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Life Insurance

A life insurance policy is a cover that pays a sum of money to the family(declared nominee) in case the policyholder passes away in the policy period. This cover comes into effect when all life insurance premiums are timely paid. If you have people in your family that depend on you financially then life insurance is a must-do investment.

Let’s understand life insurance with a simple example:
Here is Manav, a 50-year-old sole breadwinner of a family with a wife and two beautiful kids- one in college and the other in school. Like most Indian families, Manav owns a house on loan, has Rs. 10 lakhs as bank balance and owes a debt of Rs. 5 lakhs. If one unfortunate day Manav passes away, what will happen? His bank balance will be taken by the creditor and the leftover is not enough to repay the house loan. So the house on loan might be taken away as well; this leaves his wife and kids with no shelter and no money to survive. The older kid will be deprived of the required college fund for higher education. Scary situation! But wait! How can Manav avoid all these possible scenarios? Only if Manav buys a life insurance policy.

If Manav buys a life insurance policy, then he will be committed to pay a small portion of his income as a premium to the insurance company. Upon his unfortunate death in the policy term, the insurance company will pay Manav’s family a lump sum amount of money, generally known as a death benefit. This lump-sum of money can be used for paying off the house loan, supporting the kid’s college funds, and the family's expenses. Now Manav’s family is financially protected.

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All the “Why”, ”What”, and “How" about Life Insurance

The basic principle of life insurance is that it gives you a life cover. A life cover is like a financial security blanket. Uncertain and unexpected incidents could leave dependent members of a family without anybody to rely on, if the primary or the only earning member passes away. In such situations, without any other source of income, it will be impossible for the surviving members of the family to meet their life goals or even the costs of their everyday expenses.

With a life cover from an insurance plan, this problem is easily solved. Why, you ask? Well, that is because in case a policyholder passes away during the tenure of a life insurance plan, the insurer pays out death benefits to the nominees mentioned by the policyholder.
There are different types of life insurance plans and you need to weigh your options before making the purchase.
  • Term Insurance Plan
    A term insurance plan is the simplest kind of life insurance available. This type of plan gives you a life cover for a specific term or period, hence the name 'term plan.' In return for the life cover, you need to pay a premium to the life insurance provider. The unique thing about term plans is that they offer a significantly high life cover for much lower premiums, when compared with other kinds of life insurance plans.
  • Savings Plans
    Savings plans, also known as endowment plans offer policyholders a life cover for a specified period. They also possess a savings component. Just like with term plans, the policyholder pays the insurer a premium in return for the benefit of a life cover.Savings plans, also known as endowment plans, are just what they sound like. They offer policyholders a life cover for a specified period. And in addition to this, they also possess a savings component. Just like with term plans, the policyholder pays the insurer a premium in return for the benefit of a life cover.
  • Whole Life Insurance
    Whole life insurance, as the name implies, is a type of life insurance plan that offers coverage for the whole life of the policyholder. In other words, the life cover offered by a whole life insurance plan is generally valid till the policyholder attains 100 years of age.
  • Retirement Plan
    A retirement plan is a kind of life insurance policy that helps you take care of your retirement needs. They are also known as pension plans or annuity plans. The retirement benefits offered by the plans can be paid out as a lump sum amount, as periodic payouts, or as a combination of the two.
  • Unit Linked Insurance Plan (ULIP)
    A Unit Linked Insurance Plans (ULIPs) is a type of life insurance plan that gives policyholders the benefit of insurance as well as market-linked investments. ULIPs invest in a variety of funds like debt funds, equity funds, or even a mix of both. ULIPs have a lock-in period of 5 years, so you can stay invested over the long term and allow your investment to grow.
  • Group Life Insurance Plans
    Group insurance plans offer the benefit of a life cover to a group of people under one master life insurance plan. One of the most common types of life insurance plans for a group of people is the employer-sponsored insurance that some workplaces offer.
Life insurance is the only financial tool that anyone can use to build a huge corpus of money that will be paid to the family in the case of an unfortunate death during the policy period, at the expense of an affordable premium amount. Let us have a reality check which can get a little awkward! The truth is, you are not going to live forever! If you depart this world untimely, your loved ones could be left with a lot of expenses and no way to pay them. You can avoid this with a life insurance policy.

Many people do not get life insurance because they believe this to be very expensive, which is not true. For example, a 30 years healthy non-smoker male can get a ₹1 Crore life insurance coverage for ₹8373 a month.

Apart from securing your family financially, there are some other benefits of life insurance products like:
  • An additional source of income to meet financial goals
  • Tax exemption2 under Section 80C2 and 10(10D)2.
  • Financial security and regular income for post-retirement life
  • Financial support for children’s higher education or marriage
  • Options to invest grow your money with unit-linked plans
  • Options to protect yourself against critical illnesses like cancer
  • Peace of mind
There are many advantages of taking life insurance. The most important benefit of life insurance is that it protects your loved ones against the perils of a lack of income in the future. Just as you are currently invested in providing for your family, the life insurance plan provides a stable fund that your loved ones can use in your absence. Many life insurance plans offer a maturity benefit as well as a death benefit. Plans with a maturity benefit can be useful to you even when you are around. They help you plan your financial future in a more systematic manner. Meanwhile, the death benefit of life insurance helps the family tide over the sudden loss of your income and helps keep the family savings intact for bigger purposes like paying for children's education or emergency hospitalisation.
You should buy life insurance if you have anyone who depends on you for financial support. The family’s expense does not stop when the breadwinner departs the world, right! In such unfortunate scenarios, the family members stress a lot for clearing the loan, child’s education/ marriage, etc.- Life insurance is the solution to that.

If you do not have elderly parents, kids or you are not married and will never get married; simply, if there is nobody that depends on you financially, then life insurance may not be essential for you. Considering retirement plans, saving plans and other wealth creation life insurance products is suggested.
The primary goal of any life insurance is to secure your family’s finances if you pass away. It is a way to ensure that your family can carry out their day to day expenses, pay bills, pay rent or EMIs and pay child’s school fees even in your absence. But a life insurance policy can have secondary benefits as well, like tax savings and as an investment.

Below is the list of people who need to buy life insurance:
  • New families
  • Existing families
  • People with home loans
  • Parents
  • Senior Citizens & retired persons
  • Business Owners
  • Working Persons for tax saving
Life insurance premium refers to the specific amount of payment that the policyholder needs to pay to the insurance company monthly/ quarterly/ half-yearly/ annually (as defined in the policy) in order to keep the coverage in place. Periodic premium payment till the end of the policy term keeps the life insurance in force. Your life risk primarily decides if your premium will be higher or lower. The amount of the life insurance premium depends on some factors like:
  • Age: With increasing age, the life insurance premium rises. Because younger individuals generally have low mortality rates and are less likely to die unexpectedly. But with increasing age, the life risk rises with chances of attracting common diseases like blood pressure, diabetes, etc., resulting in a higher premium. So if you are buying life insurance early, then you can access a lower premium.
  • Gender: Generally, life insurance premiums for men are higher as compared to women. Because historically, males have shorter life spans than females. For example, if a healthy, non-smoking 30-year-old female buys an ABSLI DigiShield Plan with a life cover of ₹1 Cr for 25 years of term period, the monthly premium will be ₹7293. But if a male same age and habits chooses the exact same plan then he will have to pay a monthly premium of ₹8373.
  • Smoking Status: If you have a habit of smoking, then you are putting your life at risk. Mortality increases when people smoke. Hence the life insurance premium is higher for smokers than non-smokers.
  • Sum assured: Sum assured is the amount that the insurance company has to pay out to the nominee if the life insured passes away during the policy period. You will get to choose this amount while purchasing the policy. Choosing a higher sum assured will result in higher premium rates.
  • Premium payment frequencyYou will get to choose the frequency in which you can make the premium payment while purchasing the policy. Options are: Yearly/ Semi-yearly/ Quarterly/ Monthly. If you choose a yearly payment mode then you can enjoy the cheapest rate. On the other hand, for the monthly payment mode, premium will be on a higher side.
  • Policy period:Mortality rate increases with increasing age. The risk of death is higher when the insurance company covers an older policyholder. So the premium rate increases with increasing policy period. Simply put, coverage for 30 years will be costlier than coverage for 20 years.
If you are planning to buy a life insurance policy, make sure to keep these things in mind:
  • Check whether the sum assured or the product you are buying matches your requirements. For example, if you want a low premium product, then the term plan is an apt cover. But if you are looking for long term investment and returns, ULIPs can be the best option.
  • Ask for the expert’s advice if you are new to financial planning.
  • Check insurer’s claim settlement ratio. Aditya Birla Sun Life Insurance has a claim settlement ratio of 98.08%1.
  • Do not skip any information in the proposal form. Fill it carefully and try not to hide any information because it impacts the coverage.
  • Always keep a copy of the completed document, like a proposal form, with you for your future reference.
  • Understand the procedure of claim to simplify the processing at the time of need.
Choosing the right type and coverage amount (sum assured) of the life insurance is possible by determining how much money your dependents will need in your absence. As a general rule of thumb, financial experts suggest everyone to choose a sum assured 8-10 times of the current annual income.

For example, if your yearly income is Rs. 12 lakhs, then you must buy life insurance with a sum assured of at least Rs. 1 crore. Considering everyone’s situation is unique, the following are the factors that can help determine the minimum amount of life insurance required.
  • Current debt: The outstanding loans and liabilities in your name become a burden to the family in your absence. So you should pick a sum assured that is enough to pay off the debt along with interest in full.
  • Expenses of dependents: If you are the sole income provider of your family, then you need to choose an assured sum large enough to cover the minimum monthly expenses of the family. Please consider the inflation and ageing of the dependents in the family while deciding on this.
  • Premium paying capacity: Life insurance policy pays out only when the policyholder pays all the premium in time. Otherwise, the policy will lapse, and the investment will go in vain. Against the chosen sum assured, you have to pay the premiums in the chosen interval; please make sure that falls under your premium paying capacity.
  • Financial goals: At different stages of life, everyone has different financial requirements. You need to consider your financial goals like children’s education/ marriage, buying a house, medical expenses, retirement, etc., while deciding on the sum assured of the life insurance policy.

You can always use our human life value calculator where you can put your details and check how much life cover you need.
Yes, you have different options to pay the premium. You can pay the premium monthly, quarterly, semi-yearly or yearly. There is also an option to pay the bills in one lump sum. Different insurance products have different premiums depending on the development and coverage.
Payment of premium on time is the basic condition which you as a policyholder have to fulfil. Only if you pay the premium, the policy cover remains in effect. In a life insurance policy, if you do not pay the premium on time, the insurance company will give you a grace period to pay the premium, which has already fallen due. If the premium is not paid in the grace period, the policy will tend to lapse. That means you will not be qualified to get any benefit from the policy purchased.

If later you can afford the premium and feel the need to continue the policy after it lapses, there is still an option to revive the policy. For that, you will have to pay all the pending premiums and charges and depending upon the type of policy you own.
If you are the nominee, beneficiary, or the legal heir of the policyholder, you should first intimate the insurance service provider of the policyholder’s demise. Along with this, you will need to provide some other information such as the cause, place, and date of death.

After the intimation is given, you should file the following documents with the insurer to lodge a death benefit claim.
  • A duly-filled claim form
  • A copy of the death certificate
  • The original policy document
  • Proof of relationship with the deceased
  • An executed form of discharge
Once all of these documents are filed, the insurer will process the claim, and if found to be sufficient and proper, they will disburse the death benefit.
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Why choose Aditya Birla Sun Life Insurance?

We are among leading life insurers with a legacy to deliver promise and great customer experience. We are a joint venture between Aditya Birla Group and Sun Life Insurance. Our wide range of affordable life insurance products for groups and individuals ensures life and financial protection, retirement, savings and investment, traditional term plan, health and more.

  • iconbullet 363 offices assist in buying life insurance
  • iconbullet Simple online purchase process
  • iconbullet 79k+ direct selling agents to guide
  • iconbullet 3-steps online claim process

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  • Disclaimer

    1 As per annual audited figures submitted to IRDAI for the period FY 21-22 for individual death claims paid.
    2 Tax benefits are subject to changes in the tax laws
    3 ABSLI DigiShield Plan (UIN: 109N108V08) scenario: 30 years healthy Male/Female, non smoker, policy term- 25 years, Selected plan option- Level Cover option, Sum assured - ₹1 Cr, Premium Paying Frequency: Monthly, Premium paying Term: Regular Pay, Policy Option: Single life Premium Amount: ₹837/month for Male & ₹729/month for Female (offline premium) (Excluding GST).
    ABSLI DigiShield Plan is a non-linked non-participating individual pure risk premium life insurance plan; upon Policyholder’s selection of Plan Option 9 (Level Cover with Survival Benefit) and Plan Option 10 (Return of Premium [ROP]) this product shall be a non-linked non-participating individual life savings insurance plan. All terms and conditions are guaranteed throughout the policy term. GST and any other applicable taxes will be added (extra) to your premium and levied as per extant tax laws. An extra premium may be charged as per our then existing underwriting guidelines for substandard lives, smokers or people having hazardous occupations, etc. The insurance cover for the life insured will commence on the policy issue date. UIN: 109N108V08