Understanding Life Insurance: A Beginner's Guide

1. Insured and Beneficiary
   The insured individual is the person who is covered by the insurance provider. On the other hand, the beneficiary is the person nominated who will be entitled to receive the death benefit under the plan. Quick Insight: Remember that a life insurance policy can have multiple beneficiaries.
2. Death Benefits
   As the name suggests, the death benefit is the money that the beneficiary receives under an insurance plan. Death benefits are provided in different forms, like a lump sum payment, specific income provision, lifetime income or interest income, etc., depending on the plan chosen Quick Insights: Head straight to Jio Insurance Broking to learn more about the death benefits of the most trusted insurance providers in India.
3. Premium
   Premium is the amount that you are supposed to pay against the life insurance plan to keep the plan active. The premium amount depends on different factors like the type of life insurance plan, tenure, the policyholder's age, coverages, etc.
   Quick Insights: Use the insurance calculator to know how much a policy can cost you. Typically, higher coverage means more premium.
4. Claim Settlement
   To receive benefits under a life insurance plan, the beneficiary is supposed to raise a claim with the insurance provider. The claim settlement process is different for every insurance provider, but mostly, it can be done easily through online portals. Once the claim is raised, the insurance provider performs a simple verification and approves the claim.

Types of Life Insurance Plans

Now that you have a fair understanding of the concept of a life insurance plan, let’s take a look at the different types of life insurance plans that you get to explore with Jio insurance broking:

1. Term Life Insurance
   A term insurance plan is a type of life insurance plan that is designed to offer wide coverage at a comparatively lower premium. As the name suggests, term insurance provides coverage for specific periods, like 10 years or 30 years, etc. Once the specified period is over, the policy comes to an end.
2. Endowment Plan
   An endowment plan is a type of life insurance plan that is designed to offer life insurance and savings benefits. This is because an endowment life insurance plan promises a lump sum payment at the time of death of the insured or at the time of maturity (when the insured survives the plan tenure). An added advantage of an endowment plan is that because there are various types of endowment plans, the premiums you pay can be customised.
3. Retirement Plan
   A retirement plan is a type of life insurance plan that allows you to live a comfortable and peaceful life even when the regular source of income is stopped. This type of plan is designed to provide financial assistance in the post-retirement life. There are different types of retirement plans that you can choose from.
4. Whole Life Insurance
   As the name suggests, a whole life insurance plan provides coverage to the insured for life (typically up to the age of 100 years). Under this type of life insurance plan, you’re supposed to pay premiums throughout your life and in case of your demise, the beneficiary gets the sum assured.
5. ULIPs
   For those who wish to invest and insure with the same plan, a Linked Insurance Plan is a suitable choice. A part of the premium is saved for coverage, while the other is invested in market-linked funds. While these plans come with the risk of market volatility, you have the option of investing as per your risk appetite.

Why Do You Need a Life Insurance Plan?

A life insurance plan comes with a promise to protect your loved ones even when you are not around. Let’s take a quick look at the benefits of a life insurance plan:

1. Take Care of Financial Needs: In case you are not around, a life insurance plan promises to take care of the financial expenses of your loved ones.
2. Tax Benefits: The death benefits and maturity provided to the beneficiary are eligible for tax benefits. The premiums that you pay can help you save on taxes under Section 80C of the Income Tax Act of 1961.
3. Riders for Extra Coverage: Most life insurance plans allow riders to expand or adjust their coverage. This includes coverage for chronic or terminal illnesses, accidental death and disability.

Wrapping Up

Purchasing a life insurance plan can seem tricky at first, but now that you have a fair understanding of common terminologies and different types of life insurance plans, you are well equipped to zero in on a plan that best meets your requirements. To ease the process of choosing a life insurance plan with a reputed insurance provider, you can head straight to Jio Insurance Broking. Our executive can help you make a well-informed decision.