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What is a Life insurance policy?
What is a Life insurance policy?
Life Insurance is a contract between an insurance policyholder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium after a set period or upon the death of an insured person.
Life Insurance acts as financial protection for your family in case of your death or a payment made to you on surviving the policy term. In return for this payment, you make periodic fixed payments to the life insurance company. In certain types of policies, there is the option to get critical illness benefits or create additional protection for your family if you pass away from an accident. You can read about these features and types of life insurance policies below.
Why should you buy a Life insurance from MyonelifeX
Life insurance is a simple product and is easy to understand. Here are reasons to buy term insurance:
Which is the right Life Insurance policy for you?
Well, different types of policies suit different types of people. Someone who is willing to take some risk and knows a little about investments may go in for a ULIP. Someone who only wants the protection aspect of life insurance may prefer a term insurance policy.
What Are The Benefits Of MyonelifeX Life insurance plan online vs. offline? ?
Here are some benefits of purchasing a Life insurance policy.
You may get an online discount when you buy online.
How much Life Insurance cover do I need?
This depends on individual circumstances. However, as a rule of the thumb, the life insurance cover should be at least 10 times annual income. For example, if your annual income is ₹ 8 lakh, your life insurance cover should be at least ₹ 80 lakh. Although 80 lakh – 1 crore can seem like a huge sum, you can get it for a monthly premium as low as ₹ 1000 (for a 30 year old, non-smoker). Medical bills also increase with time and so a large amount is needed to cover future medical costs.
Important life insurance terms you should know
1. Who is a policyholder?
A policyholder is a person who owns the life insurance policy. Usually, they are the one insured under the policy. However, sometimes, the policyholder may be a relative of the insured, a corporation or a partnership. The policyholder has the right to exercise all privileges that are provided in the life insurance contract.
2. What is Sum Assured?
Sum assured is a predetermined fixed amount that a policyholder’s family receives in case of policyholder’s death. It is basically the total sum policyholder is covered for. Sum assured is chosen by the policyholder and is always mentioned by the company in the policy details.
3. Who is a nominee?
In life insurance parlance, a nominee is a person who receives the sum assured and other benefits in case of an insured person’s death. The choice of nominee depends totally on the policyholder and the name is usually mentioned while buying the life insurance policy. In most cases, the nominee is someone from the family.
4. What is the difference between a policy term and premium payment term?
A policy term is the time period for which you are covered. A premium paying term is the duration for which you have to pay the premium of the policy. For instance, the policy term as a whole can be of 50 years but the premium paying term can be of 25 years. This means that you need to pay a premium for 25 years but you are covered for 25 additional years.
Factors that affect life insurance premium
Your life insurance premium depends on several factors. The main factors contributing towards the calculation of life insurance premium include your age, the type of coverage you are opting for, the amount of coverage, and personal factors such as smoking status, occupational status, etc.