What is Life Insurance?

Life insurance is an essential part of financial planning. The main purpose of life insurance is protection against financial loss resulting from insured Individual’s death. In realistic terms, life insurance provides you and your family the financial security and certainty to deal with the aftermath of any unseen unfortunate events.


Today, there are many options available to a person who wishes to purchase a life insurance policy. Some policies provide coverage for lifetime and other provides coverage for a specific number of years. Certain policies allow combining different kinds of insurance. The choice of a particular policy should be based on the needs and the cost which a person can afford.

Why one needs Life Insurance

Everyone has a need for life insurance because everyone is exposed to some or the other risk in life which keeps on changing through the life stages of an individual. Only in exceptional cases, an individual may not need life insurance, if he is not exposed to risk. The situation can be cases where the individual is super rich or has no dependents.

You should take a life insurance if you have-

  • Family that is financially dependent on you:
  • It provides protection to your family in case of any unforeseen events. The life insurance proceeds can be used to support your family members with the expenses.


  • Loans or liabilities:
  • It is very important to insure yourself if you have taken a loan or mortgaged your assets. It not only provides peace of mind but also a steady source of income for your family.


  • To provide for children’s school & college education:
  • Proceeds from the insurance policy could be used to fund future expenses such as child’s higher education.


  • Partner in a firm or Self-employed:
  • It is highly needed by people who are partners in a firm or have their own proprietor firms. Life insurance can be a critical component for specialized business applications - such as funding a buy-sell agreement. The proceeds of a life insurance policy could be used to provide cash for the purchase of a deceased owner’s interest in the business or to pay off business liabilities.

Learn More about Life Insurance

Types of Life Insurance policies

Term Insurance

  • A term insurance (also called pure insurance) policy provides life insurance protection for a specific period of time. If an individual dies during the coverage period, the beneficiary named in the policy receives the policy death benefit. If he doesn’t die during the term, the beneficiary or the survivor receives nothing, that is, it has no maturity value in case of survival.
  • Term insurance is available for different time periods ranging from one year to many years.
  • Term insurance policies are lowest in cost among life insurance plans as sum assured is payable only if the policy holder dies within the policy term and there is no element of savings or investment.
  • Term Insurance helps the customers in safeguarding their families from financial worries that arise due to unfortunate circumstances at a nominal cost. It also let you avail the benefit to cover your outstanding debts like mortgage, home loan etc. In case of something happens to you, the financial burden is borne by the insurance company and not your loved ones.
  • Term insurance is inappropriate, if one wish to save money for a specific need, because it doesn’t have a cash value attached to it.
  • Term insurance policies are generally of the following types-
    • Level term insurance
    • Under this plan, the sum assured remains same and uniform throughout the term of the policy and in case of death happening anytime during the term, the sum assured amount is payable. It is the most simple and ordinary policy.


    • Decreasing term insurance>
    • Under this plan, the benefit payable decreases with time. Thus the benefit payable depends not on the initial sum assured but is based on the prevailing sum assured at the time of death. Not a common product in India.


    • Increasing term insurance
    • Under this plan, the benefit increases with time on an agreed basis. The increase could be a fixed percentage or linked to any index. This is an important policy which keeps pace with the inflation


How to choose a term insurance plan?

Before buying a term plan, one shall consider the following few things:

  • How much cover he needs? [Life insurance is meant to provide the dependants of the policyholder with enough money to replace his income in case he dies.]
  • Till when he needs the cover? [The tenure of the term plan and the amount of cover are equally important. The latter should provide coverage till the intended age that the beneficiary desires to remain in service. Hence, one must be discreet regarding flexibility of fixing the tenure while choosing a term plan.]
  • One should also factored in the inflation: [INR50 lac cover may look sufficient now, but the value of INR50 lac will only be INR28 lac after 10 years assuming an inflation of just 6%.]
  • It is advisable to go for an ordinary term insurance plan instead of the return of premium plan types, as even if these plans may return the buyer the total premiums he had paid at the maturity of the plan; however the inflation-adjusted value of this sum becomes quite meagre. This often may tantamount to the beneficiary having to pay a higher premium for this benefit.
  • Likewise, buyers may not prefer the single premium option as it frontloads the entire cost of the cover. In case of early death, the premium for the rest of the term is of no avail. On the other hand, the buyer enjoys the same insurance benefit by paying far less in any regular plan.
  • One should choose a term plan that is affordable.
  • One should also check the claim settlement ratio of the life insurance company offering the term plan.

Endowment Plans

  • Endowment policies combine risk cover with financial savings.
  • If the insured dies during the tenure of the policy, the insurance company pays the sum assured (in case of endowment policies without profit) to the beneficiary.
  • The sum assured is also payable even if the insured survives the policy term along with some other investment benefits.
  • A bonus is declared every year and is added to the sum assured. This bonus is not guaranteed and depends upon the profitability of the insurance company.
  • As these policies have an inbuilt savings component, the premium rates are higher as compared to term plans.
  • These policies are eligible for loans within the surrender value of the policy.
  • This plan can be used to meet expenditure like children’s education and marriage. The term can be selected to suit these contingencies.
  • Endowment policies can be of the following types:
    • Full term premium payment endowment policies
    • Limited term premium payment endowment policies
    • With bonus policy
    • Without bonus policy
  • Most of the Endowment plans available in India provides a yield between 5-6% and are not able to beat the inflation.
  • The tenure of Endowment policies are also very long (20years, 25 years or 30 years) and thus they are poor performers, especially considering their long tenure and is a waste of your money.
  • Endowment plans are also not very liquid. In order to receive money out of a life insurance policy, the beneficiary may either surrender the policy or borrow it from the policy. In case of the former it is considered unwise to surrender policies frequently as returns are nominal over the first decade or so. The latter is also not free from deficiencies. One is that the money borrowed is denied to the heirs as a part of the beneficiary’s death benefit. Secondly, borrowing too much entails that the beneficiary has to regularly keep on investing each year to keep the policy in force.

Term Insurance

  • A term insurance (also called pure insurance) policy provides life insurance protection for a specific period of time. If an individual dies during the coverage period, the beneficiary named in the policy receives the policy death benefit. If he doesn’t die during the term, the beneficiary or the survivor receives nothing, that is, it has no maturity value in case of survival.
  • Term insurance is available for different time periods ranging from one year to many years.
  • Term insurance policies are lowest in cost among life insurance plans as sum assured is payable only if the policy holder dies within the policy term and there is no element of savings or investment.
  • Term Insurance helps the customers in safeguarding their families from financial worries that arise due to unfortunate circumstances at a nominal cost. It also let you avail the benefit to cover your outstanding debts like mortgage, home loan etc. In case of something happens to you, the financial burden is borne by the insurance company and not your loved ones.
  • Term insurance is inappropriate, if one wish to save money for a specific need, because it doesn’t have a cash value attached to it.
  • Term insurance policies are generally of the following types-
    • Level term insurance
    • Under this plan, the sum assured remains same and uniform throughout the term of the policy and in case of death happening anytime during the term, the sum assured amount is payable. It is the most simple and ordinary policy.


    • Decreasing term insurance>
    • Under this plan, the benefit payable decreases with time. Thus the benefit payable depends not on the initial sum assured but is based on the prevailing sum assured at the time of death. Not a common product in India.


    • Increasing term insurance
    • Under this plan, the benefit increases with time on an agreed basis. The increase could be a fixed percentage or linked to any index. This is an important policy which keeps pace with the inflation


How to choose a term insurance plan?

Before buying a term plan, one shall consider the following few things:

  • How much cover he needs? [Life insurance is meant to provide the dependants of the policyholder with enough money to replace his income in case he dies.]
  • Till when he needs the cover? [The tenure of the term plan and the amount of cover are equally important. The latter should provide coverage till the intended age that the beneficiary desires to remain in service. Hence, one must be discreet regarding flexibility of fixing the tenure while choosing a term plan.]
  • One should also factored in the inflation: [INR50 lac cover may look sufficient now, but the value of INR50 lac will only be INR28 lac after 10 years assuming an inflation of just 6%.]
  • It is advisable to go for an ordinary term insurance plan instead of the return of premium plan types, as even if these plans may return the buyer the total premiums he had paid at the maturity of the plan; however the inflation-adjusted value of this sum becomes quite meagre. This often may tantamount to the beneficiary having to pay a higher premium for this benefit.
  • Likewise, buyers may not prefer the single premium option as it frontloads the entire cost of the cover. In case of early death, the premium for the rest of the term is of no avail. On the other hand, the buyer enjoys the same insurance benefit by paying far less in any regular plan.
  • One should choose a term plan that is affordable.
  • One should also check the claim settlement ratio of the life insurance company offering the term plan.

Endowment Plans

  • Endowment policies combine risk cover with financial savings.
  • If the insured dies during the tenure of the policy, the insurance company pays the sum assured (in case of endowment policies without profit) to the beneficiary.
  • The sum assured is also payable even if the insured survives the policy term along with some other investment benefits.
  • A bonus is declared every year and is added to the sum assured. This bonus is not guaranteed and depends upon the profitability of the insurance company.
  • As these policies have an inbuilt savings component, the premium rates are higher as compared to term plans.
  • These policies are eligible for loans within the surrender value of the policy.
  • This plan can be used to meet expenditure like children’s education and marriage. The term can be selected to suit these contingencies.
  • Endowment policies can be of the following types:
    • Full term premium payment endowment policies
    • Limited term premium payment endowment policies
    • With bonus policy
    • Without bonus policy
  • Most of the Endowment plans available in India provides a yield between 5-6% and are not able to beat the inflation.
  • The tenure of Endowment policies are also very long (20years, 25 years or 30 years) and thus they are poor performers, especially considering their long tenure and is a waste of your money.
  • Endowment plans are also not very liquid. In order to receive money out of a life insurance policy, the beneficiary may either surrender the policy or borrow it from the policy. In case of the former it is considered unwise to surrender policies frequently as returns are nominal over the first decade or so. The latter is also not free from deficiencies. One is that the money borrowed is denied to the heirs as a part of the beneficiary’s death benefit. Secondly, borrowing too much entails that the beneficiary has to regularly keep on investing each year to keep the policy in force.

Money Back Plans

  • Money back policies also combine term insurance with savings. But unlike ordinary endowment insurance plans where the survival benefits are payable only at the end of the endowment period, this scheme provides a portion of the sum assured at regular intervals. On survival the remainder of the sum assured is payable. The money received during the term of the policy is tax-free.
  • In case of death, full sum assured is payable to the insured. No deduction is made for any payment of the survival benefit already paid.
  • The premium is payable up to the term of the policy.
  • These policies can be of different terms like 12, 15, 20, 25 years and varies from insurer to insurer.
  • These policies can be useful to meet the anticipated expenses (marriage, education, etc) over a stipulated period of time.
  • Money back policies are probably one of the costliest traditional insurance products available in the market.
  • A study of 10 popular money back policies reveals that the sum total of premiums paid during the entire policy tenure are either higher than or equal to the total receivables from these schemes. This is despite the fact that most of these schemes promise guaranteed additions upon maturity. The proportion of variable pay-outs or bonuses which may be declared by the insurance companies from time to time were not considered- as the same are not guaranteed - even if the same are incorporated, they are not likely to make a significant difference to the probable pay-outs by insurance companies. [Source: Economic Times]

Whole Life Plans

  • Whole life policies provide insurance cover against death irrespective of when it happens.
  • The sum assured is received by the nominee along with any applicable bonus in event of the death of the insured.
  • But now most of the companies are capping the age, thereby providing for payment of sum assured plus bonuses in the form of maturity claim.
  • A limitation of a whole life plan is usually under insurance because it has an investment element built into it.
  • Whole life plans are very costly.
  • This plan is mainly devised to create an estate for the heirs of the policyholder as the plan basically provides for payment of sum assured plus bonuses on the death of the policyholder.
  • Whole life policies are highly illiquid. In order to receive money out of a life insurance policy, the beneficiary may either surrender the policy or borrow it from the policy. In case of the former it is considered unwise to surrender policies frequently as returns are nominal over the first decade or so. The latter is also not free from deficiencies. One is that the money borrowed is denied to the heirs as a part of the beneficiary’s death benefit. Secondly, borrowing too much entails that the beneficiary has to regularly keep on investing each year to keep the policy in force.
  • Whole life policies are of two types-
    1. Ordinary life insurance:
      • Provides lifetime protection to age 100
      • Premiums are constant throughout the life of the term.
      • It has an investment element.
      • It is appropriate in 2 scenarios-
      • when lifetime protection is needed and when additional savings are required


    2. Limited payment life insurance:
      • Provides life time protection.
      • Premium payments are limited only for a certain period of time.
      • It also has an investment element.
      • It is appropriate in cases where the insured has a very high income for a limited period.

Unit Linked Insurance Policy

  • Unit linked insurance plans allow the coverage of an insurance policy, and also provide the option to invest in any number of qualified investments, such as stock, bonds or money market instruments under a single integrated plan.
  • The policy owner decides on the financial instruments to be invested with his paid premium.
  • After deducting some upfront amount, known as premium allocation charges which vary from product to product, rest of the fund is invested in the chosen assets in the form of units.
  • The policy holder is allocated the units at their net asset values.
  • Mortality and administration charges are deducted, thereafter, on a periodic basis (mostly monthly) by cancellation of units, whereas fund management charges are adjusted from NAV on a daily basis.
  • Usually there is no minimum guarantee of return under these policies and the return is linked to the performance of the invested assets.
  • ULIPs also provide the flexibility of switching from one asset class to another in the course of investments.
  • In these policies the death or survival benefit and surrender benefit are payable on the basis of sum assured and/ or the value of units, which is dependent on the performance of the portfolio.
  • Unit linked policies provide considerable flexibility when compared to traditional form of insurance which include-
    • Frequency of premium payment.
    • Alteration of death benefit without changing the premium amount.
    • Options to pay top up to increase the fund corpus.
    • Withdrawals are based on unit value rather than surrender value index
  • Unit linked policies in India have two variants:
    • In some policies in case of death, sum assured or unit value, whichever is higher are paid.
    • In some policies in case of death, sum assured + unit value is paid.
  • ULIPs also provide the benefit of Riders (additional or supplementary benefits) that can be bought along with the main policy. Some of the commonly offered riders are critical illness benefit rider, accident & disability rider, waiver of premium rider, etc.
  • ULIPs generally have a lock in period of 5 years and premature partial or full encashment may attract significant surrender charges.

Annuities and Pension

  • Pension policies are individual plans that are helpful in retirement planning and provide financial stability during old age.
  • These policies provide pension at the time of retirement of an individual and ensures that there is some element of regularity in the receipts from the insurance companies.
  • These policies in traditional form do not cover life.
  • Investor pays a single premium or regular premium to the insurance company for the purchase of the policy.
  • In the event of death of the insured during the term of the policy, the nominee has the option of taking a lump sum amount or receiving a regular pension for the remaining term of the policy.
  • Annuities currently are a bad investment choice because of low returns, tax disadvantage and lack of liquidity.
  • If one has taken a pension plan from an insurance company, he has to buy an annuity with at least 66% of the maturity proceeds from that particular insurer, even if the yields offered by that insurer are lower than its competitor.
  • Currently annuities available in the market are offering a yield of less than 8% (pre tax) which makes it the worst choice among the financial instruments available for converting nest eggs into regular income.
  • Corporate bonds provide better yields in comparison to the “safe” government bonds. However, the dearth of such long term corporate bonds result in low returns from annuities. Government bonds may have tenures spanning 30 years, yet getting long term gilt is also not easy.
  • Besides the low returns, there is also lack of transparency in the annuity market. Insurance companies do not divulge their annuity rates.
  • Annuities are riddled with the tax factor when considered with other investment options. E.g: The tax free income earned on the maturity of your Provident Fund and PPF immediately becomes taxable when reinvested in an annuity and earned as pension. Hence, annuities do not find much favour with investors in the higher tax brackets.
  • Annuities also do not provide any option for surrendering the policy. Those that do have the provision of return, makes it available to the heir of the investor in the event of the latter’s death. So, investors are advised caution before they choose to invest their lives' savings into an annuity.

Children’s Plans

  • Children's plans that are offered by insurance companies are actually insurance-cum-investment plans that bear resemblance to ULIPs (unit-linked insurance plans). The USP of a children’s plan lies in the fact that the parent starts investing in the children’s plan right from the birth of the child and the sum invested is withdrawable once the child reaches adulthood. However, some plans also facilitate withdrawals at intermediate levels.
  • In this plan the child receives the sum assured plus bonus (if any) at a pre-determined time. This money is receivable irrespective of the fact that the proposer is dead or alive.
  • The proposer for such a policy could be the parent/guardian/grand parent who pays the premium for the policy.
  • Premiums need not be paid by the family in the event of the proposer’s demise. Whether the child will receive the assured sum or not upon the death of the insured depends upon the policy type. If the policy continues, unhindered, the child receives the sum assured along with applicable bonus (if any)upon maturation of the policy.
  • The child receives the assured sum at the pre-determined time in case the policy continues without disruption.
  • This kind of policy is best suited to support a child’s higher education plans or to bear the marriage expenses in due time.
  • These plans rate poorly, both, in terms of life cover and investment option. These plans are also relatively costly as risk of both parents and child is covered. But we believe kids don’t require a cover as they don’t pose a financial lose.

Tax implications

The premiums that one pays for their life insurance policy can be claimed as part of deduction under section 80C of Income Tax Act (maximum of 1.5lac for FY 2015-16) if the premiums paid is less than 10% of the sum assured.

Tax liability on the proceeds from life insurance policies

There would be three cases wherein taxation comes into consideration for the proceeds from the life insurance plans –

  • Case 1: In course of death of the insured:
  • In case of death of the policy holder the Insurance policy proceeds thus received by the next of kin becomes completely tax exempt under section 10(10D) of Income Tax Act. On production of a valid death certificate along with other required documents supporting the insured’s demise, the claimant may directly receive the insurance amount.


  • Case 2: Surrender of policy before its maturity:
  • Taxability of a policy that has been surrendered before its maturity period depends upon whether the beneficiary has paid the minimum 5 premiums of the policy or not. If paid, applicable tax becomes nullified . If not, the surrender value is added to the total annual income of the beneficiary and taxed according to the applicable tax slab.


  • Case 3: Upon maturity:
  • If continued normally till its maturity, the proceeds become completely tax free.


Tax Implication of Pension plans

Pension plans are taxed in a completely different manner as compared to the traditional plans and ULIP.

  • Case A: Death of Policyholder:
  • In case of death of the policy holder the Insurance policy proceeds thus received by the next of kin becomes completely tax exempt under section 10(10D) of Income Tax Act


  • Case B: Surrender of the policy prior to its maturity
  • Surrendering a pension plan before its maturity is inadvisable because of the serious tax implications that follows. To begin with, any premium which has been claimed as part of deduction under section 80C will be reversed and shall immediately become taxable. This is followed by the addition of the entire surrender value to the total annual income and taxed according to the applicable slab. As per the latest rules of IRDA, 2/3rd of the surrender value received must be invested to purchase annuity plan.


  • Case C: Upon maturity:
  • Up to 1/3rd of the maturity proceeds under pension plans are tax free while the remaining 2/3rd must be invested in the purchase of annuity plans as per directives of the IRDA. The annuity received will be added to your total income for the year and taxed according to your tax slab.


Recommendation

Our Recommendation

We believe that life insurance policies should be considered only as a risk management tool to protect against financial loss resulting from insured individual’s death and not as an instrument to save taxes or build assets, that is, one should keep his insurance and investment needs separate.


Thus, we feel that pure term plans are the best life insurance instruments as they provide the maximum cover at the lowest premium. The term plan premium is a minor proportion to be paid compared to the amount that the customer pays while buying an endowment plan, a money back policy or a ULIP that provides the same coverage.


In case one wants to discontinue the policy, there is little to lose except the insurance cover.


Death benefit coverage is provided only for a specific time period by term policies and is liable to expire with the expiry of the policy itself. In such policies the premium increases as the age increases. The beneficiary is therefore advised to choose as per his/ her requirement also keeping in mind the interest of the dependants who need to be covered until they can provide for themselves or the loan on a mortgage is repaid. Starting investment in such polices at a young age provides double benefit: that of a low premium and a long term coverage to go with it.

We have tied up with HDFC Life to sell their term plan (HDFC Click 2 Protect Plus) which provides a comprehensive protection at an affordable price.


HDFC Life is the third largest insurance company in India. As per IRDA’s Annual Report on India’s Life Insurance Industry for the year 2013-14 (published on 8th January 2015), the claim settlement ratio of HDFC Life for the financial year 2013-14 is 94.01%. The company had paid total claim amount of 254.32 crore across 6824 claims during this financial year.


Note: It should be noted that we will earn commission for selling HDFC Click 2 Protect Plus from the insurance company.

HDFC Life Click 2 Protect Plus

HDFC Life Click 2 Protect Plus is a pure term plan providing a comprehensive protection at an affordable price to protect against the financial loss resulting from insured Individual’s death anytime during the policy term.

Key Features of the plan:

Comprehensive coverage at affordable cost (The cost is based on age, gender, life style, medical history and plan option. Attractive premium rates for non tobacco users.)

The plan can be customized with choice of cover options:

Plan Option Cover
Life Option Death Benefit/ Sum Assured (payable in the form of lump sum)
Life Option with Life Stage Protection

Death Benefit/ Sum Assured* (payable in the form of lump sum)

*Sum Assured is increased on reaching certain key milestones of life like-

  • Marriage: Additional 50% of Sum Assured subject to a maximum additional Sum Assured of 50, 00,000.
  • Birth of 1st child: Additional 25% of Sum Assured subject to a maximum additional Sum Assured of 25,00,000.
  • Birth of 2nd child: Additional 25% of Sum Assured subject to a maximum additional Sum Assured of 25,00,000.

Note:

  • Occurrence of these events must be during the term of the policy
  • Premium will be recalculated based on increased Sum Assured and outstanding policy term.
  • Additional cover can be reduced later (after attaining age of 45yers of age) which will lead to proportional reduction in future premiums.

Our observation: These plans come with a higher premium when compared to any other ordinary plan. It is wise to review the insurance requirements at regular intervals and add more cover, if needed to make it a cost effective proposal.

Extra Life Option Death Benefit + Accidental Death Benefit (payable in case of accidental death)
Income Option 10% of the Death Benefit is paid as a lump sum upon death with the remaining 90% of the death benefit is paid as monthly instalments over next 15 years (0.5% of death benefit every month for 15 years).
Income Plus Option 100% of Sum Assured is paid as lump sum upon death. In addition, a monthly income equal to 0.5% of Sum Assured shall be payable for a period of 10 years. The monthly income can be level or increasing at 10%p.a. as chosen by the policyholder.

Note:

No benefit is payable on survival till end of policy term.

In case of death due to suicide within 12 month from the date of inception of the policy, the nominee of the policy holder shall be entitled to 80% of the premiums paid. But after 12 months from the date of inception of the policy suicide is also covered.

Accidental death benefit is not paid if the death occurs after 180 days from the date of the accident.

Accidental death benefit is also not paid if accidental death is caused directly or indirectly by any of the following:

  • Intentionally self-inflicted injury or suicide, irrespective of mental condition
  • Alcohol or solvent abuse, or the taking of drugs except under the direction of a registered medical practitioner
  • War, invasion, hostilities (whether war is declared or not), civil war, rebellion, revolution or taking part in a riot or civil commotion
  • Taking part in any flying activity, other than as a passenger in a commercially licensed aircraft
  • Taking part in any act of a criminal nature with criminal intent
  • Taking part or practicing for any hazardous hobby, pursuit or race unless previously agreed to by the insurance company in writing

Our Recommendation:

We will advise to choose from Life option, Extra life option or Income plus option. But one should take a decision only after analyzing his needs and the money he can spend to buy the policy.

  • Insurance cover is available up to age of 75 years (maximum maturity age). Minimum entry age is 18 years while maximum entry age is 65 years. One can choose cover for any term from 10 years to 40 years subject to meeting the maximum maturity age.
  • Note: All ages mentioned above are age on last birthday.
  • Sum Assured is based on age, gender, life style, medical history and plan option. Minimum Sum Assured is Rs. 2500000 while there is no limit on maximum Sum Assured, subject to satisfactory underwriting.
  • Single (premium needs to be paid once), Limited (premium needs to be paid for the chosen policy term less 5 years) and Regular premium (premium needs to be paid throughout the chosen policy term) payment options to choose from. Premiums can be paid on single, annual, half-yearly, quarterly and monthly basis.
  • Our observations: With the interest of the beneficiary in mind we advise our clients to opt for regular premium payment option. Even though the single premium option packs the entire cost of the cover however, in case of premature demise, the premium for the remaining term remains unutilized i.e it is simply wasted. In comparison, with a regular plan, the buyer gets the same insurance benefit by paying far less for it.
  • A grace period of 30 days for yearly, half yearly and quarterly frequencies from the premium due date is provided. The grace period for monthly frequency is 15 days from the premium due date. Should a valid claim arise under the policy during the grace period, but before the payment of due premium, the claim is honoured. In such cases, the unpaid premium will be deducted from any benefit payable. In case if the insured does not pay premiums before the end of grace period, the policy will lapse, all risk covers will cease and no benefits will be payable.
  • The benefit on death will be paid to the nominee.
  • Tax benefit as per prevailing tax laws. The premiums paid can be claimed as part of deduction under section 80C of Income Tax Act (maximum of 1.5lac for FY 2015-16). Proceeds received by the family members in the event of death of the policy holder is completely tax exempt under section 10(10D) of Income Tax Act.