10 FAQ’s While Buying a Life Insurance Policy

1. What are the different types of life insurance policy available?

While buying a life insurance policy, you have the options to choose from:-

Whole life policy- This policy provides you cover for your whole life. The policyholder pays premium for his whole life, till his death and upon demise, the family is given the death benefit.  You can enjoy the cover under this policy for your whole life as it has no limit on policy term.

Term insurance Plan- This is the most economical way of buying a life insurance policy as it allows the buyer to choose his policy term like for 10,15,20 or 25 years. The premium rates are very low in term insurance policies with a high cover amount.

Endowment Plan- The basic difference between term plan and endowment plan is, an endowment plan gives the maturity benefit upon survival. It also gives you the option of earning profits on the amount of premium you pay.

Unit Linked Insurace Plan- This policy gives you investment option in stock/debt in addition to life cover.    

2. How much life insurance cover do I need?

One of the most basic ways of determining your life insurance is based upon your annual income. Your amount of cover should be equal to five times of annual gross income. But never forget to consider number of dependents, assets, liabilities, lifestyle and future obligation while deciding the amount of cover. 

3. What are policy riders?

Riders are additional benefits which can be added to your life insurance policy by paying extra premium. Rider  enhances your cover of life insurance policy, for example, by adding a critical illness rider to your life insurance policy, you will get cover for specific critical illness under the same policy. Following are some of the different types of riders available with a life insurance policy:-

 -Critical illness rider

 -Accidental death benefit

 -Partial and permanent disability

 -Income benefit rider

4. What if I don’t die?

First of all it depends on the type of life insurance policy you are having. If you are having a simple term plan, then you will get nothing if you survive the policy term as it contains no maturity benefit while if your policy has a maturity benefit like Endowment plan, you will get the sum assured upon survival of policy term.

5. What are the different paying options?

 For the convenience of the policyholder, most of the insurer offers monthly, quarterly, half yearly and annual mode of premium payment for your life insurance policy. You can choose the premium payment mode according to your convenience.

6. What if I fail to pay the premium?

If you fail to pay the premium on the due date, you will get a grace period of 15/30 days after your due date, during which you can pay the premium. But if you fail to pay the premium even after the grace period, then your policy will lapse.  

7. How do I buy a life insurance policy?

You can buy a life insurance policy through an agent or through online medium. Most of the people prefer online mode of purchase because it is quick and cost-effective than offline medium.

8. Can I upgrade my life insurance policy?

Depending on the type of policy, you may increase your cover amount of life insurance policy. Some policies offer an increase in cover at important stages of life like marriage or becoming a parent.

9. What if I cancel my policy?

You get a free look in period of 15 days after the purchase of the policy, during which you can cancel your policy if you are not satisfied and you will get full refund of  of payment. But if you have passed the free look in period, then you will receive the surrender value upon cancellation of the policy only if you have paid premium for minimum three years.

10. What are the additional benefits with my life insurance policy?

In addition to your life insurance cover, you can get loan against your policy, return on investment, tax benefit, assured income benefit and many other additional benefits under your life insurance policy (benefits vary from policy to policy).