Reliance Life Insurance
  • Life Insurance as ProtectionLife Insurance as Protection
  • Life Insurance as an InvestmentLife Insurance as an Investment
  • Life Insurance for Saving TaxLife Insurance for Saving Tax
  • GlossaryGlossary

A life insurance policy allows you to provide the right security for your family in case of your unfortunate absence. As you are the sole bread earner of the family, an untimely demise can cause them severe financial distress. While no amount of money can ever replace a person, life insurance gives you the peace of mind, knowing that your family will have the right financial support to continue living in case of your absence.

Life insurance is a long-term financial instrument that works as a financial backbone to fulfill your family members’ financial needs at important milestones even in your absence. Most importantly, it allows the family to pay off any mortgage, liabilities, medical expenses or loans, so that these liabilities don’t cause an additional burden to them. It is therefore important, to choose an insurance policy that allows your family to continue the same kind of lifestyle and cherish the wonderful memories that come along.

6 Steps to a Wholesome Protection Package

  • Self-analysis –What is your current family size and financial situation and where do you see yourself in the future? Are you the sole breadwinner in your family? Most importantly, analyse of your current savings and how much cover you need.
  • Evaluate Options – Depending on your life stage, you can evaluate life insurance policies with different coverage plans. For the basic need of family protection, a term plan can be considered whereas for a specific type of need, you can choose from health, savings, child and other plan types.
  • Research – Once you have determined the amount of cover and the type of life insurance you need, you need to have complete information about the chosen type of life insurance plan, understand the benefits and conditions of the plan.
  • Calculate Premium – Once you have identified the plan you need, you can calculate the premium payable on the plan, depending on the coverage you require.
  • Read the offer document – This is the most critical stage of buying any policy; it is always advisable to have a complete understanding of the offer documents with your insurance agent, before signing anything. Do not hesitate to ask your agent any policy related questions.
  • Final Confirmation – Life insurance is for life. So conduct an extensive analysis and have complete confidence in the plan that you are going to buy. Once the plan is purchased and later on, there is any disagreement relating to the policy, you can still back off by returning the Policy Document to the Company within the Free Look period.

More than providing peace of mind your family and yourself, life insurance can be one of the best investment decisions you have ever made. With stringent regulatory conditions to safeguard policyholders, traditional life insurance policies carry minimum investment risk and provide long-term insurance benefits.

Most life insurance policies include retirement income on maturity. Another advantage of life insurance is that the coverage amount can be increased over time. So, while presently, you can afford only a low insurance premium with your current salary, over time with increasing income through promotions or new income sources, you can increase your insurance cover by paying slightly higher premiums and provide a better life cover for your family even when you are not around.

While choosing a life insurance policy, it is generally advisable to look at various products that different organizations provide. Many insurance companies offer an array of insurance plans that best suit the needs of the entire family.

It is always better to invest your hard earned savings which will provide you with long-term benefits than to seek short-term benefits from high-risk investment ventures. Whether you have just started your career, are recently married or blessed with a family, securing adequate life insurance can prove to be the best investment decision you ever made.

5 Retirement Income Planning Tips

  • Envision your Lifestyle –When you think about retirement, how do you visualize your life after you retire? Understand your lifestyle requirements in order to plan your retirement income as part of your life insurance.
  • Evaluate the Economy – With increasing prices, it is important to evaluate the value of every rupee you will save with the hope of sustaining your current lifestyle post-retirement. It is therefore important to have realistic expectations before planning to invest in a retirement plan.
  • Health Implications – As you get older, your health concerns increase. Your retirement income should therefore be able to take care of any medical emergencies to ensure that your health never takes a backseat in your life.
  • Different Income Resources – Life insurance should not be your only source of income. Consider investing in other investment avenues such as Fixed Deposits (FDs), Public Provided Fund (PPF), National Savings Certificate (NSC) etc. that secure your principal investment along with ensuring safer returns that enable you to lead a comfortable life post retirement.
  • Always Plan for more Years – As the quality and standard of life increases along with medical advancements, it is always recommended to plan ahead, at least 5-7 years more than your life expectancy estimates that you may have made.

Life Insurance policies give you an additional advantage of tax benefit. As your income increases, the tax bracket also widens. The most apt method to save your hard earned rupee is through investment in insurance policies.

With most insurance policies, the premium you pay is eligible for tax benefits. Under Existing Income Tax Laws, contribution towards life insurance policy is allowed as deduction in income, thereby decreasing tax liability. It means that you not only provide financial security for your loved ones in the unfortunate event of your demise, but also reap the benefits of additional income from tax savings through premium contribution in unit linked life insurance policies.

Any profit earned from Unit linked life insurance schemes also provides tax benefits to the payee. Another advantage of life insurance is that the lump sum benefit payable on death is tax free.

Life insurance is therefore your greatest ally to help you save your hard earned money from the burden of tax.

4 tax Benefits through Life Insurance

  • For Individuals and HUF –An individual or HUF paying life insurance premium can avail deductions on taxable income up to Rs. 100,000 under existing income tax laws subject to applicable conditions.
  • On payment of any bonus – Any amount of insurance benefit received as a lump sum payment from life insurance policy is considered as a non-taxable amount under existing income tax laws subject to applicable conditions.
  • Premium payment on behalf of spouse – Income Tax deduction is also available on life insurance premiums paid on behalf of your spouse.
  • On maturity of policy – Life insurance proceeds are not taxable for the deceased’s family.

Income Tax benefits under Income Tax Laws are subject to amendments and interpretation from time to time. Kindly consult a tax expert. Conditions apply.

  • ACCIDENT

    A sudden, unintended, fortuitous, violent, visible and external event and does not include any naturally occurring condition or degenerative process.

  • ACCIDENTAL DEATH BENEFIT

    A supplementary life insurance policy benefit that provides a death benefit in addition to the policy's basic death benefit if the life assured sustains any bodily injury resulting solely and directly from an accident caused by outward, violent and visible means and where such injury solely and directly and independently of all other causes results in the death of the life assured within 180 days of its occurrence.

  • ACTUARY

    An insurance professional skilled in the analysis, evaluation and management of statistical information. He/She evaluates insurance firms' reserves, ensures the solvency of the company, determines rates and rating methods, and determines business and financial risks of the insurance company.

  • ADVERSE SELECTION

    The tendency of those exposed to a higher risk to seek more insurance coverage than those at a lower risk.

  • AGE LIMITS

    Stipulated minimum and maximum ages for a particular policy below and above which the company will not accept applications or may not renew in case of lapsation.

  • AGENT

    An insurance company representative licensed by IRDA who solicits, negotiates or effects contracts of insurance, and provides service to the policyholder.

  • ALLOCATION

    Creating the units at the prevailing unit price offered by the life insurer. This is applicable in case of premium payments, top up payments and switches.

  • ANNUITANT

    The person who receives the income from an annuity contract. Usually the owner of the policy or his/her beneficiary.

  • ANNUITY

    A life insurance product that pays periodic income benefits for a specific period of time or over the course of the annuitant's lifetime. Deferred annuities are paid after a deferment period whereas Immediate annuities allow payments to begin within a year of purchase.

  • ANNUITY CERTAIN

    An insurance contract that provides an annuity for a certain number of years, irrespective of whether the insured is alive or dead.

  • ASSET ALLOCATION

    The spread of the investment across various asset classes.

  • ASSIGNEE

    The person to whom the benefits of the life insurance policy are assigned under section 38 of the Insurance Act, 1938.

  • ASSIGNMENT

    A transfer of the rights and benefits of an insurance policy from one person to another either conditionally or absolutely, by an endorsement upon the Policy itself or by a separate instrument signed in either case by the assignor specifically stating the fact of assignment and duly registered in the records of the insurer.

  • AUTHORITY

    The Insurance Regulatory and Development authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999.

  • BALANCE SHEET

    A statement providing a snapshot of a company's financial condition at one point in time. It shows assets, including investments and reinsurance, and liabilities, such as loss reserves to pay claims in the future, as on a particular date.

  • BENEFICIARY

    Beneficiary is the person who receives the benefits of a policy. In case of death of the life assured during the term, the nominated person is the beneficiary, whereas in case of maturity it is the policyholder.

  • CLAIM

    A request for payment of the contractual benefits that is made by the insured / beneficiary when the contingency covered by the policy arises.

  • COMMISSION

    Fee paid to an agent or insurance salesperson as a percentage of the policy premium. The percentage varies widely depending on coverage, the insurer, regulations and the marketing methods.

  • CONCEALMENT

    When an applicant withholds critical information from the insurance company.

  • COVERAGE

    The scope of protection provided under a contract of insurance or any of the several risks covered by a policy.

  • CRITICAL ILLNESS (CI) INSURANCE

    A type of individual health insurance that pays a benefit when the insured is diagnosed with a specified illness.

  • DATING BACK

    Dating Back or Back Dating is an option that allows the assured to get the benefits of lower age by commencing the policy from a date earlier than the date on which the proposal form is signed. Back Dating is permissible only within the same financial year and only in traditional (Non-ULIP) policies.

  • DEATH BENEFIT

    The benefit received by the beneficiary (ies) on the death of the insured.

  • DECLINE

    Refusal of the insurance company to accept the request for insurance coverage.

  • DEFERMENT PERIOD

    Period between the date of commencement of an insurance-cum-pension policy and the time at which the first installment of pension is received. It can also be the period between the date of commencement of the policy and the date of commencement of risk on the insured life.

  • DISABLEMENT RIDER

    A type of add on health insurance designed to compensate an insured person for a portion of the income lost because of a disabling injury or illness. Benefit payments are generally made periodically for a specified duration during the continuance of an insured's disability.

  • ENDORSEMENT

    A written form attached to an insurance policy that alters the policy's coverage, terms, or conditions and is treated as a part of policy document.

  • ENDOWMENT INSURANCE

    Life insurance policy that provides a policy benefits on the date of maturity if the insured is still alive on that date or before it if the insured dies during the term of the policy.

  • EXCLUSIONS

    Specific conditions or circumstances under which the policy will not provide specific benefits.

  • FREE LOOK PERIOD

    A period of 15 days from the date of receipt of the policy document, which gives the policyholder an option to review the terms and conditions of the policy. If he/she disagrees with the terms and conditions stated in the policy, he/she has the option to return the policy, stating the reasons for objection. In this event, for Non-ULIP policies, the Policy would then be cancelled and the premium paid would be refunded by the insurer, after deducting: proportionate risk premium for the period on cover, expenses incurred on medical examination of the client and stamp duty charges. For ULIP policies, the company shall refund an amount equal to the non allocated premium Plus the charges levied by Cancellation of units plus fund value as on the date of receipt of the request in writing for cancellation, less the proportionate premium for the period the company has been on risk and the expenses incurred by the company on medical examination, if any, and stamp duty charges.

  • FUND VALUE

    It is the product of the total number of units under a policy and the applicable NAV (Net Asset Value per unit).

  • GRACE PERIOD / DAYS OF GRACE

    A period after the premium due date, during which an overdue premium may be paid without penalty. The policy remains in force throughout this period. The grace period is usually 30 days from the due date for quarterly, half-yearly or yearly modes of premium payments. In case of monthly mode, the grace period is of 15 days. A policy lapses if premium are not paid within the days of grace.

  • GROUP LIFE INSURANCE

    Life insurance of a group of people under a single policy. This group should already be in existence and should not have come together only for the purpose of insurance. The individual members of the group hold certificates as evidence of their insurance.

  • HEALTH INSURANCE

    A policy that will pay specified sums for medical expenses or treatments. This policy usually takes care of Daily Hospital Cash expenses, Intensive care unit expenses and post hospitalization expenses.

  • HOSPITAL CASH BENEFIT RIDER

    A rider that provides cover for hospitalization expenses.

  • HUMAN LIFE VALUE

    The present value of the family's share of the breadwinner's future earnings, for purposes of life insurance.

  • INCONTESTABILITY CLAUSE

    A policy provision in which the insurance company agrees not to contest the validity of the contract after it has been in force for a certain period of time, usually two years.

  • INSURABLE INTEREST

    The policy holder (or the beneficiary) must stand to suffer a direct financial loss if the event (against which the insurance cover was bought) does occur. It shows true, valid, determinable, and direct economic stake of a policy holder (or of the beneficiary of the policy) in the continued existence or safety of the insured person. A life insurance contract is not valid without insurable interest.

  • INSURER

    The insurance company.

  • LAPSE

    The termination of an insurance policy due to non-payment of premium.

     

  • LICENSE

    Permission granted by IRDA to the applicant for commencement and operation of the insurance business in India.

  • LIFE ASSURED/INSURED

    The person on whom the insurance cover is granted by the Life Insurance Company.

  • LIFE INSURANCE

    A contract provided for the payment of a sum of money/Sum Assured to the person assured or failing him, to the person entitled to receive the same, on the happening of certain event for the consideration/premium. 

  • LIMITED PREMIUM PAYMENT POLICY

    The policies where the premium payment period is lesser/limited as compared to the policy term.

  • LOCK-IN PERIOD

    The period of time for which investments made in an investment option cannot be withdrawn. For eg. In ULIP policies, it is currently 3 years.

  • MAJOR SURGICAL BENEFIT RIDER

    A rider that gives a lump sum if the life insured undergoes any of the major surgical operations listed in the document. The payment is made subject to the medical need for the surgery being established. The Maximum benefit per year shall be 100% of Surgical Sum Assured. Multiple claims are allowed during the full policy term, up to a total payment of 300% of the Major Surgical Benefit Sum Assured.

  • MARKET VALUE

    The monetary value an asset will fetch if sold in the market today.

  • MATERIAL MISREPRESENTATION

    The policyholder / applicant makes a false statement of any important fact on his/her application.

  • MATURITY CLAIM

    The Payment made to the policy holder at the end of the stipulated term.

  • MATURITY DATE

    The date on which a policy term comes to an end.

  • NET ASSET VALUE (NAV)

    A scheme's net assets (Market Value of the underlying Investments (plus/minus expenses incurred in the purchase/sale of assets) plus any accrued income net of fund management charges plus Current Assets less Current Liabilities and Provisions of the Fund) divided by the number of units it has issued.

  • NOMINATION

    A provision by which a life assured can designate any person to receive the policy money in the event of his/her death. Where the Nominee is a minor, the Policyholder has to appoint a person (Appointee) to receive the money during the minority of the Nominee. Nomination may be made/altered by an endorsement on the Policy and by communicating the same in writing to the Company.

  • NOMINEE

    A person selected by the life assured under section 38 of the Insurance Act, 1938 , to receive the benefit in case of his/her death.

  • PARTIAL WITHDRAWALS

    Any part of fund of a policy that is encashed/withdrawn by the policyholder during the period of contract.

  • PARTICIPATIVE PLANS

    See 'with-profit' policy

  • PERMANENT PARTIAL DISABILITY

    Permanent loss of any body part, one eye, one limb or one finger or a toe, or injuries that render the insured incapable of earning an income from any work, occupation or profession from the date of the accident onwards. While the loss of the body part is permanent , its effects on the insured's life are partial.

  • PERMANENT TOTAL DISABILITY

    Total and Permanent disability means that the life assured has solely and directly as a result of an accident caused by outward, violent and visible means suffered for at least six months that renders the insured incapable of earning an income permanently. This includes total and irrecoverable loss of the sight of both eyes, or loss by severance of two limbs at or above wrist or ankle, or total and irrecoverable loss of the sight of one eye and loss by severance of one limb at or above wrist or ankle.

  • POLICY

    The legal document that contains the schedule and the conditions of the insurance contract and is the evidence of the contract.

  • PREMIUM

    The amount paid by a policyholder to the insurance company, in order to be insured under a policy.

  • PREMIUM RE DIRECTION

    This is the facility allowing the policyholder to modify the allocation of amount of future renewal premium into a different investment pattern from the option (investment pattern) exercised at the inception of the contract.

  • PROPOSAL FORM

    A document supplied by the insurance company, usually filled in by the agent and medical examiner (if applicable) on the basis of information received from the applicant. It is signed by the applicant and is a part of the insurance policy if it is issued.

  • REDEMPTION

    Encashing the units at the prevailing unit price offered by the life insurer where the process involves cancellation of units. This is applicable in case of exercising partial withdrawal, switch, maturity, surrender etc.

  • REINSTATEMENT

    The restoring of a lapsed policy to in-force status. Insurance companies require evidence of insurability (financial and medical) along with payment of past due premiums plus interest for reinstatement.

  • REINSURANCE

    The transfer of part or whole of the risk by the original insurance company to one or more reinsurers.

  • RIDER BENEFITS

    The amount of benefit payable on a specified event (for instance, accident). An add-on benefit available at the option of the policyholders that may alter certain features of a policy by increasing or restricting benefits

  • RURAL SECTOR

    In accordance with the IRDA notification dated 16-10-2002, any place under the latest census, which has 1) A population of less than five thousand 2) A density of population of less than four hundred per square kilometer and 3) More than 25 per cent of the male working population is engaged in agriculture.

  • SETTLEMENT OPTIONS

    A facility made available to the policyholder to receive the maturity proceeds in a defined manner (the terms and conditions are specified in advance at the inception of the contract).

  • SUM ASSURED

    The amount of insurance cover taken under a life insurance policy. It is the minimum amount that will be paid on death of the policyholder during the policy term.

  • SURRENDER VALUE

    The value payable to the policy holder in the event of his/her deciding to terminate the policy before the maturity of the policy.

  • SURVIVAL BENEFITS

    The amount of benefit which is payable at specific intervals, on survival to that period during the period of contract as specified in the policy document. This is stated at the inception of the contract.

  • SWITCHES

    This is the facility allowing the policyholder to change the investment pattern of the accumulated fund value by moving from one fund to other fund(s) amongst the funds offered under the underlying product of the insurer.

  • TEMPORARY TOTAL DISABILITY

    An injury that results from an accident and renders a person immobile or affects his earning capacity temporarily.

  • TERM COVER

    A type of life insurance where the sum assured is payable only in the event of death of the insurer during the specified term.

  • TERM OF THE POLICY

    The tenure during which a policy contract provides insurance.

  • TERMINAL BONUS

    A one-time bonus paid on maturity of a with-profit plan.

  • TOP-UP PREMIUMS

    A top up premium is an amount (s) paid at irregular intervals during the period of contract. This is an additional amount of premium over and above the contractual basic premiums charged at the commencement of the contract.

  • UNDERWRITING

    The process of selecting applicants for insurance and classifying them according to their degrees of insurability so that the appropriate premium rates may be charged and includes rejection of unacceptable risks.

  • UNIT LINKED FUND

    It is a fund which pools together the premiums paid by policyholders and invests in a portfolio of assets to achieve the fund(s) objective. The price of each unit in a fund depends on how the investments in that fund perform. The fund is managed by the insurer.

  • VALUATION OF FUNDS

    The determination of the value of the underlying assets of the unit fund.

  • VESTING DATE

    In pension plans, it is the date from which the policyholder starts receiving pension. In children's plans, it is the date from which a child becomes the owner of a policy in which he/she is the Life Assured.

  • WAIVER OF PREMIUMS RIDER

    An add on policy (rider) that waives the premium payable on the basic policy and other riders in certain circumstances like death, disability or injury.

  • WHOLE LIFE INSURANCE

    Class of life insurance policies that provide insurance cover through the lifetime. The premium payment can be for a specified number of years or throughout life.

  • WILL

    A document that designates the assets of a person-both financial and physical- to various family members and other heirs.

  • WITH-PROFIT POLICY

    An insurance plan in which the policyholder gets a share of the insurer's profits in the form of bonus along with the sum assured.

  • WITHOUT-PROFIT POLICY

    An insurance plan in which the policyholder does not get any share of the insurer's profits

 

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