A life insurance policy is a contract between a policyholder and an insurance company. In a life insurance policy, the insurance company promises to pay a sum of money to the loved ones of the policyholder in case of death of the policyholder during a certain period. In return, the policyholder pays a small amount as premium to the insurance company.
In certain types of policies, the policyholder can also opt for critical illness benefits or choose additional protection to cover against an unfortunate event due to an accident. Read more about these features and types of life insurance policies below.
Life insurance in India can play a critical role in your life. It can help you in diverse financial situations and offer the following advantages:
A lot of loan providers ask for collateral when sanctioning a loan. A life insurance plan can be used as collateral for secured loans. This can help you get a loan with a favourable rate of interest in your hour of need.
Life insurance plans offer online discounts from time to time. If you purchase a plan online, you can enjoy a discount on the premium. Some plans may offer a discount if you make the payment through a specific bank.
Life insurance plans let you choose the premium payment method. Typically, the premium can be paid in half-yearly, yearly, or monthly instalments. Each of these methods can provide you with unique discounts. You can find out more about them from the insurance company and pick an option that lets you save the most.
A life insurance policy can help you save a lot of money otherwise spent on tax. You can claim a deduction^ of up to ₹ 1.5 lakh in a financial year under Section 80C of the Income Tax Act, 1961 on the premium paid towards a life insurance plan. In addition to this, the payout received for your life insurance policy is tax-free^ subject to conditions prescribed under Section 10(10D).
Here is a look at the ₹1 crore term life insurance plan for different age groups till the age of 60 years:
| Age | Annual Premium (Incl GST) |
| 20 - 25 | ₹11,120 - ₹12,644 |
| 30 - 35 | ₹15,100 - ₹18,868 |
| 40 - 45 | ₹24,353 - ₹32,321 |
| 50 | ₹45,308 |
Note: The premiums illustrated are for customers purchasing policies from the direct portal. These are standard rates for healthy, non-smoker, non-drinker salaried male life, including GST. These rates are subject to change for direct journeys. The eligible sum assured and final premiums may vary and depend on actual underwriting.
Term insurance plans are a type of life insurance designed to provide coverage for a specified period, typically ranging from 10 to 30 years. Here’s how they generally work:
Raman is a healthy, non-smoking individual.
He invests in a ₹1 crore term life insurance for 25 years to provide financial security for his wife.
In the 15th year of the policy, Raman experienced an unfortunate death.
His wife received a ₹1 crore death benefit from the insurance company.
With this benefit, she can preserve her quality of life and meet her financial obligations.
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