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Ref. No. KLI/22-23/E-BB/492
Life insurance is an important financial tool that provides a safety net for your loved ones in the event of your unexpected death. With so many different types of policies available, it can be overwhelming to know which one to choose. In this blog post, we'll explore the benefits of term life insurance and why it's a great option for people of all ages.
A life insurance policy provides financial protection to your family in the unfortunate event of death. At a basic level, it involves paying small monthly sums called premiums. However, depending on the type of life insurance products you have opted for at the policy’s maturity, you will receive returns the policy may have earned over the years. Also, in case of the policyholder’s untimely demise during the tenure of the policy, your family will receive a lump sum amount.
There are various types of life insurance products that cater to a wide variety of needs, such as:
This article will help you know what is the classification of life insurance.
Different life insurance plans also offer additional benefits such as savings, investment opportunities, and tax benefits. Understanding the different types of life insurance plans is crucial when selecting the right policy that meets an individual’s specific needs and goals. Read ahead to know the overview of various types of life insurance plans available in the market.
The simplest form of life insurance product is a term insurance policy. Being a pure risk cover policy, term insurance protects the person insured for a specific period. In such type of a life insurance policy, a fixed sum of money called the sum assured is paid to the beneficiaries if the policyholder expires within the policy term.
A whole life policy covers a policyholder against death throughout his life. The validity of this life insurance policy is not defined; hence, the individual enjoys the life cover. Under this life insurance policy, the policyholder pays regular premiums until his death, upon which the corpus is paid to the family.
Endowment policies are among the popular life insurance policies, combining risk cover and financial savings. Policyholders benefit in two ways from a pure endowment insurance policy. First, in case of death during the tenure, the beneficiary gets the sum assured. If the individual survives the policy tenure, he gets back the premiums paid with other investment returns and benefits like bonuses.
Many people prefer this life insurance policy because it gives periodic payments during the term of the policy. In other words, a portion of the sum assured is paid out at regular intervals. If the policyholder survives the term, he gets the balance sum assured.
Unit-Linked Insurance Plans are market-linked life insurance products that provide life cover and wealth creation options. A part of the amount people invest in ULIP provides life cover, while the rest is invested in equity and debt instruments for maximizing returns.
Annuity And Pension
In these life insurance policies, the insurer agrees to pay the insured a stipulated sum of money periodically. The purpose of an annuity is to protect against financial risks and provide money in the form of a pension at regular intervals.
Tax Considerations: Both annuity and pension benefits have tax implications that you should be aware of. Annuity payments are generally taxable as ordinary income, although some types of annuities may offer tax advantages. Pension benefits may also be taxable, depending on how they are structured and funded. It’s important to consult with a financial advisor or tax professional to understand the tax implications of annuity and pension benefits and how they will affect your overall retirement income plan.
Providing you with stability and security financially after retirement is the main goal of a retirement plan, a sort of life insurance. You can build an ongoing, reliable income stream by investing in retirement plans. If you keep making investments up until you retire, the plan will assist you in covering your living costs.
Throughout your working life, it mandates that you regularly invest a set portion of your income. The money you have saved up will be transformed into a steady income stream when you retire. Death benefits are another aspect of retirement programmes.
A group life insurance policy is a type of life insurance that covers a group of people inside a single insurance policy. Group insurance covers a minimum of 10 members, unlike individual life insurance policies, which cover one person for a specific period of time.
Employers, banks, corporates, and other homogeneous groups of persons can buy group Life Insurance policies for their employees and customers. While employers would want to offer financial protection to their employees’ families, banks and lending institutions aim to keep the debt off the borrowers’ families after their death.
Kotak Life Insurance provides several types of life insurance plans that cater to different financial goals and life stages. The plans offer comprehensive coverage to secure the financial future of your loved ones in case of any unfortunate events.
Life Insurance Plan
Insurance Plan Name
Multiple plan options
Three pay-out options
Savings and Investment Plans
Kotak Assured Savings Plan
Kotak Guaranteed Savings Plan
Multiple investment options
Unit-Linked Investment Plans
Unit-Linked Investment Plans
Pre & Post Hospitalization Expenses
Choosing the right type of life insurance policy can be a daunting task, as there are many options available in the market. Each type of policy comes with its unique features, benefits, and costs, and selecting the right one depends on your individual circumstances, financial goals, and personal preferences.
Individuals may have different goals. You must plan for your life insurance goals with the aid of suitable life insurance coverage. If protecting your family’s financial security is your primary goal, you may be able to find a term insurance plan that offers high coverage at affordable rates.
If you want to save money for your child’s education or if you want to purchase your own dream home, think about investing in a unit-linked insurance plan. A retirement plan that can guarantee consistent income for your ongoing costs after retirement is another option.
You should carry life insurance coverage that is at least ten to fifteen times your annual income, according to several financial gurus. While determining the right life insurance sum, there are a number of factors to take into account. If you have debts, it may be difficult for your family to make ends meet if you were to pass away. You should also put money aside for your kids’ higher education or eventual marriage. If your family’s main provider were to depart, it might be difficult for them to maintain their current standard of living due to inflation. Therefore, you must determine the total of the following:
Using online premium calculators, you may figure out how much of a premium you need to pay for the required quantity of life insurance. Find the policy that provides the best protection at a price that fits your budget by comparing several ones. Take into account how long you will be paying premiums based on your anticipated income over the next few years.
The appropriate length of the policy term is the period during which your family will be financially dependent on you. The usual rule is to subtract your current age from the age at which you anticipate your income to end or at which you aim to achieve a certain life goal in order to determine the optimum insurance term.
Over the course of several years, reputable life insurance providers frequently have a Claim Settlement Ratio (CSR) of over 95%. The CSR is the ratio of the company’s settled claims to the total number of claims filed during a fiscal year. You can check the most recent CSR of the various insurance carriers in India by going to the website of the Insurance Regulatory and Development Authority (IRDAI). It’s also a good idea to study customer reviews to determine how quick and easy your life insurer’s claim process is.
Life insurance is an essential financial product that helps individuals protect their loved ones financially in the event of an unforeseen death. India offers a variety of life insurance policies to meet the diverse needs of its citizens.
Term life insurance provides coverage for a specified period, while whole life insurance offers coverage for the entire life of the policyholder. Endowment policies combine insurance coverage with savings and investment features. Unit-linked insurance plans (ULIPs) provide the policyholder with investment opportunities and insurance protection.
In addition to these policies, there are also specialized plans such as group life insurance, pension plans, and child plans. It is important for individuals to understand the features and benefits of each policy type before making a decision.
Ref. No. KLI/22-23/E-BB/2435