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Most Common Life Insurance Queries: Answered!

Updated On Oct 02, 2021

Life insurance is a financial contract between the life assured and the insurance provider which assures to provide life cover and financial protection to the policyholder from the uncertainties. In case of an untimely demise of the life assured, the nominee/beneficiary/family of the life assured will receive a death benefit. Life insurance is a great way to start financial planning for a financially secured future of your family in case of your untimely demise.

Most Common Life Insurance Queries

Below mentioned are some of the most common questions asked before or at the time of purchasing a life insurance policy:

1. What are the Different Types of Life Insurance?

There are several types of life insurance plans that you must know about before investing your money into one. Below mentioned are some types of life insurance plan available in India:

  • Term Insurance: Term life insurance plans are known as pure protection plans because these types of life insurance plans provide financial protection to the family of the life assured in case of an untimely demise of the life assured. 
  • Unit-Linked Insurance Plans: ULIPs are savings cum insurance plans as part of the premiums paid are invested in a market linked investment option that helps you build a corpus and a part of premiums paid are for the risk cover. 
  • Endowment Plans: Endowment plans provide a death benefit in case of an untimely demise of the life assured during the policy tenure and in case the life assured survives the entire policy tenure a maturity benefit is provided. These plans are participating plans. 
  • Money-Back Plans: Under money back plans the life assured can avail payouts at regular intervals usually 5-10 years, these regular payouts are a pre-fixed percentage of the sum assured. 
  • Retirement Plans: Retirement plans are also known as pension plans, that help you build a corpus to ensure a financially independent life post retirement.
  • Child Life Insurance Plans: Child life insurance plans are a unique combination of investment and insurance, these types of life insurance plans help you grow your earning to ensure a better future for your child. 

2. What is the Difference Between Life Insurance and Term Insurance?

Difference between a traditional life insurance and term insurance is that traditional life insurance provides life cover until the date of demise of the life assured, on the other hand term life insurance, life cover is provided for a certain period of time. 

3. What are the Benefits of Purchasing Life Insurance?

Below mentioned are some of the benefits of purchasing a life insurance policy:

  • Provides financial security to the life assured and his/her family
  • Flexibility to choose the policy tenure
  • Maturity benefit is provided in case the life assured outlives the policy term
  • Loan against the policy facility available

4. What are ‘Riders’ in a Life Insurance Policy?

Riders are additional coverages that widen up the scope and benefits of life insurance policy. When a rider is purchased along with a life insurance policy it increases the base coverage of the policy, you can choose to add riders like critical illness benefit, accidental death benefit, accidental total and permanent disability etc. 

5. What are the Factors that Affect Premium for a Life Insurance Policy?

Factors that affect a life insurance policy are Age, Gender, Way of Living, Personal Habits like consumption of alcohol/tobacco, Body Mass Index (BMI), Profession etc. 

6. Can the Premium Change During the Policy Tenure?

No, the premiums do not change during the policy tenure. The premium for a life insurance policy is determined after considering some factors mentioned above, once the premium is determined it does not change throughout the policy tenure. 

7. What are ‘Underwriters’ in a Life Insurance Policy?

Underwriters are the people who evaluate the risk involved in insurance. The policy application and claim settlement is approved only after the underwriter gives clearance. 

8. What Happens if I Don’t Pay Premiums on Time?

If you fail to pay premiums timely, a grace period is provided to pay the due premiums. If the premiums are not paid within the grace period the life insurance policy will lapse.

Also read - Investment Options That Can Help Enhance Tax Savings

Is Life Insurance Worth It?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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