Your life insurance premium depends on several factors. This also relates to the fact that the premium amount is different for different individuals. The main factors contributing to the calculation of life insurance premiums include age, the type of coverage you are opting for, the amount of coverage, and personal factors such as credit history, driving records, smoking status, occupational status, etc.
Who is a policyholder for insurance premiums?
A policyholder is a person who owns a life insurance policy. Usually, they are the ones insured under the policy. However, sometimes, the policyholder may be a relative of the insured, a corporation, or a partnership. The policyholder has the right to exercise all privileges that are provided in the life insurance contract.
What is Sum assured?
Every policy comes with a fixed amount that the policyholder is entitled to receive at its maturity. This value is termed the sum assured. Simply said, it is the assured amount offered by the company at the end of the policy term. Sum assured is mentioned in the policy details during its inception.
Who is a nominee?
In life insurance parlance, a nominee is a person who receives the sum assured and other benefits in case of an insured person’s death. The choice of nominee depends totally on the policyholder and is usually mentioned while buying the life insurance policy. In most cases, the nominee is someone from the family.
What is the difference between a policy term and a premium payment term?
The policy term is the time period for which you are covered. Policy paying term is the duration for which you have to pay the premium of the policy. For instance, the policy term as a whole can be 50 years but premium paying term can be 25 years. This means that you need to pay a premium for 25 years but you are covered for 25 additional years.
Read more: Premium paying terms
What are the documents you need to get life insurance in India?
The main documents required to apply for a life insurance policy in India include an
- Age proof (passport, PAN card or school leaving certificate)
- Address proof (driving license, passport, voter ID, ration card, rental agreement, bank statement, etc.)
- Photo ID proof (voter ID, Aadhaar card, etc.)
- Income proof (Salary slip for three months, bank statements, last 3 years income tax returns)
- A passport-size photo
- A cheque in the name of the insurance company
Tax Benefits of Life Insurance (80C, 80D and 10D)
If you buy life insurance, you qualify for a tax deduction of up to Rs 1.5 lakh annually under section 80C of the Income Tax Act, 1961.
Under Section 10D, the income that you receive on the maturity of your policy remains tax-free if the premium does not exceed 10% of the sum assured or if the sum assured is at least 10 times the premium amount.
Income deduction under section 80D includes saving of taxes on health insurance premiums up to Rs. 1 lakh in case the policyholder or his parents are above the age of 60.
Source- how to make full use of section 80 D
How to pick the best life insurance plan?
One needs to consider various factors before choosing the best life insurance plan. You might look forward to:
- Considering if your insurance plan has accident coverage or not
- Choosing a plan that provides income to your family after your death
- Checking and then choosing the plan with a premium that is under your budget
- Deciding on whether you want to opt for health insurance or not
- Selecting a plan that adjusts premium according to your age and income
- Opting for a plan that is convenient
What are the advantages of buying a life Insurance plan online vs. offline?
The key benefit of buying a life Insurance plan online as compared to offline is that there are no agents involved. Hence, you can eliminate unwanted commissions and intermediary costs. Most online policies are cheaper than offline ones. Also, you get transparency and trusted services of the company where all conditions are standard and addressed nicely without any hidden costs.
Must read: offline vs online term insurance
What are the payout options available for ICICI Pru Life Insurance Plans?
ICICI Pru Life Insurance Plans offer flexible payout options that cater to every type of policyholder. You can choose from 4 payout options. These are:
- Lump-sum: The agreed life cover is paid as a fixed amount to your family in case of your unfortunate death.
- Monthly– for 10 years, you will get 10% of the benefit amount on a monthly basis. Nominees can opt between getting the benefit as a lumpsum amount or as a monthly income.
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Increasing income: This option provides a 45% additional life cover. It is suitable for policies including a large sum amount.
Lump-sum plus income: The life cover gets paid in two parts as per your selection during policy initiation. You can choose to receive half of the amount in a lump sum manner and the rest can be chosen to receive on a monthly basis.
Frequently asked questions
What is included in the insurance premium?
The amount you pay each month (or annually) to maintain the status of your insurance policy is known as an insurance premium. Depending on the kind of insurance you have, a number of factors, including risk, coverage amount, and more, affect how much your premium will be. It is not applicable to every kind of life insurance.
What is the total figure of insurance premiums collected in India?
As of 2021, the amount of insurance premiums paid in India is $127 billion (life: 76%, non-life: 24%). Compared to the global average of 9%, the total insurance premium in India climbed by 13.5% in 2021.
How can you calculate the total premium?
You can easily do so by multiplying the benefit amount and the premium rate set in the policy of your insurance
What is the premium insurance ratio?
Net premiums written divided by policyholder surplus give you the premium-to-surplus ratio. The difference between an insurance company’s assets and liabilities is known as policyholder surplus. The premium-to-surplus ratio is a useful metric for assessing an insurance provider’s ability to write new business.