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Life Insurance

Life Insurance

Life insurance is a contract between an insurance policyholder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium after a set period or upon the death of an insured person. Life insurance offers you and your family financial protection. Some policies also offer optional add-ons, such as critical illness benefit, accidental death benefit, and more. The importance of life insurance cannot be ignored in ensuring the financial safety of your loved ones.
The death benefit that accrues to the beneficiaries upon the death of the insured person replaces the income that was earned regularly by the policyholder. This amount can be used by the dependents to pay off debts, meet living expenses and fund education and other long-term goals.
Buying life insurance does not just help provide financial support in the event of the insured person's untimely death, but it can also be a sound long term investment by helping you meet your life goals such as children's education, your retirement corpus or buying a second home.


Life Insurance Coverage

  • Monthly bills and expenses: One of the main uses for life insurance is to replace your income for those who depend on it. This is why it can be helpful to work with an agent or use a life insurance calculator to determine how much coverage you need. That way, you know your loved ones are going to be taken care of when you pass away. Upon receiving the death benefit, the beneficiary can use the money to pay for bills — including grocery, utility and childcare expenses — as well as other costs that may pop up. There aren’t restrictions on what kinds of expenses you can use a death benefit payment for.
  • Co-signed debts : Debt repayment costs can be tough on anyone’s budget, but paying down debts on which you co-signed after losing a loved one’s financial support can be even tougher. Mortgage payments, car loan costs and other debts can cause financial stress. Receiving a death benefit can help your loved ones pay those costs without worry.
  • College tuition and education : If you’re financially responsible for your child’s college tuition or education, you may want to factor those costs in when you purchase a life insurance policy. That way, should you pass away, you can still help your child pay for college. Adding the cost for college into your life insurance calculations could dramatically increase the death benefit amount that you need.
  • End-of-life expenses : Another primary function of life insurance is to pay for your end-of-life expenses. These could include your funeral costs, the price of a casket and the expense of a reception. Any life insurance policy’s death benefit can be used to pay for funeral costs. If that’s the only coverage you need, though, you may want to consider final expense insurance. This type of permanent life insurance provides a small death benefit and generally doesn’t require a medical exam for approval. However, compared to other policy types, final expense coverage may be more expensive for the amount of coverage you’re likely to get.
  • Child care or dependent care : From daycare and after-school programs to nannies and other expenses, life insurance policies can help cover the cost of childcare. If your beneficiary is also taking care of an aging parent or other dependent, a life insurance death benefit could help with those costs, too, if you pass away.
  • Medical expenses and long-term care : While life insurance is primarily used to provide financial support for your loved ones, you can sometimes use your policy to your benefit. Life insurance with living benefits provides options for you to use your life insurance coverage while you are still alive. There are different types of living benefits you can choose from, based on your needs. For example, many companies offer an accelerated death benefit rider, which provides you with access to a portion of your death benefit prior to your passing if you’ve been diagnosed with a terminal illness. This may help you pay for medical expenses while you’re still alive, reducing the financial burden on your loved ones after your passing.
  • Estate planning : In addition to funeral costs, life insurance can cover the cost of estate planning following your death. Estate planning is a little different from end-of-life expenses in that it involves securing an attorney to close out any remaining accounts in your name and officially report your death to the county and IRS. Many people fail to realize that descendants may still owe taxes to the IRS, and a life insurance policy can help them cover these costs so they are not incurring unnecessary financial burden.
  • Leaving a legacy : It’s easy to see life insurance as a practical purchase. After all, it’s helping your loved ones feel financially secure after your passing. But life insurance can go a step further. You could use your life insurance policy to leave a financial gift to your beneficiary, your children, an organization or a charity. If you choose to do this, just be sure you buy an appropriate amount of coverage. You’ll likely still want your loved ones to have enough of a payout to cover daily expenses, debts and the other costs mentioned here.

What is not covered in Life Insurance :-

  • Death due to natural causes or health-related issues: These kind of deaths are well within the purview of Term insurance plans. Even if a person dies due to existing medical condition or critical illness, the beneficiary of the insurer is entitled to the sum assured as the death benefit.
  • Death due to natural calamity : Death caused due to any natural disaster or act of god like Tsunami, Earthquake, floods, is not covered by Term Insurance, unless, you have opted for any particular riders for that purpose.
  • Homicide : We have often heard of cases where the policyholder is murdered by the nominee for money. In case any investigation reveals the involvement of the nominee in the death of the insured, then the nominee is not entitled to death benefits until the judiciary acquits the nominee.
  • Death due to intoxication : Death due to alcohol or drug overdose is also not entitled to payouts under Term Insurance plan.
  • Death due to existing illness : If you have an existing illness when purchasing a Term insurance plan, then it is mandatory to disclose it. If the disease is the cause for the death of the policyholder, the nominee is entitled to the payout only if the information has already been disclosed at the time of purchase. If there is a life-threatening disease that you are suffering from, the premiums might be higher, but then the claims settlement is smoother in case of a payout. This is why financial institutions require you to undergo medical tests for term insurance plans.
  • Death due to critical Illness : Death due to any critical illness is covered under Term plans. It also includes sexually transmitted disease like HIV/AIDS.
  • Death due to self-inflicted injuries : Term insurance plans do not cover death due to self-inflicted wounds.
  • Suicide : In case of death by suicide in the initial 12 months, the beneficiary receives 80% of the amount accumulated from the premiums in case of a non-linked plan, and 100% in case of a linked plan. Death benefits for suicide are typically on the discretion of the insurance companies. Usually the nominee is not entitled to any compensation if the insurer commits suicide after 12 months.
  • Death due to accidents. : Accidents can happen all the time. In case of an accidental demise, your nominee is entitled to a payout under term plans. Besides Term plans also have the option of attaching a rider that gives you additional payout over the sum assured in the original plan. However, there are certain exceptions to this. Accidental death due to intoxication or drugs or if the insured is involved in criminal activity is not entitled to any payouts. Also, accidental deaths when during adventure sports like skydiving, paragliding, bungee jumping, among others too are not covered by term plans.

Benefits of Life Insurance

Life insurance provides your family with much needed financial protection, in your absence. It gives you peace of mind and confidence and helps you save taxes. There are several benefits of life insurance. Let us take a look at some of them:

  • Financial security : Life insurance products can provide you and your loved ones with financial security. You can financially secure your family by choosing a substantial life cover+ so that they can maintain their standard of living in your absence
  • Wealth creation : These life insurance plans help you create wealth over time and build savings. Life insurance plans can be used to save for your future needs. They offer options to cover different types of risks and goals
  • Disciplined investment : With regular premium payments, life insurance plans inculcate financial discipline. They offer unique investment opportunities for every risk type with a wide range of products, such as unit linked life insurance plans, guaranteed savings insurance plans, endowment plans, and more
  • Retirement planning : Life insurance products like annuity plans, savings plans, endowment plans, and others help you build a retirement pool. These plans offer guaranteed income on maturity and help you secure your retirement with adequate savings
  • Tax savings: Life insurance plans offer many tax` benefits to facilitate better savings. The premiums paid are tax` deductible under Section 80C and 80D of the Income Tax Act, 1961. The maturity benefits also enjoy a tax-free` status under Section 10(10D) in most cases

Life Insurance

Type of Life Insurance Policies in India


Term Insurance The purest and most affordable type of life insurance plan that offers financial coverage to the policyholder against the fixed amount of premiums for a specific duration. In case of policyholder's untimely death, their nominee receives the Cover Amount, as per the chosen policy.

Term Return of Premium (TROP) :-

TROP(Term Return of Premium) is a variant of term insurance that provides an additional feature of Survival benefit. In addition to the life cover, if the policyholder survives the entire Policy Term, then all the premiums are paid back, excluding GST.

Whole life Insurance

Under Whole Life Insurance, the policyholder is covered till the age of 100 years. If you want to leave a legacy for your family, and ensure that they are always financially covered, then Whole life Term Insurance is the best option for you.

Retirement Plans :-

These are long-term investment plans which offer opportunities to get a stable post retirement income. During the investment period, a premium amount is paid at regular intervals which accumulates & grows. The maturity amount is then paid back post retirement based on the preference in-terms of lump sum or regular income.

Guaranteed Return Plan (Endowment Policy):-

A guaranteed high return with a life cover, is what an endowment plan offers. These are the preferred investment option for someone looking for a fixed lump sum as maturity after a specific duration. With a life cover benefit on death event and better returns than other fixed investment plans, makes these plans a must have inclusion in the investment portfolio.


Market Linked Systematic Investment Plan (ULIP) Unit linked investment plans (ULIPs) are unique market-linked life insurance plans that provide dual benefits of wealth creation through investments (in equity, debt or both) and a life insurance cover. High performing ULIPs have shown 15-20% returns (tax free), making it a popular choice for medium to long term investors.

Child Plan:-

These plans are designed to enable financial security for children where the returns on the investment helps fulfil a child's future needs like education. Child plans specifically ensures these remain intact even in your absence by providing life cover to the nominee & funding the balance premiums through the insurer thus ensuring the a secured future of the child

  • Eligibility criteria
  • Documents required
  • How to apply

What are the eligibility criteria to avail Life insurance?

  • Age: The lower limit is 18 years, and the maximum age for term insurance is 65 years. The age at which you apply for the term insurance will determine the premium you are to pay for it.
  • Citizenship : Anyone applying for term insurance must be an Indian citizen residing in India at the time of purchase. However, term insurance eligibility will remain the same if you leave India for education or work after purchasing.
  • Medical tests : Insurers would typically demand underwriting to get a medical test to understand your health. You must be completely honest with them about your medical history. This aspect also plays a significant role in deciding your premium.
  • Smoking habits: Whether you are a smoker or non-smoker plays a role in deciding your premium. The premiums are considerably higher for smokers.
  • Job profile : Along with income, your job profile is considered too. You will be charged a premium for your pure-term insurance plan if you work in high-risk environments.
  • Income: There is no specific bracket or limit for income eligibility for term insurance. However, you are asked for your income slips or bank account details to decide the term cover. And also determine whether you have a minimum income for term insurance to ensure that you can pay the premiums regularly and on time.

What are the Documents Required to Apply for a Life Insurance?

  • Duly filled Proposal Form
  • Photograph of the Proposer/Life Assured (Adhaar Card, Voter ID Card, Passport etc.)
  • Age Proof of the Proposer/Life Assured
  • Photo Identity Proof of the Proposer/Life Assured
  • Address Proof of the Proposer/LIfe Assured
  • Medical Examination Report of the Proposer/Life Assured
  • Income Proof of the Proposer/Life Assured
  • PAN Card of the Proposer/Life Assured

How to Apply for a Life Insurance?

With Loan Magic, you can apply for a housing loan in various ways:

  • Visiting our Branch

You can visit your nearest Loan Magic branch to apply for a Health Insurance offline. Our executives there will guide you through the entire process.

  • Through the phone