Life insurance in India is understood as a means of investment and tax savings. Though the basic objective of Life Insurance is to provide financial security to the family in case of any miss-happening to the bread winner of the family. In case of an eventuality to the life assured the insurance company pays to the family a sum called as the sum assured. Sum assured is decided at the time of buying the insurance policy and should be sufficient enough to replace the economic loss to the family in case of death of the life assured. As a thumb rule the sum assured should at least be ten times the annual income of the earning member. Life insurance is a contract based on the principal of good faith between the insurance company and the life assured.
Besides providing financial security to the family, in case you have large debt obligations e.g. a home loan or any other form of large borrowings it is strongly advised that you should go for a Life insurance in the form of a Term Insurance.Term Insurance is also highly recommended in Financial Planning as a protection of the financial goals (Also called as risk planning) in case of any eventuality to the earning member.
There are various Life insurance products available in India. Besides the financial security insurance companies also provide savings cum investment scheme bundled with Life Insurance. These schemes are in a common parlance called as ULIPs (Unit Linked Insurance Plan), Endowment Plans, Whole life Plans, Children’s Plans and Retirement Plans. These plans provide for Insurance during the coverage period and a lump sum at the time of maturity as maturity benefits.
Premium for a particular age are charged based on the mortality rates for that age bracket. For a 30 years policy starting at 25 years of age and ending at 55 years of age, for each age bracket there would be a different premium. As the age increases the mortality rate increases hence the premium. Level premium is the average premium calculated by adding the rate applicable for each age bracket and diving by the number of years and remains the same through the term of the policy.
How much insurance would depend on the following factors? Human Life Value Calculator.
There is a provision of Tax rebate u/s 80 C of the income tax for buying a life insurance policy upto Rs 1 lac. The maturity proceeds / Death benefits are free from any kind of Tax in India.