Basic features of life insurance that you should be aware of
A life insurance plan allows you to provide for your family that will help overcome the financial burden in case of your death. It offers ways to ensure regular income for your children and spouse when you are not alive. On the other hand, you should understand the types of life insurance in detail before investing your money. Life insurance includes plans like money-back plans, endowment plans, Unit Linked Insurance plans, term insurance plans, money-back policies, whole life insurance, and child insurance plans. In addition, you should know the differences between the plans that will help make the right decision.
As a policy buyer, you must be aware of the basic features of life insurance from various sources. This, in turn, gives ways to focus more on your financial goals, which give ways to ensure stability in your life. Another thing is that it allows you to lead a trouble-free life. Therefore, you should understand the features of life insurance plans in detail that will help you gain more advantages. Not only that, you can select the right policy which caters to your requirements.
Know the basic features of your life insurance plans
- Policyholder
- Premium
- Tenure Customization
- Sum Assured
- Surrender Value
- Nominee
- Entry Age
- Maturity Benefit
- Riders
- Investment Options
- Renewability
- Free-Look Period
- Tax Benefits
1. Policyholder
Most insurance companies offer plans only for individuals allowing you to get coverage accordingly. However, some of them provide joint life plans enabling you to save money on premium rates. Apart from that, it acts as a single insurance plan that will help manage the same with ease.
2. Premium
You should know the life insurance definition while buying a policy from an insurer. It is an agreement between you and an insurance company where you have to pay premiums. Premium is the amount of money paid by you after choosing a policy. The premiums play a key role in keeping your plan active, and you should evaluate them with more attention. You can choose premium payment modes based on your choices. You can calculate the premium rates before selecting a plan.
3. Tenure Customization
You should select a tenure when buying a policy from an insurance company. A policy offers protection only until the end of a chosen tenure. Therefore, you should customize a plan according to your needs and requirements. Customizing a policy allows you to select the coverage of a plan that will help accomplish goals to a large extent.
4. Sum Assured
The sum assured is a pay-out provided by an insurer, and your nominee will receive the same after your demise. You can customize the sum assured amount similar to your tenure when purchasing your policy. Choose your sum assured amount wisely because it impacts your premium amounts.
5. Surrender Value
Surrender value is the most crucial factor to consider while purchasing a life insurance plan. It is the amount paid by an insurer when you want to exit from a policy. On the other hand, make sure that you paid premiums for at least 2 years for a 10-year policy and 3 years for a policy that has more than 10 years duration. Therefore, it is wise to know the surrender value in detail.
6. Nominee
A nominee is a legal heir appointed by you in a life insurance policy who will receive the amount in case of unfortunate death. Therefore, while purchasing a plan, you have to make sure that it allows you to change your nominees at any point during the life tenure of a plan.
7. Entry Age
You should know the minimum and maximum entry age for life insurance from an insurer. Moreover, it enables you to purchase a plan based on your choices that will help get maximum protection from potential threats.
8. Maturity Benefit
A maturity benefit is a lump sum pay-out when your policy expires after the duration. The insurance companies offer different maturity plans in the markets, and you can pick the right one depending on your needs. For example, an endowment policy comes with a combination of investment and insurance plans enabling you to generate more money.
9. Riders
A rider is an additional top-up feature offered by a life insurance plan that significantly enhances the benefits. Accidental death benefit, critical illnesses coverage, partial disability, and complete disability coverage are some riders an insurer provides. You can choose one or more among them based on your requirements.
10. Investment Options
Some life insurance policies come with investment options such as ULIP plans, thereby helping to generate regular income. Moreover, they are suitable for you to diversify your portfolio to meet exact needs in financial planning.
11. Renewability
Renewability is one of the features of a life insurance policy you should keep in mind while investing your money. You should check whether a plan provides a renewability option to help extend the coverage.
12. Free-Look Period
A free-look period is a feature offered by insurance companies. It allows you to determine whether to buy life insurance or not. The feature even enables you to get a refund within 15 days when you’re not satisfied with the policy terms and conditions.
13. Tax Benefits
Most insurers offer tax benefits on your paid premiums, and you are eligible for tax exemption under income tax act section 80C, 80D, and 10 (10D).
Conclusion:
Buying a new life insurance policy involves several things, and you should be aware of them properly. Furthermore, you should understand the key features of life insurance with more attention while investing money. They will help you get more benefits when you want to claim amounts. You can also secure your life financially with them to manage unwanted problems during emergencies. Evaluating the features will help you get the best that suits your needs.
