As the world grapples with the deadly COVID-19, major concerns about tackling the fallout from the impact of the virus are pervasive. India, a country of 1.38 billion people, has faced one of these worry– ambiguous financial future.
With a penetration of life insurance at 2.74% from 2018 and expectations for the the life insurance industry is expected to grow 12% to 15% per year Over the next three to five years, it may be time to consider life insurance policies that could help allay your worries about your financial protection and that of those around you.
We spoke with insurance companies offering life insurance to find out how to choose your life insurance policy during the coronavirus pandemic. Here is what they said.
Choose a life insurance plan that offers protection first
While the crisis has created uncertainty, it has also given insurance companies time to think more deeply about innovation, improving the customer experience, fundamentally different cost structures and a skilled and re-skilled workforce, according to McKinsey. report.
Given the way insurance companies tailor their policies to address life insurance issues holistically, this might be a great time to choose a policy that protects you and your savings. Let’s look at your options:
Term life insurance plans
Term life insurance plans provide protection to an individual for a specified period or a specified period for which a premium is paid. In the event of death or total and permanent disability, depending on the contract, the insured’s dependents receive a benefit. If the policyholder survives the term of the term insurance plan, no benefit is normally payable.
Tarannum Hasib, director of distribution of Canara life insurance HSBC Oriental Bank of Commerce, finds basic hygiene plans for every salaried family member as they serve as an income replacement for the family in the absence of the member.
She advises sufficient term life insurance coverage to help the family support their lifestyle expenses.
Loan protection plans
Loan protection policies support your mortgage payments in the event of death or, in some cases, terminal illness or disability and are designed to protect your family.
In India, loan protection plans act like term insurance policies and are available to cover loans such as home loans, student loans, and auto loans.
Consumers can choose between two options:
Level covers are available to protect the policyholder’s family for mortgage payments.
This coverage works like a term plan in which a guaranteed sum insured is paid on the death of the insured during the term of the contract. If the policy expires and the insured is still alive, no payment is made.
Reducing coverage helps pay off an insured’s mortgage debts so that the payment made to the nominee or family at the time of a tragedy is reduced over the life of the policy.
This coverage works like a term plan in which the sum insured that is paid out at the end of the policy term gradually decreases over the life of the policy. Unlike level guarantees in which a fixed indemnity fixed at the start of the contract is paid to the agent, the sum insured for declining guarantees decreases over time.
If the policy expires during the life of the insured, the sum insured decreases to zero and no payment is made.
Secure your financial future
In the midst of the coronavirus, securing your financial future can ensure that your anxiety levels remain low. Some life insurance policy decisions can help:
Life coverage with a high sum insured
The sum insured is the fixed value that an insurer pays to the nominee on the death of the policyholder. To keep your family financially secure, experts suggest taking out life coverage with a high sum insured.
Nishant Jain, co-founder and product manager of Toffee Insurance, suggests using a higher multiplier for your annual income given the uncertain times in deciding the sum insured when selecting life insurance coverage. .
“If you don’t have life insurance yet, then choose a sum insured of at least 10 times your annual income. Or take out an additional life insurance policy to cover the difference, ”advises Jain.
Those who already have life insurance coverage can increase their face amount in two ways.
The first is to go for another life insurance policy and forfeit the one they already have, as most life insurance companies in India do not offer extension of the sum insured within existing fonts.
The other is to go for a rider.
Jumpers or add-ons
Endorsements, also known as add-ons, refer to additional benefits that policyholders can purchase in addition to their insurance plans.
Sanjay Tiwari, chief strategy officer at Exide Life Insurance, says most policies offer the option of adding riders such as critical illness, hospi-cash, temporary rider, waiver of premium riders in the event of death or illness. serious. Opting for these can significantly help insured life in the event of a critical illness or eventuality.
An example of a coronavirus-specific rider is Max Life Insurance’s COVID-19 insurance plan in which the company provides coverage to the insured after a waiting period, typically 15 days. If the policyholder is diagnosed positive for the coronavirus, he is covered for his expenses, provided that the diagnosis is received 15 days after the issue.
An individual can also purchase this coverage as a stand-alone policy or as part of a COVID-19 insurance rider associated with a life insurance plan.
Investment plans allow consumers to build a tax-free financial body for their families while securing their lives.
Tiwari advises taking out a savings plan or an annuity plan to secure your financial future based on your existing life insurance coverage.
A savings plan is a kind of life insurance plan in which consumers can obtain life protection and periodically invest a portion of their premium. Popular savings plans include: Unit Linked Insurance Plans (ULIPs) and Endowment Plans.
A ULIP allows you to gain insurance and invest in equity and market-linked debt funds and asset classes to generate returns.
If the policyholder dies during the term of the ULIP, an amount of death benefit is paid to the nominee, regardless of the value of the returns on his ULIP investment.
Depending on the policy, the candidate gets either the sum insured or the maturity value of ULIP or both. The Maturity Value is the return generated by the ULIP investments that the insurance company makes on your behalf in the markets.
If the policyholder survives the term of the ULIP, he obtains the expiry value of the ULIP.
ICICI Prudential Life Insurance, promoted by one of India’s leading banks, ICICI Bank Limited and Prudential Corporation Holdings Limited, states that ULIPs allow flexibility and control over your money in the following ways:
1. Fund Switching – An option to transfer your money between equity, balanced and debt funds.
2. Premium Redirection – An option to invest your future premium in a different fund of your choice.
3. Partial Withdrawal – An option that allows you to withdraw part of your money.
4. Recharge – An option to invest additional money in your existing savings.
A capitalization plan allows you to obtain life cover and a fixed return at maturity.
Capitalization policyholders are insured with their capital at maturity. In the event of premature death, applicants receive the sum insured.
These policies are a savings plan to meet financial needs such as funding children’s education, home building proceeds, and retirement.
An annuity plan is a retirement plan that allows consumers to receive a sustained income, usually after retirement, based on a lump sum payment made at the time of purchase of the policy.
This sustained income can be obtained as a lump sum payment when an immediate annuity plan is chosen. In the case of a deferred annuity plan, the policyholder receives a periodic monthly, quarterly or annual payment of his or her returns on the plans.
Make sure your life insurance policy ticks certain boxes
While taking out a life insurance policy to protect and secure your financial future is a crucial step, a policyholder must ensure that they follow certain maintenance rules so that the policy is useful when needed. suddenly.
Carefully evaluate the policy before signing up: You need to assess the risk coverage requirement and your financial goals before choosing the right plan.
Keep your policy active by paying your premiums: Paying all premiums on time is essential to ensure that your policy does not fail or be interrupted. To ensure that your life insurance claim is honored in the event of an eventuality, you must keep your policy active.
Let your family know about your policy: Family members should be made aware of insurance policies and the claims process when deciding to purchase a policy. Any ignorance can lead to mental agony and can deprive family members of the benefits you have carefully planned for them.
Be honest about your health with the insurer: Any information relating to existing health conditions, including current and current COVID-19 status of oneself, should not be withheld or concealed. Such misrepresentation of facts and health conditions can hamper the claims process.
Clearly understand the terms and conditions of your policy: Although life insurance covers death, including death due to COVID-19, all exclusions, terms and conditions should be read carefully. If purchasing critical illness coverage, read the terms and availability of critical illness COVID-19 coverage.
The coronavirus pandemic is a wake-up call for all those who have not considered taking out a life insurance plan or have postponed their choice for an adapted plan in anticipation of their good health ensuring them to live a long life.
The uncertainty surrounding coronavirus infection and survival rates if they are affected is reason enough for Indians to consider securing their families’ financial future in the event of an unexpected tragedy.