Life Insurance in India
Find out about the different types of life insurance policies available in India...
The life insurance sector in India has been fast growing since 2000. Life Insurance Corporation (LIC) is the company which offers life insurance in the public sector, while a variety of private insurance companies have emerged since the Insurance Regulatory Development Authority (IRDA) began issuing licences at the turn of the century.
Although traditionally thought of as paying funeral costs on death, life insurance has also grown into a form of financial planning and a wealth accumulation tool. As well as providing a financial payout to loved ones after death, life insurance can be seen as a long-term investment; often with in-built savings plans and regular returns.
In addition to providing cover for the domestic market, policies are also available for Indian nationals living abroad, people of Indian origin and foreign nationals living in India.
Different companies have different policies so searching for the company and product that best suits personal requirements is advisable.
- A list of life insurance companies is provided by the IRDA
Types of Policies
Different insurance companies in India offer varying plans at different rates using a variety of different investment vehicles. A brief overview of some of the types of plans can be found below:
Unit-Linked Insurance Plan
Offers protection as well as savings. Part of the premium is cover in case of death (death benefit) while the other part is invested in customer chosen funds (maturity benefit).
Traditional Savings Plan
Offers protection on death as well as a low risk investment plan with a guaranteed, but low, return. Can be linked to the performance of the insurance company (with-profits policy).
Protection / Term Plan
High risk protection offering a proportionately high payout on the event of death at a comparatively low cost.
Protection on death or after a given maturity period. The policy can be cashed in early or surrendered.
Protection on death as well as facilitating the investor to pre-determine an amount of regular income after retirement.
Requirements for Life Insurance Plans
The scope of life insurance cover and type for an individual is subject to:
- Country of residence
- Financial capacity
- Medical health
- Basic underwriting stipulations
Documents required to take out a policy may include:
- Valid work permit (if applicable) / visa
- Employment contract (if applicable)
- Proof of address
Life insurance companies often offer the ability to purchase premiums using bank transfer, over the phone via debit card, online through their website or at a branch (if applicable).
Credit cards issued outside of India are usually not accepted as a method of payment.
Payments for the premiums are made in Rupees as are any payouts following successful claims. Some companies may allow payment for the premium in foreign currency. If this is the case, then any payouts made can be requested in the same currency. If payment has been made in part using foreign currency, the equivalent proportion of settlement is made using the same currency.
It is legal to repatriate money to another country after a successful claim if desired.
Nationals of certain countries may not be able to receive cover including certain countries in Eastern Europe, Africa, South America and Asia.