Life Insurance Go Back

In India, life insurance is a contractual agreement between an individual (the policyholder) and an insurance company, wherein the company provides a financial benefit to the policyholder's beneficiaries upon the policyholder's demise, in exchange for regular premium payments.Here are some key aspects of life insurance in India:

• Purpose: Life insurance safeguards family's finances after the policyholder's demise.
• Premiums: Policyholders pay regular premiums (monthly, quarterly, half-yearly, or annually) based on factors like sum assured, age, health, and policy type.
• Sum Assured: This is the amount of money the insurance company guarantees to pay the beneficiaries in case of the policyholder's death.
• Riders: Riders are supplementary features that enhance a base policy, offering added coverage such as critical illness, accidental death, and disability benefits.
• Tax Benefits: Premiums paid for life insurance policies offer tax benefits under Section 80C of the Income Tax Act, up to a specified limit. Starting from April 2018, premiums paid less than 5,00,000 in a year are eligible for this benefit
• Nomination: The policyholder can nominate a person who will receive the benefits in case of their demise.

Types of Policies:

• Term Insurance:Term insurance covers a specific period (5-30 years), paying out upon the policyholder's demise; if they survive the term, no payout is made.
• Endowment Policies: These are a combination of insurance and savings. They provide a death benefit along with a maturity benefit if the policyholder survives the term.
• Unit-Linked Insurance Plans (ULIPs): These combine insurance with investment. Part of the premium goes towards providing life cover, and the rest is invested in various funds.
• Whole Life Insurance: This provides coverage for the entire lifetime of the policyholder. It also has an investment component and builds cash value over time.
• Money Back Policies: These policies offer regular payments throughout the term, along with a lump sum payout upon maturity or in the event of the policyholder's demise

Health Insurance

Health insurance in India plays a crucial role in providing financial protection against medical expenses. Here are some key points to consider:

(i) Types of Health Insurance Policies:

• Individual Health Insurance: Covers an individual's medical expenses.
• Family Floater Policy: Covers the entire family under a single policy.
• Senior Citizen Health Insurance: Designed for elderly individuals, offering coverage for age-related illnesses.
• Critical Illness Insurance: Provides a lump sum amount on diagnosis of a critical illness like cancer, heart attack, etc.
• Group Health Insurance: Provided by employers to their employees, covering a group of people.

(ii) Coverage:

• In-Patient Hospitalization: Covers expenses for a minimum of 24 hours of hospitalization.
• Pre-Hospitalization: Covers medical expenses before hospitalization.
• Post-Hospitalization: Covers expenses after discharge for a specified period.
• Day Care Procedures: Covers procedures that don't require 24-hour hospitalization.
• Ambulance Charges: Some policies cover ambulance expenses.
• Maternity and Newborn Baby Cover: Optional rider for childbirth expenses.

(iii) Exclusions:

• Pre-existing Conditions: Most policies have a waiting period for pre-existing conditions.
• Specific Treatments: Some treatments like cosmetic surgeries may be excluded.
• Certain Diseases: Some policies may exclude specific diseases for a specified period.
• Alternative Treatments: Not all alternative treatments like Ayurveda or Homeopathy may be covered.

(iv) Premiums:

• Premium Amount: Depends on factors like age, coverage, add-ons, and the insurance provider.
• No Claim Bonus (NCB): Insurers offer a bonus for every claim-free year, reducing the premium or increasing the coverage.

(v) Network Hospitals:

• Insurance companies have tie-ups with hospitals where policyholders can avail cashless treatment.

(vi) Policy Renewal:

• Policies need to be renewed annually. Timely renewal is crucial to maintaining continuous coverage.

(vii) Waiting Periods:

• Initial Waiting Period: Certain diseases are covered after a specific waiting period.
• Specific Diseases Waiting Period: Some diseases have a longer waiting period

(viii) Portability:

• You can switch from one insurance provider to another without losing benefits.

(viii) Tax Benefits:

• Premiums paid qualify for tax deductions under Section 80D of the Income Tax Act. Individuals and families under 60 years can claim a maximum deduction of ₹25,000, while those above 60 can avail up to ₹50,000 in exemptions.

(viii) Government Schemes:

• The Government of India runs health insurance schemes like Ayushman Bharat for economically weaker sections.