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Features
Ref. No. KLI/22-23/E-BB/492
A life insurance policy is a contract between the insurance company and the policy holder, wherein the insurance company promises to pay a sum of money in exchange for a premium. Learn what is life insurance and how it works.
The COVID-19 pandemic has been a great eye-opener for many Indians in making them realise the importance of having robust life insurance cover during adversity. The lack of awareness has been one of the significant impediments to life insurance purchases. Also, the availability of different types of insurance products tends to confuse people. But most life insurance policies work in a similar manner. Let us understand more about what life insurance is? and how life insurance works?
When you purchase a life insurance policy, you sign a contract with the insurance company that agrees to provide you with the life cover. The contract lays out the policy terms and determines the amount that the insurance company must pay your family in the event of your demise during the policy period. A life insurance policy works only if you pay the premium diligently on time.
The working of life insurance is similar to any other insurance type. You, as the policyholder, must pay the premium to the insurance company for a specific period as agreed in the policy. The premium helps the insurer to cover your family’s financial needs after your demise.
This allows your family to get financial support in the event of any emergency. The insurer pays the death benefit and other accrued benefits (if any) to the nominee allowing your family to meet their everyday expenses and manage their usual lifestyle even in your absence.
When you submit your insurance applicant, the insurers carry out an underwriting process to determine the premium amount based on the risks involved. After assessing the risks, based on age, gender, profession, medical history, and lifestyle habits, they determine the premium amount you must pay to get the life cover.
Term plan is one of the most popular types of life insurance in India. As the name suggests, a term plan provides coverage for a specific period, and after that, the policy expires.
One of the reasons many people prefer buying a term plan is that it offers high coverage at an affordable premium. Also, it is one of the simplest life insurance policies. In a term plan, the insurer pays the death benefit to the nominee in the event of your demise during the policy term. But, if you survive the policy period, you don’t get any survival or maturity benefits.
Unit Linked Insurance Plans are invest-cum-insurance plans. In ULIP, you get life cover as well as investment opportunities. Typically, the ULIPs have a five five-year lock-in period, and it is considered one of the best long-term investment plans.
A part of the premium you pay for ULIP is used for provided life cover. The remaining amount is invested in different money market instruments to generate returns for you. It functions as per the market dynamics, so you must invest carefully based on your risk appetite and financial goals.
Child insurance plans are specially meant for safeguarding your child’s future. Apart from providing life cover, it allows you to build a corpus for your child’s future needs like education, marriage, etc. Child insurance plans are a great way to help your child realise their dreams and aspirations. You can buy child insurance plans as soon as they are born so that you can leverage time benefit to build a sizeable corpus.
When you buy a life insurance policy, it is critical to understand the working of the policy you buy, and know it’s features and benefits so that you can make the most of it.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Features
Ref. No. KLI/22-23/E-BB/2435
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
