What is Life Insurance? Benefits, Types & FAQs
Close
Close

Buy a Life Insurance Plan in a few clicks

Now you can buy life insurance plan online.

Kotak e-Term Plan

Protect Your family’s financial future with Kotak e-Term Plan. Know more

Kotak Assured Savings Plan

A plan that offer guaranteed returns and financial protection for your family. Know more

Kotak Guaranteed Savings Plan

A plan that offers long term savings and insurance in one premium. Know more

Kotak e-Invest

Insurance and investment in one plan with Kotak e-Invest. Know more

Kotak Health Shield

Insurance against medical expenses related to heart, brain, liver and Cancer. Know more

What is Life Insurance?

What is Life Insurance?
  • 10th Jun 2022 |
  • 33,740

Life is precious, but the acts are uncertain. It is impossible to analyse what the next step of your life would be. When you think about life and its numerous phases, all you want for yourself and your loved ones is a tranquil and secure future. You want children to be safe with or without you, so you start making plans for that, ensure that they are financially safeguarded, look into their education, and take care of your spouse and parents. You may do this by looking at various types of life insurance plans, reading about them online, or speaking with insurers or people who have life insurance to gain a better understanding of what is life insurance and how does it work. Let us delve a little deeper into this topic.

What is Life Insurance?

Life insurance is a financial instrument that provides life cover against the risk and offers the opportunity to grow up the savings for future expenses. A life insurance policy is especially beneficial for those who have minor children, children with special needs, or for all those who want to secure their family’s future during any uncertain incidence. It is advisable to start an early life insurance policy as the premium amount keeps on increasing with age or if the individual has pre-existing medical conditions. There are different kinds of insurance policies available to suit your financial requirements like term insurance, endowment plan, money-back insurance policy, ULIP and many more.

Benefits of Life Insurance

Now that you know what life insurance means, let’s take a look at its benefits:

Risk Coverage

In case you pass away, the beneficiary of the policy will get a lump sum amount to secure their future, thereby eliminating the need to be dependent on someone else. By enrolling for this policy, you will be covering the risk of your family members that would otherwise occur if the bread earner of the family meets with an unexpected death.

Tax Benefit

Applying for life insurance can help you save taxes. The premiums paid towards insurance can be claimed for income tax deductions under Section 80C of the Income Tax Act, 1961. This reduces your taxable income and aids you in obtaining a life cover instead.

The claim amount received against the life insurance policy is exempted under the Section 10 (10D).

Loan Option

Insurance companies allow you to get a loan against life insurance policy if you are in need. It has lower interest rates when compared to a personal loan and is much quicker in terms of processing. However, the option is available on selected policies. If you need a loan, you can then use your life insurance policy as collateral.

Health Cover

Life insurance cover expenses related to illnesses or hospitalisation, thus freeing you from the burden of medical bills.

Variety of Policies

There are several varieties of insurance policies available to help you secure your future. You can choose any depending on your needs and purpose.

Riders

This option enables you to add extra perks to your policy. The insurance rider options can cover critical illnesses, disability, waiver of premium, accidental death benefit and much more.

Guarantee of Fix Return

Life insurance policy guarantees that you get a fixed amount after a specified period of time. For this, you must thoroughly check the structure, terms and conditions of different life insurance policies and select the one that fits all your needs.

Immediate Expenses after Demise

Life insurance will help your family cover a part of essential expenses immediately after your demise and thus stay financially secure.

Types of Life Insurance

Below mentioned are some of the life insurance policies that are available in the market:

Term Insurance

Term insurance provides life cover in the event of your demise and doesn’t have any maturity benefits. This is the simplest form of insurance and is cheaper than most available options present in the market. However, no claim for the policy can be made if the insured person survived till the end of the policy period.

Endowment Plan

An endowment plan is similar to term insurance, but the only difference is that the lump sum amount is paid out even if you survive the maturity period. The policy offers insurance benefits along with saving benefits. In case of the sudden demise of the policyholder, the endowment policy guarantees that along with the sum, a participation profit will also be paid.

Unit Linked Insurance Plan (ULIP)

ULIPs or Unit Linked Insurance Plans invest some part of your premium towards life insurance and the rest into a financial instrument. The policy has a lock-in period of 5 years and can be continued even after the lock-in ends. You can also choose where you want to invest according to your risk appetite.

Whole Life Insurance Plan

The whole life insurance plan covers you throughout your life, where you pay the premiums for a stipulated period. The corpus is paid out to your family in case of death and does not have a fixed validity. This plan is perfect if you have financial dependents. The overall process is simple and can be done online.

Money Back Policy

Money Back Policy provides life coverage throughout the policy term and also provides regular payments for survival. The payment made is a percentage of the sum assured, which is given during the plan tenure and the rest of the sum assured is paid out on maturity of the policy. In case you pass away during the tenure, the sum assured is paid regardless of the payments made to you before. Unlike other life insurance policies, this policy offers you money during the policy period and is quite expensive in comparison to other policies.

Annuity Pension Plan

Pension plan involves paying a lump sum amount to the insurance company, where the payments are sent out immediately on a regular basis or in a lump sum form. The wealth can also be left to accumulate according to your risk appetite.

Why Do You Need to Buy a Life Insurance Policy?

Though life may seem smooth when you are younger, there could be some health issues in the future that might require medical aid. Also, no one can predict their life span and for how long they will live with their loved ones. If something were to happen, you wouldn’t want your family to wind up paying your loans and clearing the debt. The concept of life insurance is to secure your family’s future and help them sustain themselves through the tough times. It leaves them with enough wealth to be independent and lead a comfortable life.

What Should my Life Insurance Cover Be?

Before making a final decision, it is important to cover the following aspects to select the best coverage for you. Keep scrolling through to know the details:

Age Factor

Although the age limit for life insurance is a critical criterion for selecting the amount of coverage you require, it should not be used as an excuse to put off getting a policy. Your age and health will determine not just the amount of insurance you should get but also the length of time for which you should retain it.

Life Goals

The biggest goal of life is to acquire an adequate financial assistant. Life insurance aims to provide much-needed financial backup to your family in case of unexpected emergencies or demise.

Lifestyle & Family

If you want to carefully prepare for your family’s future and lifestyle, it is recommended that you select the finest insurance policy that meets your demands.

Pending Debts

After you pass away, your loved ones can use the insurance proceeds to pay off debts such as college loans, vehicle loans, credit cards, and personal loans. If you owe any of these bills, you should purchase comprehensive insurance coverage.

Budget Bracket

Your life insurance coverage will lapse if you are unable to pay the premiums. Because a more comprehensive life insurance policy will require a higher premium, choose a plan that matches your budget.

Estimated Working Years

The major aspect of retirement planning is to get done with financial responsibilities during the working years. Ensure that the insurance coverage you choose should correspond with the premium amount you can easily pay during the working years.

How to choose Life Insurance?

Life Insurance plans make dealing with life’s volatility much easier in terms of financial stability and security. Your life insurance policy is determined by your financial objectives and responsibilities, debts, loans, and the needs of your family in the event of your death. Hence, before deciding on the ideal amount, you must analyse all conceivable factors. Let’s look at how we can get one of the greatest life insurance plans to protect your family’s future.

  • It’s vital to examine life insurance options online simply because there are so many out there. You can pick between life insurance kinds that require a single premium payment or monthly premium payments, depending on your needs.
  • Examine the plan’s coverage before purchasing it. Insurance riders can be added to cover additional needs.
  • You should purchase your policy from a trustworthy insurer who is approachable. The insurance firm must have a high claim settlement ratio and a respectable ranking.
  • Check the list of hospitals covered by your life insurance to receive treatment in a facility that is appropriate for you.

Now that you know everything about life insurance, it is extremely important to begin with this policy from today itself and keep you and your loved one’s future secure. Whether you are single, married or have kids, you need a life insurance plan to stay protected.

Kotak e-Term Plan

Download Brochure

Features

  • Nominal Cost
  • Multiple Plan Options
  • Flexible Payout Options
  • Critical Illness Rider
  • Tax Savings
  • Long term Coverage

Ref. No. KLI/22-23/E-BB/492

T&C

Browse our library of resources

- A Consumer Education Initiative series by Kotak Life

Similar Articles

What Is Staggered Payment Option Under Term Insurance Policy?

When Should You Review Term Life Insurance of Yours?

How to Calculate Human Life Value(HLV)?

Is It Time to Review Life Insurance Policy of Yours?

Staying Insured While Investing

A Step-by-Step Guide: How To Make An Investment Plan?

Do Life Insurance Premiums Increase Every Year?

How Often You Must Review Your Life Insurance Policy?

What Is Financial Planning?

Why Life Insurance Is Always a Smart Decision

What is Minimum Life Insurance Policy?

What Is Investment Insurance?

Difference Between Money Back and Endowment Policy

Savings cum Protection Plans Secures Your Family from Unforeseen Events

How to Choose Life Insurance for All Ages?

What is Sum Assured in Endowment Policy?

Why You Should Buy Term Insurance under the MWP Act (Married Women’s Property Act)?

What Is The Life Insurance Penetration In India And How Does It Compare Globally?

Can a Term Plan be the Substitute for a Retirement Plan?

Guidelines for Linking Aadhar and PAN to Insurance Policies

How Does Life Insurance Work?

Compare Different Life Insurance Products Offered By Kotak Life

Best Insurance Plans in India

NRI Premium Payment Options

Can You Apply For A Life Insurance After Getting Heart Attack? Here is Everything You Need To Know

What are robo-advisors in insurance?

Beware of Phishing & Fraud Insurance Calls

Adding A Child to Your Life Insurance Policy?

Nominee in insurance - A Complete Guide on nomination in insurance

5 Reasons Why a Women Should Buy a Life Insurance

Role of IRDAI in the Insurance Sector

Unit-Linked Life Insurance (ULIPs) vs. Term Insurance

Process of Filing A Claim For Life Insurance

5 Easy Steps to Buying A Policy

How Many Insurances Should I Have?

Why is Medical Test Important While Buying a Term Insurance?

Difference Between Term Insurance and Endowment Plan

Types of Life Insurance Policies in India

Think About Life Insurance Sooner than Later

All About Backdating in Life Insurance

Choose the Nominee of a Term Life Insurance Plan Wisely

What Happens If I Stop Paying My Life Insurance Premium?

Digital Life Certificate for Pensioners Seeking Pension

All about IRDAI

Different Types of Insurance Policies in India

Term Life Insurance vs. Accidental Death Insurance

Life Insurance with Money Back vs Without Money Back

Term Insurance for Home Loan: How Term Plan Helps in Paying Off Home Loan?

Can You Transfer Life Insurance Policies to Another Company in India?

First Job? Here’s Some Tips on How to Manage Finances

5 Things to Keep in Mind While Buying Life Insurance Policy

Term Insurance Vs Car Insurance: A Budgetary Choice You'll Regret

Term Life Insurance Vs Money Back Life Insurance

Types of Life Insurance Or One Investment, Many Options

4 Benefits of Gifting Life Insurance Cover to Your Spouse

What is Group Insurance?

How Much Life Insurance Costs and How Much Insurance Cover You Need?

Does Life Insurance Pay for Suicidal Death?

Customer Awareness on Information Security

Who Is A Nominee In A Life Insurance Plan?

ULIPs: Suitable for all

What is a savings plan?

Is It Advisable To Have Multiple Life Insurance Policies?

How to Revive the Lapsed Life Insurance Policy?

Why Buying a Term Insurance is Important for all Parents

1 CR Term Insurance Plan: How to Pick the Best 1 CR Term Plan

Is it Possible to Reduce Life Insurance Premium without Affecting Sum Assured?

Take 100% Responsibility of Your Family with Term Life Insurance

Life Insurance and Retirement Planning

Life Insurance for Millennials

Health Insurance VS Life Insurance

Always keep your Nominee informed

Life Insurance and Millennials

What Is Insurance Coverage?

Various Term Insurance Premium Payment Options Available in India

Can An Individual Buy Multiple Term Insurance Plans?

Term Insurance Tips for NRIs in India

9 Most Important Things You Must Learn About Paying Life Insurance Premium

What Should One Expect During the Medical Evaluation for Life Insurance?

5 Common Life Insurance FAQs and Answers

Is it Worth Buying Disability Rider on Term Insurance?

Life Insurance for Overweight Applicants

Important Features of a Term Insurance Plan

Do Your Financial Planning with Life Insurance!

How to Choose a Life Insurance Policy

Why You Should Never Cancel Life Insurance Policy

Is Life Insurance For Millennials Really Needed?

5 Smart Steps to keep in mind while buying term policies

How To Use Different Types Of Life Insurance For Retirement Planning?

Are Deaths Due To Coronavirus Covered by Kotak E-Term Plan?

Is Return-of-Premium (ROP) in Life Insurance Worth It?

Is Voluntary Life Insurance the Same as Basic Life Insurance?

“Life” Insurance or “Death” Insurance?

Details Required To Be Filled In A Life Insurance Form

All about Your Rights and Duties While Buying Life Insurance Policy

Why Your Family Should Know About Your Life Insurance Policy?

Choosing Between Short-Term & Long-Term Insurance Plans

Why Do Life Insurance Agents Avoid Selling Term Plans?

Voluntary Life Insurance Policy Vs Group Life Insurance

FAQs on Life Insurance

Important Terminologies of Life Insurance

Life Insurance Beneficiary

Terms and Conditions of Term Insurance Plans

Is Life Insurance an Investment?

Different Kind of Deaths that are Not Covered in a Term Insurance Plan

Insurance Changes You Need to Make Post Marriage

Life Insurance for Overweight Applicants

What is a Single Premium Term Plan and its Tax Benefit?

What is Human Life value and a Human Life Value Calculator?

Choosing a Life Insurance Beneficiary

Does Family History Affects your Term Life Insurance Rates?

How to Make Death Claims on Life Insurance?

Why Online Term Insurance Plans Cheap?

All About Life Insurance and How It Works?

6 Different Types of Insurance Policies

Term Insurance Claim Process

7 Superficial Reasons People Avoid Buying Insurance Online

How Much Life Insurance Cover Do I Need?

Important Life Insurance Terms You Must Know

Why do most Indians choose the wrong way to buy life insurance?

What is an Endowment Plan?

What Is Social Impact Investing and How Does It Benefit Society?

How Much Life Insurance Do You Need?

Life Insurance vs Health Insurance

When are Millennials required to take out a life insurance policy?

What is the Difference Between Limited and Regular Pay Insurance Plan?

Term Insurance Vs Life insurance: Small Details, Big Differences

What Is the Procedure to choose a nomination in life insurance policy?

Kotak Life Claim Settlement Ratio

Can NRI Buy Life Insurance in India?

In India, should NRIs purchase life insurance?

Does Life Insurance Policy Cover Covid Death?

Why Term Insurance for Women is Important?

How to Choose the Right Life Insurance Policy for Your Age?

Loan Against Life Insurance Policy

Life Insurance Plans for Women

Types of Insurance You Must Invest in for Secure Future

Everything You Must Know About ULIP Riders

How to Customize Your Life Insurance Policy with Riders

Most Common Life Insurance Riders to Enhance Your Existing Policy

5 Advantages of Life Insurance Going Digital

5 Reasons Why You Need Life Insurance in College

6 Things You May Not Know about Life Insurance

Insurance Vs Investment - A Guide to Your Financial Goals

Reasons Why Term Insurance Claims Get Rejected

Difference Between Insurance and Assurance?

Life Insurance Policy Closure

भारत में जीवन बीमा पॉलिसियों के प्रकार

How to Buy a Life Insurance Plan?

All You Need to Know About Life Insurance - Its Benefits, Features, and Types of Life Insurance

10 Most Frequently Asked Questions - FAQs on Term Insurance

What Is Surrender Value (Cash Surrender Value) in Insurance and how is it calculated?

Biggest Life Insurance Myths

5 Ways to ensure faster settlement of claims

What are the Benefits of Endowment Policy?

Benefits of Term Insurance with Critical Illness Rider

How Do Term Insurance Plans Differ for Smokers?

Why Renewal of Term Insurance Plan is Important

What is the Current Trend in Term Insurance?

Top 5 Common Life Insurance Myths and Facts

What Should One Consider Buying: Term Insurance or Traditional Life Insurance

How to Select a Perfect Life Insurance Policy in India to Protect Your Future?

Is it Possible to Make Changes in a Term Plan’s Specification Post Purchase?

What Is Insurance Rider and It’s Benefits?

Why do I Need Life Insurance?

Life Insurance vs Mutual Funds

Important Factors to Consider While Choosing the Right Term Period for Your Term Insurance Plan

What Is a Whole Life Insurance Plan?

Life Insurance Vs. Mutual Funds Investment

Should you buy a Renewable Term Life Policy?

Difference Between ULIP and Endowment Plan?

Benefits of Buying Term Insurance Plan for Senior Citizens in India

Guide for Buying Online Term Insurance Plans for Senior Citizens

Importance of Checking Claim Settlement Ratio before Buying Life Insurance

All about Life Insurance Calculators

Does Life Insurance Cover Terminal Illness?

What is Underinsurance & The Dangers of Being Underinsured

Sabse Pehle Life Insurance

Why One Must Buy Term Insurance before 25 Years

Key Things to Review in Your Life Insurance Policy Document

5 Things to Consider Before You Buy Life Insurance

Different Types Of Life Insurance In India

Choosing the Right Life Insurance

How to Find the Best Term Insurance Plan in Seven Steps

How to Buy a Term Life Insurance Online

A Term Insurance Guide for Disabled People

Comparing low premium term insurance Is Not the Only Factor While Buying Life Insurance