How to select your life insurance policy during coronavirus – Forbes Advisor INDIA

0

As the world battles the deadly COVID-19, major concerns about tackling the fallout from the impact of the virus are rife. India, a country of 1.38 billion people, has faced such a worry— ambiguous financial future.

With life insurance penetration at 2.74% from 2018 and the 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 ease your anxiety about financial protection for you and your loved ones.

We spoke to insurance companies offering life insurance to find out how to select your life insurance policy during the coronavirus pandemic. Here is what they said.

Choose a life insurance plan that provides protection first

Although 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 retrained workforce, says McKinsey. report.

Given how insurance companies tailor their policies to address life insurance concerns holistically, now could be a great time to select 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 fixed period of time or a fixed term for which a premium is paid. In the event of death or total and permanent disability, according to the contracts, the beneficiaries of the insured receive compensation. If the policyholder survives the duration of the term insurance plan, no benefit is normally payable.

Tarannum Hasib, Distribution Manager of Canara HSBC Oriental Bank of Commerce Life Insurance, finds basic hygiene plans for each earning member of the family, as they serve as income replacement for the family in the absence of the member.

She advises sufficient term life insurance coverage to help the family meet their lifestyle expenses.

Loan Protection Plans

Loan protection policies take care of your mortgage payments in the event of death or, in some cases, terminal illness or disability and are intended to protect your family.

In India, loan protection plans act as term insurance policies and are available to cover loans such as home loans, education loans, and car loans.

Consumers can choose between two options:

Level coverage

Level covers are available to protect the policyholder’s family for mortgage repayments.

This coverage works as a term plan in which a guaranteed sum insured is paid on the death of the insured during the term of the policy. If the policy expires and the insured life is still alive, no payment is made.

Reduce coverage

Reducing coverage helps pay off a policyholder’s mortgage debt so that the payout to the candidate or family at the time of a tragedy is a reduced sum over the life of the policy.

This coverage works like a term plan in which the sum assured that is paid at the end of the policy term gradually decreases over the term of the policy. Unlike level coverages in which a lump sum fixed at the start of the policy is paid to the agent, the sum insured for reducing coverages decreases over time.

If the policy expires during the life of the policyholder, the sum insured decreases to zero and no payment is made.

Secure your financial future

Amid the coronavirus, securing your financial future can ensure your anxiety levels remain low. Some life insurance policy decisions that can help include:

Life Cover With High Sum Insured

The sum insured is the fixed value that an insurer pays to the agent on the death of the policyholder. To ensure that your family is financially secure, experts suggest taking out life insurance with a high sum insured.

Nishant Jain, co-founder and chief product officer 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 cover. .

“If you don’t already have life insurance, choose a sum insured of at least 10 times your annual income. Or get an additional life insurance policy to cover the difference,” advises Jain.

Those who already have life insurance coverage can increase their sum insured in two ways.

The first is to opt for another life insurance policy and abandon the one they already have, as most life insurance companies in India do not offer sum assured extension in the policies. existing.

The other is by opting for an endorsement.

Amendments or Add Ons

Riders, also known as add-ons, refer to additional benefits that policyholders can purchase on top of their insurance plans.

Sanjay Tiwari, director of strategy at Exide Life Insurance, says most policies offer the option of adding riders such as critical illness, hospi-cash, term rider, waiver of premium riders on death or illness serious. Opting for these can significantly help the life of the insured in the event of a contingency or serious illness.

An example of a coronavirus-specific endorsement is Max Life Insurance’s COVID-19 insurance plan in which the company provides coverage to the insured after a waiting period, usually 15 days. If the insured is diagnosed positive for 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

Investment plans allow consumers to create a tax-free financial corpus for their family while securing their lives.

Tiwari advises taking out a savings plan or an annuity plan to secure his financial future based on his existing life insurance coverage.

savings plan

A savings plan is a type of life insurance plan in which consumers can obtain life protection and periodically invest part of their premium. Some of the most popular savings plans include: unit-linked insurance plans (ULIP) and endowment plans.

ULIP

A ULIP allows you to obtain insurance and invest in market-linked equity and debt funds and asset classes to generate returns.

If the policyholder dies during the term of the ULIP, a death benefit amount is paid to the applicant, regardless of the value of the returns of his ULIP investment.

Depending on the policy, the applicant gets either the sum assured or the maturity value of the ULIP or both. The value at maturity is the return generated by the ULIP investments that the insurance company makes on your behalf in the markets.

In the event that the insured survives the duration of the ULIP, he obtains the value at the end of the ULIP.

ICICI Prudential Life Insurance, promoted by one of India’s largest banks, ICICI Bank Limited, and Prudential Corporation Holdings Limited, states that ULIPs provide flexibility and control over your money in the following ways:

1. Switch funds – An option to move your money between equity, balanced and debt funds.

2. Premium Redirection – An option to invest your future premium in another fund of your choice.

3. Partial Withdrawal – An option that allows you to withdraw part of your money.

4. Top-Up – An option to invest extra money into your existing savings.

Staffing plans

A capitalization plan allows you to obtain coverage for life and a fixed return at maturity.

Capitalization policyholders receive their sum insured on the due date. In the event of premature death, applicants receive the sum insured.

These policies are a savings plan to meet financial needs such as financing children’s education, the proceeds of building a house and retirement.

Annuity plan

An annuity plan is a retirement plan that allows consumers to receive sustained income, usually after retirement, in return for a lump sum payment made at the time of policy purchase.

This sustained income can be obtained in the form of a lump sum payment when an immediate annuity plan is chosen. In the case of a deferred annuity plan, the policyholder receives a monthly, quarterly or annual periodic payment of his returns on the plans.

Make sure your life insurance policy ticks some boxes

Although purchasing 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 for the policy to be useful in the event of sudden need.

Evaluate the policy carefully before signing up: You should 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 expire or be interrupted. To ensure that your life insurance claim is honored in the event of an eventuality, you should keep your policy active.

Tell your family about your policy: Family members should be informed about insurance policies and the claims process when you decide to purchase a policy. Any ignorance can lead to mental agony and can deprive family members of the benefits you had carefully planned for them.

Be truthful about your health with the insurer: Any information relating to existing health conditions, including current and present status of COVID-19, should not be concealed or hidden. Such misrepresentation of facts and health conditions may hinder 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.

Conclusion

The coronavirus pandemic is a wake-up call for anyone who either hasn’t considered getting life insurance or has postponed the option of a suitable plan in anticipation of their good health ensuring they live a long life. .

The uncertainty surrounding coronavirus infection and survival rates if affected is reason enough for Indians to consider securing their family’s financial future in the event of an unexpected tragedy.

Share.

About Author

Comments are closed.