India Maharashtra Pune Know Your Life Insurance (punediary.com)

Know Your Life Insurance
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Life Insurance made its debut in India well over 100 years ago. Today, it is widely accepted as one of the most attractive financial instruments in an individual's portfolio, the provides an assurance of security with attractive returns. What follows is an attempt to acquaint readers with some of the concepts of life insurance, with special reference to LIC. It should, however, be understood that the following information is by no means an exhaustive description of the terms and condition of an LIC policy or its benefits or privileges. For more details, please contact any of our Branch or Division Offices. Any LIC Agent will be glad to help you choose the life insurance plan to meet your needs and provide other necessary assistance.

What is Life Insurance ?

Life Insurance is a contract for payment of sum of money to the person assured ( or failing him/ her, to the person entitled to receive the same) on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or on unfortunate death, if it occurs earlier. Among other things, the contract also provides for the payment of premium periodically to the Corporation by the assured. Life insurance is universally acknowledged to be an institution which eliminates 'risks', substituting certainty for uncertainty and comes to the timely aid of the family in unfortunate event of the death or of total permanent disability of the breadwinner. By and large, life insurance is civilization's partial solution to financial uncertainties caused by untimely death.

Why is it superior to other forms of Savings?

(i.) Protection : Saving through life insurance guarantee financial protection against risk of death of the Policy holder. In life insurance, on death, the full sum assured is payable (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable.

(ii.) Aid to thrift : Life insurance encourages 'thrift'. Long term saving can be made in a relatively 'painless' manner because of the 'easy installment' facility (premiums can be paid through monthly, quarterly, half-yearly or yearly installments). The Salary Saving Scheme, popularly Known as SSS, provides a convenient method of paying premium each month through deduction from one's salary. The employer remits the deducted premium to the LIC. The Salary Saving Scheme can be introduced in an institution or establishment subject to specified terms and conditions.

(iii.) Liquidity : Loans can be raised on endowment type & whole Life Policies as per policy condition on the sole security of a policy which has acquired a paid-up value. Besides, a life insurance policy is also generally accepted as security for even a commercial loan/ housing loan.

(iv.) Tax Relief : Tax relief in Income Tax is available for amounts paid by way of premium for life insurance subject to the Income Tex rules in force. Assesses can avail themselves of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for his insurance than he would have to pay otherwise.

(v.) Money when you need it : A suitable insurance plan or a combination of different plans can be taken to meet specific needs that are likely to arise in future, such as children's education, start-in-life or marriage provision or even periodical needs for cash over a predetermined stretch of time. Alternatively, policy moneys can be so arranged to be made available at the time of one's retirement from service to be used for any specific purpose, such as for the purchase of house or for other investments. LIC pension plans also offer regular income in the form of annuity when you retire from active work or in later part of Life at your choice leaving lumpsum purchase price for your heirs. Subject to certain conditions, loans are granted to policyholders forhouse building for purchase of flats.

Who can buy a Life Insurance Policy ?

Any person who has attained majority and is eligible to enter into a valid contract can take out a life insurance policy for himself / herself and for those in whom he /she has insurable interest. Policies can also be taken out, subject to certain conditions, on the life of one's spouse or children. While underwriting proposals, factors such as the state of health of the life to be assured, the proponent's income and other relevant factors are considered by the Corporation.

Medical And Non-medical Schemes

Life insurance is normally offered after a medical examination of the life to be assured. However, to facilitate greater spread of insurance and also as measure of relaxation, LIC has been extending insurance cover without any medical examination, subject to certain conditions.

With Profits and Without-Profits Plans

An insurance policy can be 'with' or 'without' profit. In a With- Profit Policy, bonuses declared, if any , after periodical valuations are allotted to the policy an are payable along with the contracted amount at the time of the final claim payment. In a Without Profit Policy, only the contracted amounts are paid,. without any addition. Under some new plans Guaranteed Additions & Loyalty Addition are paid in lieu of bonuses.

Keyman Insurance

Keyman Insurance is taken by a business firm on lives of key employee(s) to protect the firm against the financial loss which may occur owing to the premature demise of the key employees.

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