Life Insurance: FAQs

1.I am Young and Healthy, do I Need Life Insurance?

Life insurance is not mandatory like motor insurance. But there are certain features which make it an imperative for you. These days, insurance comes as a combination of investment cum risk-coverage tool. This dual benefit is further augmented by tax benefits you can claim under the Income Tax Act.

It won’t be an exaggeration to say that buying a life insurance policy is a win-win situation to you. You get coverage against any unforeseen circumstances, save and grow your money and at the same time, get tax exemptions.

2.How Much Insurance Coverage Do I Need?

As a thumb rule, your insurance coverage should be five times your annual income. Thus, if your income is, for instance, Rs 10 lakh a year, then you should go for an insurance policy of at least Rs 50 lakh. This ensures adequate risk coverage for you and your family.

3.What Are The Types of Life Insurance Policies?

The opening up of life insurance sector in India has enabled several multi-national companies to offer their products in the market. But broadly, we could say that these are the types of life insurance policies: term insurance, endowment policy, money-back policy, group insurance and unit linked insurance policy/plan (ULIP).

4.What are Riders/Add-Ons? What are the Benefits?

Riders are over and above the basic term insurance cover. These riders can be availed of as per your requirement. The benefit is that you can customize your life insurance policy on the basis of your personal needs and do not have to pay for features which do not suit you.

The amount of premium varies on the nature of the rider you avail. For instance, insurers provide riders such as: critical illness benefit rider, accident benefit rider, disability benefit rider and income benefit rider.

You could take whichever riders you feel is more relevant.

5.Can I Buy Life Insurance Policy Through Online Modes? Is It Safe and Secured?

Yes, if you are making the transaction through portals of well-secured, established and reputed brands, it is safe to buy insurance through online modes. Just make sure that you make payment directly in the name of the insurance company itself and save the transaction reference number for your records.

6.What is the Frequency of Paying the Premium?

With growth in the insurance market, nowadays you can pay your insurance premium in different, pre-determined frequencies. It can be monthly, quarterly, half-yearly or annual. But you have to set the frequency right in the beginning and then follow the same. In case you wish to change it, you have to submit an application to the insurer to effect the required change.

7.What to do if I Misplace my Life Insurance Policy Document?

In case you misplace your policy document, you have to file an FIR (First Information Report) with the respective police station and then submit an application to the insurer along with the copy of an FIR. You will then receive the copy of the policy.

8.If I have a Complaint Against an Insurance Company, Whom Should I Contact?

In the first instance, you should contact the customer care centre of the concerned company and register your complaint. If the complaint does not get resolved or if you are not satisfied with the resolution, you should escalate it to the higher level, which is assigned by the company.

9.If the Company Does Not Resolve The Issue, What Is The Solution?

In case your issue persists, then contact the Insurance Ombudsman who operates under the Insurance Regulatory and Development Authority.

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