What is life insurance? Life insurance is a contract between an insurance company and the insured whereby the company guarantees payment of an agreed amount (called death benefit) to the named nominee if something untoward happens during the policy period or at the end of the policy, termed as maturity. The insured needs to pay regular premiums to the insurance company for the policy to be valid.

Why is life insurance important? If you buy life insurance, you are doing it for the financial security of your family, which relies on you, and to get multiple benefits such as tax exemption and planning for your child’s higher education.

If my age is 30 and annual salary is around Rs 5 lakh, how much cover should I be looking at? If you are around 30, you have another 30 years of working life ahead of you. Your current annual salary is around Rs 5 lakh, but you will be getting raise every two years or so. Hence, you could look at an insurance amount of Rs 1 crore. Remember to consider inflation as well.

How do I process a life insurance claim? In general, beneficiaries and insured persons can make a life insurance claim in either of the two following cases: (a) if something untoward happens to the person for whom the insurance policy has been taken, and (b) the policy matures. You need to inform the insurer, fill in the relevant forms, and submit the documents requested.

What is premium? It is the money that the policy buyer pays the insurance company on a regular basis (monthly, twice a year, or annually) in lieu of the guarantee of the death benefit

Who decides what the premium amount should be? The insurer does, and the amount depends on several factors that can impact the insured’s life expectancy, such as age, gender, smoking habit, personal medical history, and family medical history (such as heart disease or cancer among immediate family members).

Is the gender of the insured important? Yes. The average Indian woman lives longer than the average Indian man, therefore, the premium for women is lower than that for men of the same age, everything else remaining the same including smoking habit.

Why is nicotine-use a factor for determining the premium? Nicotine use becomes a factor in determining the premium because a non-smoker is expected to live longer than a smoker–in any country.

What if the premium is not paid? If premium remains unpaid one month after the due date (that is the ‘grace period’), the policy will lapse. In that case you, as the insured, will have wasted all the premiums you have paid in previous years. Additionally, your beneficiary will also not receive a pay out as the policy will be deemed ‘lapsed’.

What happens if the insured dies before paying the due premium? If the insured dies during the plan term, before he or she can pay the premium, the due premium will be deducted from the death benefit.

If the insured pays all premiums and does not die during the term period, do they get the sum assured? In case of a term life insurance policy, there are no paybacks. So, if you as the insured buy a standard term insurance, and you outlive the plan, you get nothing. But do not forget that your primary objective is to create a protective financial umbrella for your loved ones. For other plans, except term plan, you get the money after the policy matures.

Are there no monetary benefits from investing in term insurance? Besides insuring your family, this type of life insurance offers various tax deductions and exemptions. Under Section 80C of the Income Tax Act, you can claim a deduction of up to Rs 1.5 lakh on your policy premium. Even the proceeds that your loved ones get in your absence or the amount you get at the maturity of the term is tax-free. Learn all about tax benefits here.

Can I create wealth from life insurance? Absolutely! But for that, look for a policy with maturity benefits. Most people are unaware of the additional benefits apart from the death and disability benefits. So, check out the various types of life protection plans: Here are a few to consider WHOLE LIFE: Regular premiums until death, after which the corpus is paid to beneficiaries; no expiration; ENDOWMENT PLANS: Sum assured is paid under both scenarios – death and maturity; ULIP: Risk cover plus investment options, assured pay out; MONEY-BACK: Insurance-cum-investment with periodic returns as a percentage of the sum assured.

Is there anything else I can do with my policy? Yes, insured persons have the option of taking loans against their policies without upsetting the policy benefits.

Does Aegon Life have all this? Aegon Life has all this, and more. Aegon Life offers term plans, whole life, ULIP, money-back, retirement plan, and child plan. Check the website here for more details.

When should I buy life insurance? Whether you are in your 20s, 30s, 40s or more – it is always a good idea to get insured.

What are insurance riders? A rider is an attachment or amendment that supplements the term plan coverage, helping the insured meet specific needs. There are various types of riders Accidental death and dismemberment

Critical Illness

Waiver of premium

Income benefit

Partial and permanent disability

Can life insurance claims be rejected? Yes, the insurer can reject a life insurance claim on grounds of Misrepresentation of actual information

Non-disclosure of correct information

Fraud

Does life insurance not cover any particular type of deaths? Claims of death due to drunken driving, accidents while inebriated, self-inflicted wounds, murder, death in a war or known violent area, dangerous hobbies like skydiving, and death due to sexually-transmitted diseases are not entertained.