Every financially independent adult is quite familiar with the term "Life Insurance plan". This is because investing in a life insurance policy is one of the first steps you need to take to ensure financial security for your loved ones. However, investing in a financial policy is a big decision that requires thorough thought and consideration. The process can be quite intimidating even for experienced persons, so it's only natural to be worried if it is your first time. One thing that can easily take the edge off your worries is having adequate knowledge about the various features of life insurance.
Why a life insurance plan?
Life insurance, a type of insurance plan that is designed as a contract between the insurance company and policyholder, guarantees the payout of the insured sum at the time of the insured person's death.
There are many types of life insurance plans designed to suit specific requirements ranging from term life insurance to whole life insurance, Unit Linked Insurance Plans, endowment plans, and money-back plans. Besides offering financial cover for your family in the event of your death, a life insurance plan can be used as an additional source of income when you retire. If you have children, it can be used to save for their higher education and other major life events. Life insurance policies also serve as a tax-saving tool.
Before you explore the finer details of a life insurance plan for your needs, here are 6 important features you should know about a life insurance plan.
6 important features of a life insurance plan
This refers to the fixed life cover amount of any life insurance policy, which will be paid out to the insured person's nominee. Many policies provide a high amount of coverage for a small premium payment.
The insurer can decide how the sum insured will be paid out to the nominee in case of the policyholder's death. These include different payout options like:
- Single Payout: In this, the sum is paid out in a lump, at once, at the time of the policyholder's death.
- Income Form: If the insurer believes income of lump sum at once will be difficult for the nominee to handle, they can choose to pay out the sum insured in income form, i.e., monthly or annual.
- Combination: If the insurer so chooses, they can choose a sum to be paid out at the time of death and the remaining sum in income form.
This means that the regular premium amount that is decided at the time of purchase will stay the same throughout the duration of the policy. The same applies to the life coverage amount (sum insured).
Terminal Illness Benefit
Many insurance plans give you the option of a complete payout if the insured person is diagnosed with a terminal illness. The amount can be extremely useful for medical care and expenses in difficult times.
Optional Critical Illness Benefit
Similar to the terminal illness benefit, many plans also offer you the option of a complete payout in case you are diagnosed with a critical illness like cancer, kidney ailments, and thirty-two others.
If the insured person becomes permanently disabled due to an accident, many insurance companies waive off the remaining premium amount. This means that the remaining amount that was to be paid by the policyholder will be paid off by the company.
Keeping these six features of life insurance in mind, you will have a clear idea of the investment you're buying into. Take a look at the life insurance policies offered by ICICI Prudential Life to choose the plan best for your needs. ICICI is one of the most trusted insurance companies in India, ensuring your money is in safe hands.
