Grievance Redressal

The basic principle of life insurance is that it gives you a life cover. A life cover is like a financial security blanket. Uncertain and unexpected incidents could leave dependent members of a family without anybody to rely on, if the primary or the only earning member passes away. In such situations, without any other source of income, it will be impossible for the surviving members of the family to meet their life goals or even the costs of their everyday expenses.

With a life cover from an insurance plan, this problem is easily solved. Why, you ask? Well, that is because in case a policyholder passes away during the tenure of a life insurance plan, the insurer pays out death benefits to the nominees mentioned by the policyholder.

Life insurance is the only financial tool that anyone can use to build a huge corpus of money that will be paid to the family in the case of an unfortunate death during the policy period, at the expense of an affordable premium amount. Let us have a reality check which can get a little awkward! The truth is, you are not going to live forever! If you depart this world untimely, your loved ones could be left with a lot of expenses and no way to pay them. You can avoid this with a life insurance policy.

Many people do not get life insurance because they believe this to be very expensive, which is not true. For example, a 30 years healthy non-smoker male can get a ₹1 Crore life insurance coverage for ₹837³ a month.

Apart from securing your family financially, there are some other benefits of life insurance products like:

• An additional source of income to meet financial goals
• Tax exemption² under Section 80C² and 10(10D)².
• Financial security and regular income for post-retirement life
• Financial support for children’s higher education or marriage
• Options to invest grow your money with unit-linked plans
• Options to protect yourself against critical illnesses like cancer
• Peace of mind

There are many advantages of taking life insurance. The most important benefit of life insurance is that it protects your loved ones against the perils of a lack of income in the future. Just as you are currently invested in providing for your family, the life insurance plan provides a stable fund that your loved ones can use in your absence. Many life insurance plans offer a maturity benefit as well as a death benefit. Plans with a maturity benefit can be useful to you even when you are around. They help you plan your financial future in a more systematic manner. Meanwhile, the death benefit of life insurance helps the family tide over the sudden loss of your income and helps keep the family savings intact for bigger purposes like paying for children's education or emergency hospitalisation.

You should buy life insurance if you have anyone who depends on you for financial support. The family’s expense does not stop when the breadwinner departs the world, right! In such unfortunate scenarios, the family members stress a lot for clearing the loan, child’s education/ marriage, etc.- Life insurance is the solution to that.

If you do not have elderly parents, kids or you are not married and will never get married; simply, if there is nobody that depends on you financially, then life insurance may not be essential for you. Considering retirement plans, saving plans and other wealth creation life insurance products is suggested.

The primary goal of any life insurance is to secure your family’s finances if you pass away. It is a way to ensure that your family can carry out their day to day expenses, pay bills, pay rent or EMIs and pay child’s school fees even in your absence. But a life insurance policy can have secondary benefits as well, like tax savings and as an investment.

Below is the list of people who need to buy life insurance:

• New families
• Existing families
• People with home loans
• Parents
• Senior Citizens & retired persons
• Business Owners
• Working Persons for tax saving

Life insurance premium refers to the specific amount of payment that the policyholder needs to pay to the insurance company monthly/ quarterly/ half-yearly/ annually (as defined in the policy) in order to keep the coverage in place. Periodic premium payment till the end of the policy term keeps the life insurance in force. Your life risk primarily decides if your premium will be higher or lower. The amount of the life insurance premium depends on some factors like:

• Age: With increasing age, the life insurance premium rises. Because younger individuals generally have low mortality rates and are less likely to die unexpectedly. But with increasing age, the life risk rises with chances of attracting common diseases like blood pressure, diabetes, etc., resulting in a higher premium. So if you are buying life insurance early, then you can access a lower premium.
• Gender: Generally, life insurance premiums for men are higher as compared to women. Because historically, males have shorter life spans than females. For example, if a healthy, non-smoking 30-year-old female buys an ABSLI DigiShield Plan with a life cover of ₹1 Cr for 25 years of term period, the monthly premium will be ₹729³. But if a male same age and habits chooses the exact same plan then he will have to pay a monthly premium of ₹837³.
• Smoking Status: If you have a habit of smoking, then you are putting your life at risk. Mortality increases when people smoke. Hence the life insurance premium is higher for smokers than non-smokers.
• Sum assured: Sum assured is the amount that the insurance company has to pay out to the nominee if the life insured passes away during the policy period. You will get to choose this amount while purchasing the policy. Choosing a higher sum assured will result in higher premium rates.
• Premium payment frequencyYou will get to choose the frequency in which you can make the premium payment while purchasing the policy. Options are: Yearly/ Semi-yearly/ Quarterly/ Monthly. If you choose a yearly payment mode then you can enjoy the cheapest rate. On the other hand, for the monthly payment mode, premium will be on a higher side.
• Policy period:Mortality rate increases with increasing age. The risk of death is higher when the insurance company covers an older policyholder. So the premium rate increases with increasing policy period. Simply put, coverage for 30 years will be costlier than coverage for 20 years.

If you are planning to buy a life insurance policy, make sure to keep these things in mind:

• Check whether the sum assured or the product you are buying matches your requirements. For example, if you want a low premium product, then the term plan is an apt cover. But if you are looking for long term investment and returns, ULIPs can be the best option.
• Ask for the expert’s advice if you are new to financial planning.
• Check insurer’s claim settlement ratio. Aditya Birla Sun Life Insurance has a claim settlement ratio of 98.08%¹.
• Do not skip any information in the proposal form. Fill it carefully and try not to hide any information because it impacts the coverage.
• Always keep a copy of the completed document, like a proposal form, with you for your future reference.
• Understand the procedure of claim to simplify the processing at the time of need.

Choosing the right type and coverage amount (sum assured) of the life insurance is possible by determining how much money your dependents will need in your absence. As a general rule of thumb, financial experts suggest everyone to choose a sum assured 8-10 times of the current annual income.

For example, if your yearly income is Rs. 12 lakhs, then you must buy life insurance with a sum assured of at least Rs. 1 crore. Considering everyone’s situation is unique, the following are the factors that can help determine the minimum amount of life insurance required.

• Current debt: The outstanding loans and liabilities in your name become a burden to the family in your absence. So you should pick a sum assured that is enough to pay off the debt along with interest in full.
• Expenses of dependents: If you are the sole income provider of your family, then you need to choose an assured sum large enough to cover the minimum monthly expenses of the family. Please consider the inflation and ageing of the dependents in the family while deciding on this.
• Premium paying capacity: Life insurance policy pays out only when the policyholder pays all the premium in time. Otherwise, the policy will lapse, and the investment will go in vain. Against the chosen sum assured, you have to pay the premiums in the chosen interval; please make sure that falls under your premium paying capacity.
• Financial goals: At different stages of life, everyone has different financial requirements. You need to consider your financial goals like children’s education/ marriage, buying a house, medical expenses, retirement, etc., while deciding on the sum assured of the life insurance policy.

You can always use our human life value calculator where you can put your details and check how much life cover you need.

Yes, you have different options to pay the premium. You can pay the premium monthly, quarterly, semi-yearly or yearly. There is also an option to pay the bills in one lump sum. Different insurance products have different premiums depending on the development and coverage.

Payment of premium on time is the basic condition which you as a policyholder have to fulfil. Only if you pay the premium, the policy cover remains in effect. In a life insurance policy, if you do not pay the premium on time, the insurance company will give you a grace period to pay the premium, which has already fallen due. If the premium is not paid in the grace period, the policy will tend to lapse. That means you will not be qualified to get any benefit from the policy purchased.

If later you can afford the premium and feel the need to continue the policy after it lapses, there is still an option to revive the policy. For that, you will have to pay all the pending premiums and charges and depending upon the type of policy you own.

If you are the nominee, beneficiary, or the legal heir of the policyholder, you should first intimate the insurance service provider of the policyholder’s demise. Along with this, you will need to provide some other information such as the cause, place, and date of death.

After the intimation is given, you should file the following documents with the insurer to lodge a death benefit claim.

• A duly-filled claim form
• A copy of the death certificate
• The original policy document
• Proof of relationship with the deceased
• An executed form of discharge

Once all of these documents are filed, the insurer will process the claim, and if found to be sufficient and proper, they will disburse the death benefit.