing your taxable income. Moreover, the payouts for the chosen policy are tax-free under Section 10(10D) of the Income Tax Act. This includes the death benefits, maturity benefits and additional bonuses.
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Additional Benefits
Life insurance policies can provide additional benefits other than the death benefit. These might include riders, bonuses, etc. The scope of the policy is enhanced because of riders. In most cases, riders are add-ons to your existing policy that let you customise the plan to meet your specific requirements.
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Important Terms about Life Insurance Plans in India
Some basic terms used frequently in the context of life insurance plans in India include:
Terms |
Meaning |
Sum Assured |
Sum assured is the guaranteed2 income a nominee receives upon the sudden demise of the policyholder during the term of the policy. The policyholder decides this amount during the time of buying the policy. |
Life Assured |
The insured individual is called the life assured. In the event of the life assured’s death or accident, the nominee receives the coverage amount. |
Death Benefit |
The amount a nominee receives during the sudden death of the policyholder during the policy tenure is the death benefit. |
Maturity Benefit |
Maturity benefit is the amount a policyholder receives once a policy matures upon completion of tenure if he/she survives the policy term. |
Riders |
Riders are additional benefits for enhancing your financial protection against the sudden demise of a policyholder. |
Free Look Period |
The free look period is the period that provides a policyholder 30 days after the issuing date of the policy to examine its terms and conditions and cancel it without penalties. |
Lapsed Policy |
A policy is lapsed when a policyholder fails to pay the due premium even after the grace period. |
Grace Period |
The extension provided to the policyholder after the due date of premium payment is called the grace period. |
Revival Period |
Failing to pay a premium during the grace period causes your policy to lapse. However, if you are willing to continue with the policy, you can re-activate the lapsed policy within the grace period. This particular period is called the revival period. |
Claim Process |
After the demise of a policyholder during the policy tenure, a claim has to be lodged to receive the death benefits. This process of lodging a claim by the nominee is called the claim process. |
Exclusions |
A life insurance policy doesn't cover certain things. If a policyholder’s claim is not covered under the terms of the policy, the provider doesn’t pay you any benefit. Suicide is a common exclusion of an insurance plan. |
Policy |
A policy is a legally binding contract between an insurance company and an insured individual. |
Policy Tenure |
Policy tenure is the period during which the life insurance policy offers insurance coverage. In other words, it is the period for which the policy is purchased. |
How to Choose a Life Insurance Policy?
Choosing the right life insurance policy is essential. Here is a list of factors to look into to select the right policy:
Assess Your Financial Needs
First, take a good look at your financial situation. Think about your family's daily living expenses, any outstanding debts, future education costs for your kids, and other financial commitments. People's financial situations vary, and so do their life insurance needs. For example, term policies are ideal for basic life insurance coverage, while ULIPs are best for long-term investments.
Check and Compare Different Types of Life Insurance Policies
Before opting for an insurance plan, make sure to check, compare, and familiarise yourself with the terms and conditions of different policy plans. There are many types of life insurance policies available in India that have unique benefits. The right choice completely depends on how much life coverage you need.
Check the Provider’s Reputation
While choosing an insurance provider, go for an insurance policy with a good reputation for reliability and financial stability. Choosing a reputable insurer will ensure the financial protection of your family members in your absence. A stable life insurance company with a high claim settlement ratio will likely pay out claims without delay.
Read Reviews
Finally, read the reviews and testimonials from current policyholders. Customer testimonials provide valuable insights into the service quality and reliability of insurers. Overall, it builds trust in policy and showcases the impact of positive reviews.
Factors to Evaluate Before Deciding on Life Insurance Protection
Goals
Identify your long-term financial goals, such as providing for your family, funding your children's education, or securing a comfortable retirement. Understanding your goals helps determine the coverage amount needed.
Age
Your age significantly impacts the type and cost of life insurance. Younger individuals typically pay lower premiums and can benefit from longer-term policies, while older individuals may need to consider policies that offer lifelong coverage.
Debts
Evaluate your outstanding debts, such as mortgages, personal loans, or credit card balances. Ensure your life insurance coverage sufficiently cover these liabilities, preventing financial burden on your family.
Stable Income
Consider your income stability and future earning potential. A steady income allows you to maintain regular premium payments, while fluctuating income might require flexible policy options to avoid lapses in coverage.
Remaining Employment Tenure
The tenure of employment plays a crucial role in determining your annual premium. The higher the policyholder’s age, the higher the premium amount you have to pay. Moreover, the need for life insurance increases over time.
Consider the working years left in your career. This will create a deep impact on how much you should invest and accordingly pay the premium amount.
Do’s and Don’ts When Dealing With Life Insurance Policies
Do’s of Life Insurance Policies |
Don’ts of Life Insurance Policies |
Check the Insurer's Reputation: Check the insurance company's claim settlement ratio, financial situation and reputation. |
Don't Ignore Reviews And Testimonials: Pay attention to customer feedback to avoid unreliable insurers. |
Read All Policy Documents Very Carefully: Understand the terms, conditions, and exclusions as stated in the policy document. |
Don't Overlook The Fine Print: Make sure you're aware of all policy details to avoid surprises later. |
Make Timely Premium Payments: Stay on top of your premium payments to keep your policy active. |
Don't Miss Premium Payments: Missing payments can result in policy lapses and loss of coverage. |
Keep Your Beneficiaries Informed: Ensure your beneficiaries know about the policy and how to claim it. |
Don't Forget to Update Your Policy: Update your policy regularly to reflect changes in your life circumstances. |
Seek Professional Advice Wherever Required: Consult with a financial advisor to make informed decisions. |
Don't Hesitate to Ask Questions: Clarify any doubts with your insurer or advisor to ensure you understand your policy fully. |
How to Select the Right Life Insurance Plan for Yourself and Your Family?
Selecting the right kind of life insurance plan for yourself and your family can be critical at times. Follow the factors mentioned below to avail yourself a smooth and hassle-free life insurance in India:
How To Select The Right Life Insurance Plan For Yourself:
To select the right life insurance plan for yourself, make sure to follow the below factors:
a) Assess Your Needs: Choose the life insurance plan that meets your needs. Buy one that aligns with your requirements.
b) Compare Policies on Different Websites: Make a thorough comparison of the available policies to reach an informed decision. Also, buy policies online directly from the insurer to experience a hassle-free journey.
c) Calculate Your Coverage: Select the best coverage and calculate your daily expenses to fit your needs.
d) Determine the Premium: This is one of the most important policy details to look into. Considering your age, lifestyle, and riders, premiums are determined.
How To Select The Right Life Insurance Plan For Your Family
To choose the right life insurance plan for your family, follow the below-mentioned factors:
a) Understand Your Insurance Types: In India, there are many types of life insurance, including money-back policies, term plans, whole-life plans, etc.
b) Calculate the Sum Assured: Calculate the sum assured to provide financial protection to your family in your absence. Do the calculation considering how much you need for your family.
c) Review Policy Prices and Features: Insurance companies differ from one another in terms of prices and features. Choose the one that offers an affordable package.
d) Read Thoroughly: Make sure to go through the policy document thoroughly before choosing the right one. If you have questions, approach your insurance company.
How much Life Insurance cover does one need?
To examine the life insurance coverage of your chosen insurance policy, let’s consider the following factors:
Number of working years
In the current years of your employment, you might have made retirement plans to be able to spend some time with your family without worrying about future expenses. Determining the coverage amount enables you to choose a premium for easy handling of expenses during these years of life.
Keeping this in mind, you can choose a limited pay option where you will get the option of paying premiums early. Or else, you can plan to pay monthly premiums and include coverage under different insurance policies.
Regular Expenses
Before determining the life coverage, make sure to consider all your fixed and necessary expenses. This includes grocery bills, fuel expenses, clothes, water bills, and other expenses. Provide coverage about 10 to 12 times the income earned yearly.
Landmark Stages in Your Family’s Life
Consider the goals your family might want to meet in the future, including retirement, weddings, and college education. You may need to uphold different responsibilities during different stages of your life.
For example, at 25 years of age, you might have fewer responsibilities. But at 40 years of age, you might have a spouse or kid and thus want to purchase a whole life plan that provides comprehensive coverage for your whole life.
Life Insurance Plans offered by HDFC Life
Let’s look into the different life insurance plans offered by HDFC Life:
Life Insurance Plan |
Description |
HDFC Life Click 2 Protect Super |
A comprehensive term insurance plan offering financial protection to your loved ones at affordable premiums. |
HDFC Life Sanchay Plus |
A savings cum insurance plan that provides guaranteed2 returns and financial security for your family's future. |
HDFC Life Click 2 Wealth |
A unit-linked insurance plan (ULIP) that offers the dual benefits of life insurance coverage and investment opportunities to help you achieve your long-term financial goals. |
HDFC Life Guaranteed Pension Plan |
A retirement plan designed to provide a regular income stream and financial stability during your golden years. |
HDFC Life YoungStar Udaan |
A child insurance plan that secures your child's future by providing funds for education, marriage, or other milestones, even in your absence. |
What Is Human Life Value and Why Should You consider it Before Deciding On Your Life Cover?
Human Life Value is a financial concept that determines the current value of your liabilities, expenses, and investments. This indicator helps you estimate the amount necessary to provide financial security to your family during your sudden demise or any unfortunate incident. For an accurate calculation, take the help of the Human Life Value (HLV) calculator.
- Why Consider HLV Before Deciding on Your Life Cover?
Let’s consider the factors behind considering HLV:
a) Financial Planning: With proper financial planning, you can achieve financial stability. Using the HLV calculator, you can assess the economic value of an individual's life.
b) Estate Planning: The HLV calculator provides a clear image of an individual's financial condition. This thereby helps in distributing wealth among heirs.
c) Insurance Coverage: HLV is important to calculate when determining life insurance coverage. Life insurance is instrumental in building a solid financial foundation.
d) Business and Partnership Valuation: HLV is important to calculate to determine each partner's contribution to business. Upon the untimely demise of a business partner, the HLV assists the deceased partner's family members.
Should One Buy More Than One Life Insurance Policy?
This decision completely depends upon your present financial health and future needs and goals. Whether you should have multiple policies depends on how much coverage you are seeking. More policies, on the one hand, can widen the coverage, but on the other, they can be a financial burden in your present circumstances.
Having multiple policies works for those seeking to reduce risk and ensure that they have another policy to bank upon in case of delayed or rejected claim settlement from one.
Still, managing multiple policies can be challenging, with risks of delayed or missed premium payments, leading to coverage lapses. Hence, it is best to assess the risks and rewards of this decision before going ahead with multiple policies.
Riders in Life Insurance
Policyholders have the option to add extra provisions to the basic life insurance policy coverage they have by purchasing life insurance riders. Life insurance policy riders help policyholders tailor their coverage to their specific needs and financial goals.
Riders bolster financial security for the policyholders and their beneficiaries by including one or all of the following –
Accidental Death Benefit Rider (ADB)
Waiver of Premium Rider
Critical Illness Rider
Term Conversion Rider
Child Term Rider
Accelerated Death Benefit Rider
Long-Term Care Rider
Your insurance provider may name these differently. It is, therefore, best to check with your insurer for the available riders.
Steps to Buy Life Insurance Policy Online
Buying life insurance policies online is easy and hassle-free. Here is a detailed step-by-step guide to purchase the best life insurance policy online:
Choose the insurance plan that caters to your needs by comparing coverage, premium amounts, costs, and terms offered in India.
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Take the help of an online calculator to estimate your premium amount.
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Carefully review the information entered before submitting your application form online. These include your name, age, occupation, gender, and other information.
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Provide scanned copies of your documents, including age, income, identity proof, domicile document, etc.
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If you need to undergo a medical examination, you may be requested to do so.
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Make sure to go through the entire policy document and read through the small print before making a payment.
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Pay the premium amount online through credit/debit card, net banking, digital wallet and others.
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After processing payment and upon approval of the application form, the life insurance policy documents will be delivered to you through email or courier.
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Make sure to go through the documents before sending them for future reference.
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Documents Required to Buy a Life Insurance Plan in India
While buying a life insurance plan in India, make sure to present the following documents for easy approval. Here are the mandatory documents:
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Proof of Residence
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Birth Certificate
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PAN Card
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Income Tax Returns
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Medical Records from the Past
Important Documents to Get Your Life Insurance Claim Amount Smoothly
Presenting the following documents is essential to get your life insurance claim amount smoothly:
Photo Identification Proof
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Address Proof
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Details of Your Bank Account
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Death Certificate
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Policy Documents
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Proof of Legal Title to Claim Proceeds
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Medical Records
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Bank Discharge Form
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How to Save Tax with a Life Insurance Policy?
Choosing a life insurance coverage allows you to avail tax benefits apart from providing financial security. Let's explore this in detail further.
Deductions Under Section 80C
Deductions under 80C of the Income Tax Act1 Premiums paid towards life insurance policies are eligible for tax deductions. There is a maximum deduction of ₹1.5 lakh per financial year.
This tax deduction is available for premiums paid towards insurance policies for spouse, dependents, self and dependent parents. Life insurance premium tax benefits are applicable to whole life insurance plans, endowment plans, term plans, Money Back Policy, and Unit Linked Insurance Plans (ULIPs).
Maturity Proceeds
The maturity proceeds from life insurance policies are tax-exempt under Section 10(10D) of the Income Tax Act1. However, the premium must not exceed 10% of the sum assured in any year during the policy term. Furthermore, the total premium amount you pay in a year cannot be above ₹5,00,000.
Rider Premiums
Premiums paid to riders are also eligible for section 80D. Section 80D of the Income Tax Act1 allows you to avail a tax deduction on the premiums paid while opting for a critical illness rider with your chosen health insurance plan. You can get deductions of up to ₹25,000 per year and ₹1,00,000 for senior citizens.
Tax-Free Death Benefits
According to Section 10(10D) of the Income Tax Act1, the death benefit received by the nominee/legal heir is tax-free. Here, the amount you receive is fully exempted from income taxes, subject to suitable terms and conditions. The tax exemption is applicable for the bonus, maturity value, assured sum, surrender value, and death benefit.
Tax-Free Surrender Value
When a policyholder surrenders the policy before its maturity date, the surrender value/amount received is tax-free under Section 10(10D) (although conditions apply here).
Pension Plans
Premiums paid towards life insurance pension plans are eligible for tax deductions under Section 80CCC1. However, there is an overall limit of INR 1.5 lakh on these under Section 80C.
Exemption for HUF
Life insurance premiums paid for members of a HUF are also tax-benefited under Section 80C, subject to the overall limit.
How to File a Life Insurance Claim?
Filing a life insurance claim is essential to secure the financial benefits. The insurance company provides information on the policyholder's death and submits necessary documents. Here are the ways to follow for filing a life insurance claim:
Online claim
To easily submit your claim online, go to the HDFC Life Claims section on the official website page. To begin the claim process, make sure to provide relevant details of the policyholder and nominee and submit it.
Claim At Branch
Download the claim form from the official website and submit it after filling it out with the correct details. Submit the other supporting documents at your nearest HDFC branch.
Claim Via Phone
Call the Claim helpline number to initiate the claim settlement process via phone.
How to Avoid Life Insurance Claim Rejection?
Here are the things you must know to get your life insurance policy claim settled hassle-free:
Do Not Hide Information
On-Time Premium Payment
Keep Nominee Information Up to Date
Do Not Avoid Medical Tests
Do not avoid undergoing medical tests, as they provide insurers with an idea of your medical history and smoothen your insurance claim settlements.
Hiding information while choosing a life insurance plan is the most common reason for claim rejection. Some of the details you must not hide include the details of pre-existing diseases, age, occupation, consumption of alcohol, smoking habits, and others.
Failing to pay your premium on time causes your policy to lapse. Even if you missed paying the premium by the due date, pay it within the grace period.
Make sure to keep the information regarding the nominee updated as and when required. If you are single, mention your parent's name as a nominee. If you are married, you can add your spouse's or child’s name as a nominee.
Why Should Women Consider Investing in a Life Insurance Policy?
Women should invest in a life insurance policy to provide financial security to their families during times of need. Let’s look into the factors in detail below:
01 Protection for Children
Choose a life insurance plan that provides coverage for your child. This lets you pay a single premium that offers a comprehensive package for you and your child. This way, both generations can stay protected under a single policy while making it easy to manage payments.
02 Protection for Spouse
Investing in the right life insurance plan protects both spouses (the wife and husband) under a single policy. If the death of one of the policyholders occurs, the term insurance plan pays out the benefits to the survivor.
03 Leave a Legacy
A whole life insurance plan is an effective mode of wealth accumulation for not only the next generation but also after that. Because the term is extendable up to the age of 100 years, it ensures your grandchildren also receive the sum assured from your life coverage.
04 Income Replacement and Financial Security
If a woman is not the sole breadwinner of the family, life insurance policies such as ULIPs and money back are quite crucial. Opting for a life insurance plan with guaranteed payouts helps a woman build her wealth to be financially independent and secure.
Crucial Situations When You Should Consider Reviewing Your Policy
Here are some situations when you need to consider reviewing your life insurance policy:
Situation |
Reason To Review Your Policy |
Getting married |
Marriage introduces new financial responsibilities and dependents. Therefore, it is a must to reassess coverage to ensure adequacy. |
Having children |
With parenthood, your financial obligations increase. This makes it important to ensure adequate coverage for your kids’ future. |
Taking a loan |
When you take a large loan, it is wise to take additional coverage to protect against financial burdens. |
Dependents facing medical conditions |
Medical issues among dependents can increase financial strain. It requires enhanced coverage for financial security. |
FAQs on Life Insurance Policy
1 What is life insurance policy?
A life insurance policy is a contract/agreement between the policyholder and the insurance company. Under this policy, the insured commits to paying premiums for a pre-determined period to the insurer. In exchange, the insurer guarantees to pay a certain sum as a death benefit to the insured’s beneficiaries.
2 What are the 4 main types of life insurance?
The four main types of life insurance are whole insurance, term insurance, endowment plans, and Unit Linked Insurance plans.
3 Why is life insurance plan useful?
Life insurance is useful as it offers financial protection to your loved ones in the event of your death. It ensures that your dependents are financially secure. The benefits help them maintain their standard of living even after you are not there. Additionally, life insurance can help cover expenses such as funeral costs, outstanding debts, loan payments. It also helps with future financial needs like education or retirement funding.
4 How much does life insurance policy cost?
The cost of life insurance varies based on several factors. These include - age, health, lifestyle, coverage amount, type of policy, and term length. Generally, younger and healthier individuals pay lower premiums compared to older or less healthy individuals.
5 What are the different options available for premium payments?
Insurance companies offer various options for premium payments. Some of the most common ones include - annual, semi-annual, quarterly, and monthly payments.
6 What are the consequences of non-payment of premium?
Non-payment of premiums has serious consequences on your life insurance policy. If you miss premium payments, your policy may lapse. As a result you lose coverage and any accumulated cash value. Some policies offer a grace period during which you can make late payments to avoid lapsing. However, if you fail to pay within the grace period, your policy may terminate.
7 How can I file the claim in case of insured person's demise?
A death claim can be filed online or at the nearest branch. In case of natural death following needs to be provided:
Mandatory documents
Original policy document (Not necessary in case of dematerialised policy document)
Death Claim Form
Death certificate issued by local authority
Claimant's passport size photograph
Personalized Cancelled Cheque or Bank Passbook (with Printed A/c no, IFSC & Name account holder)
Claimant's Valid Identity Proof
Claimant's Valid Address Proof
Claimant's PAN CARD/Form 60 (if PAN Card not available)
Employer’s certificate (Form) for Life Assured, if employed (not required for pension/ annuity plans)
Additional Documents
Medical cause of death certificate
Medical records for all the treatments taken in the past. (Admission notes, History / Progress sheet, Discharge /Death summary, Test reports, etc.)
Note:
Self-Attestation is required on any photocopies of the KYC or any other document copies submitted by the Claimant.
HDFC Life may call for documents apart from the above (case specific).
8 What is a 5 year life insurance policy?
A 5-year life insurance policy is a short term insurance that keeps the insurer covered for five years. It offers tax benefits and death benefits, but there is no cash out in this case. If the policyholder passes away while the policy is valid, the death benefit amount is paid out to the beneficiaries.
9 When can I start to pay the life insurance premiums?
You must pay your first premium to activate your life insurance policy. The premium payment activates your cover. You may pay your premium monthly, quarterly, semiannually, or annually, depending on the policy's terms and your choice.
10 Will I have to pay tax on my life insurance policy's maturity benefit?
According to Section 10(10D) of the Income Tax Act, 19611, the maturity benefit from a life insurance policy is non-taxable if the premium you paid is either not more than 5 lakh a year or does not exceed 10% of the sum assured.
11 What do you mean by paid-up value in life insurance?
The value of the sum assured after premium payment has been stopped by the policyholder (before the maturity date) is called the paid-up value. In such a case, the policy will remain in force with a reduced death benefit. This benefit amount is then based on the premiums paid and the length of time the policy has been active.
12 Which type of life insurance plan is the most affordable?
A term life insurance plan is the most affordable type of life insurance plan. It offers coverage for a specific period, say, 10 years or 20, or 30 years. There is a death benefit if the policyholder dies within the term. Premiums for term insurance are lower compared to whole life insurance.
13 How long does life insurance take to payout?
Life insurance payouts typically take between 15 to 60 days after a claim is filed. The variation in timelines comes from various factors including the insurance company's processes and the completeness of the submitted documentation. Delays can also take place if there is any investigation required or if the necessary paperwork is incomplete.
14 What happens if I outlive my life insurance policy term?
If you outlive the term of your life insurance policy, the outcome depends on the type of policy you have. If it is a Term Life Insurance, the cover ends without any payout unless the policy has a return of premium feature. In the case of Whole Life Insurance and universal life insurance, as long as you pay the premiums, the policy cover is maintained, and the accumulated cash value provides a health benefit whenever the insurer passes away. If yours is an endowment policy, you receive a sum assured plus bonuses, if any, when the policy matures.
15 How to benefit from life insurance?
Well-designed life insurance provides tax benefits, death benefits, and income replacement at affordable premiums to benefit financially during urgent times.
Here's all you should know about life insurance.
We help you to make informed insurance decisions for a lifetime.
HDFC Life
Reviewed by Life Insurance Experts
HDFC LIFE IS A TRUSTED LIFE INSURANCE PARTNER
We at HDFC Life are committed to offer innovative products and services that enable individuals live a ‘Life of Pride’. For over two decades we have been providing life insurance solutions - protection, pension, savings, investment, annuity and health.
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2. Provided all due premiums have been paid and the policy is in force.
15. Save 46,800 on taxes if the insurance premium amount is Rs.1.5 lakh per annum and you are a Regular Individual, Fall under 30% income tax slab having taxable income less than Rs. 50 lakh and Opt for Old tax regime.
19. Calculation for 30 year old male for HDFC Life Sanchay Plus Long Term Income Plan option, policy term 10 years.
20. Premium for HDFC Life Sanchay Plus. It is subject to change depending on final plan option and product selected. (Monthly premium of 2500/30=83.33)
1. Tax benefits & exemptions are subject to conditions of the Income Tax Act, 1961 and its provisions. Tax Laws are subject to change from time to time. Customer is requested to seek tax advice from his Chartered Accountant or personal tax advisor with respect to his personal tax liabilities under the Income-tax law.
ARN - DM/09/24/152541