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Buying Life Insurance Policy for The First Time? Here’s A Beginner’s Guide to Help You Out

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Life Insurance is an assured plan that protects a family’s finances during tough times. But this is not the only reason why people prefer it. Nowadays, it is a trend to use life insurance for investment and savings purposes. Any of the best life insurance policies in India can provide the financial goals from an investment. If you are also planning on purchasing life insurance, then there are some things you should be aware of beforehand. Those things include information on the types, features, and benefits.

Types Of Life Insurance

India is the second-most populous country, and the monetary requirements for each person in the country vary. This is also why India has so many insurers and insurance policies. In the fiscal year 2020 alone, life insurance companies in India gathered more than USD 43.9 billion through policy renewal. And the amount generated from new policies stood at USD 36.7 Billion.

This trend of increasing number of health insurance is continuing over the past few years. And to cash in on the new policies and provide customers with plans that prove useful for specific requirements, several new varieties of life insurance emerged apart from conventional term insurance. Given below are some of the most popular types of life insurance.

Term Insurance

Term insurance is the basic type of life insurance. They have low insurer premiums and don’t have the facility of premium repayment. So, the investor will not get back the invested capital but will enjoy the life coverage and its maturity amount during the policy term. After the term, they will have to renew the policy for the next term. The major benefit of such schemes is that they are extremely cheap even though they don’t have a return of premium. And are capable of providing a much higher maturity to investment ratio. It allows people who have limited resources to spend on life insurance an opportunity to have one without creating a burden on their finances.

Such basic insurance plans with limited premium amounts come under the Saral Jeevan Bima Yojana in India. Under this scheme, every insurer has to mandatorily introduce simple term insurance as per the instructions of IRDAI. The nomenclature of such schemes has to begin with the insurer’s name followed by Saral Jeevan Bima Yojana. For example, if Max Life Insurance is the insurer, their plan’s name will be Max Life Saral Jeevan Bima Yojana. Max Life Insurance has several beneficial life insurance policies that you must learn more about from official sources.

Term Insurance with Capital Return

Some insurers return the entire premium paid throughout the policy duration to the policyholder in case of survival at term-end. This mode of repayment does not attract any income tax due to its repayment category. And due to it, several people use such schemes as savings schemes. As per Section 80C of the Income Tax Act, 1961 of India, premium payments towards life insurance are eligible for deductions in taxable income for up to INR 1,50,000. So, taxpayers can save a lot of money in the form of tax deductions and obtain a tax-free return after a few years.

Term Insurance with Interest Returns

Term insurance with interest returns combines the banking instrument, recurring deposit, to life insurance. Through this, the policyholder obtains premium repayment and a return on investment at term-end. The interest rates of these schemes are limited around the range of 7 or 8% per annum. Also, all the returns other than premium repayment attract income tax.

ULIP Plans

Unit-Linked Insurance Plans are pure investment plans that also provide life insurance. Currently, several policyholders deem them to be the best life insurance policy in India. They can give interest rate percentages as high as in the 20s. Their investors also have added tax relaxations.

Retirement Gold Endowment Plans

Retirement plans are specifically made to receive monthly remuneration during retirement life. For these plans, the target audience is senior citizens or people approaching that age category. Policyholders invest in these plans for a fixed period, and after policy maturity, they start receiving these monthly pay-outs. And in case of the sad demise of the policyholder, their nominee or dependent receives this endowment plan.

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Family Life Insurance

Family life insurance is an insurance bundle meant for family members and relatives. People can purchase a cheap and combined plan through this plan instead of the costly separate plans.

Child Life Insurance

Child life insurance or child education plans are specially targeted for minors and their safe future. Through these plans meant solely for children, they can enjoy several benefits, including reduced premium amount, higher maturity amount, higher interest rate, and several pay-outs. Even if children don’t require funds from these plans when they grow up, they can set it aside as a backup fund.


Great Features of a Best Life Insurance Policy In India

Everyone knows the major benefit of life insurance, ie, financial protection of family and dependents through life coverage. But insurance policies have several other equally important qualities which make them a necessary investment. Given below are some of the crucial benefits the best life insurance policy in India can provide.

  • Low Premium as Compared to Returns
  • Terminal Illness Cover
  • Customization Plan
  • Partial Withdrawal and Loan Facility
  • Tax Relaxations

Conclusion

If you didn’t know about life insurance before, know you must have a rough idea of ​​its importance. These definitions, types, and features of life insurance will help you next time you plan to purchase one for yourself or your family. You can expect these benefits from any best life insurance policy in India. So don’t waste time and purchase life insurance today because the earlier you join a plan, the more will be your gains.

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Source:

https://www.ibef.org/industry/insurance-sector-india/infographic

https://www.incometaxindia.gov.in/Charts%20%20Tables/Deductions.htm

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