Life insurance is protection against financial loss resulting from insured Individual’s death. In realistic terms, life insurance provides you and your family the financial security and certainty to deal with the aftermath of any unseen unfortunate events.
Life Insurance provides you and your family with protection against all the risks involved, moreover providing you an opportunity to grow your investments. It could be viewed as a long-term investment to provide for your child’s future expenses or your expenses, post retirement.
You need insurance for Family that is financially dependent on you: If you have a family that is financially dependent on you, then you definitely need to insure yourself. The most common reason to buy life insurance is it provide protection to your family incase of any unforeseen events. The life insurance proceeds can be used to support your family members with the expenses.
Loans or liabilities: It is very important to insure yourself if you have taken a loan or mortgaged your assets. It not only provides peace of mind but also a steady source of income for your family
Compulsory saving-cum-investment: A life insurance policy could be used as a compulsory saving-cum-investment avenue. Proceeds from the insurance policy could be used to fund future expenses such as child’s higher education or retirement funds or even a well-deserved holiday.
Partner in a firm or Self-employed: It is highly needed by people who are partners in a firm or have their own proprietor firms. Life insurance can be a critical component for specialized business applications - such as funding a buy-sell agreement. The proceeds of a life insurance policy could be used to provide cash for the purchase of a deceased owner’s interest in the business or to pay off business liabilities.
Other than the RBI Bonds, insurance products are the only other investment products that guarantee yields over a range of time - from 5 years to 25 years. Insurance companies offer single premium investment products as well as regular investment-cum-insurance products that guarantee high yields over a period.
Breadwinner - If you are the breadwinner of the family, you should insure yourself first.
Working spouse - If you have a working spouse who could use an insurance policy, both of you could insure yourselves in a joint-life policy. It could serve as a low-cost policy which covers both of you, and which either of you could use for tax-saving purposes as well.
Children - If you have children you could buy an insurance policy in their name. This would ensure that your children receive a certain sum of money in their needy years of higher education. The major advantage in such a policy is that your child or family receives a guaranteed amount of money at a specified period in life.
This type of a policy helps since the earning parent may not be alive later when the child needs money for higher education and the spouse may not be in a position to provide such a large sum of money. Moreover, a policy of this kind ensures a compulsory saving for the child’s future.
Partner/Key-person in the organization: If you have a working partner in your firm or a key-person(s) in the organization, your firm/organization could buy life insurance for them. Such a policy would insure your firm against any financial loss that would be incurred in the event of your partner/key-person’s death.
The minute you have people dependent on your income, you should insure yourself. The younger the age, the lower is your premium. At LIC of India, we believe anybody who is married and has children or plans to have children needs to be insured.
Even if you are single, earning and intending to marry, you should think of buying a policy now, as it costs less now than it will when you marry.
Remember, it is never too late to buy an insurance policy. Even if you are 45, and are not insured, you could choose insurance products that provide benefits to your family and provide income during your retirement period.
Ideally, you should insure yourself for as long as you are the critical or crucial breadwinning member of the family.
With the growing nuclear families and the typical Indian sacrificing mothers/wives. It may be prudent to ensure that the working man covers himself for his whole life; to ensure that his wife receives a lump sum upon his death.
The two basic elements to all individuals are
» Risk coverage (i.e. Term Insurance)
» Savings for future (i.e. Pure Endowment)
The cost of buying an insurance policy depends on:
» Your age, health and the nature of work you do
» Policy type selected.
» Sum assured.
» Policy term.
» Premium paying term.
» Premium payment frequency.
» Riders (if any) attached to the policy.
The cost of a policy could be lowered if you
» Buy insurance at an early age (while the risk is lower)
» Insure yourself for a long period
» Insure yourself for a large sum assured; offer to pay premium annually, thereby receiving discounts
» Select a low cost policy such as a Term product, which offers negligible to minimum returns upon maturity.
Do not buy riders or additional benefits that do not seem to add value to you or are available as other insurance policies at lower prices.
The insurance sector is classified into Life and Non-life (or General insurance as we know it). Under Life insurance, an individual’s life is covered i.e., the insured’s nominee receives a certain sum of money if the insured individual dies within a specified time.
Under General Insurance, everything but an individual’s life is covered. Thus, an individual could insure himself for his health, home, automobile, travel, office, shop, and even pets.
To ensure you are safe, the least you should do is to ensure that you have
- Health insurance
- Life insurance, Accident Insurance
- Automobile insurance
- Home insurance
A Peace of mind, that you have secured your family from major risks – be it death, illness, accidents, theft or natural calamities
In monetary terms, you can claim tax-deductions under section 80C (although now the deductions will depend on your income bracket).
Premium paid towards a life insurance policy, up to Rs 1,50,000, can be claimed as a tax-deduction u/s 80C. However, the amount that can be claimed as a tax-deduction depends on the income bracket (given below in the table).
» Survival benefits or Interim benefits, i.e. money received during the term of a money back policy are tax-free. For example, money received from LIC of India Back policy, during the term of the policy, is guaranteed and tax-free.
» Maturity benefits or the amount received at the end of the term of a policy is also tax-free.
» Premium paid towards certain pension policies such as LIC of India – Lifelong Pension Plus is eligible for tax deduction under section 80C.
» Regular pension received under pension policies is taxable. However, the lump-sum cash option available under these policies is tax-free.
» Proceeds of a life insurance policy, received by the nominee, are tax-free.
» For a Health insurance policy, you can claim the premium amount, up to a maximum limit of Rs 10,000 u/s 80D.
Moreover, the money you receive from the insurance company, during the term of the policy and/or upon maturity, is tax-free (with the exception of the pension policies).
You could use some of the insurance policies as investment products.
Insurance companies now offer a variety of products that allow the insured to choose his investment option. There are policies that offer a fixed guaranteed rate of return, some offer a market-linked rate while some allow the insured to select his investment option. In the current state of the market, yields from insurance products can be expected to vary in the range of 6.5 -7.5 - 8% per annum (pre tax).
Life insurance usually without medical examination, on a group of people under a master policy. It is typically issued to an employer for the benefit of employees or to members of an association, for example a professional membership group. The individual members of the group hold certificates as evidence of their insurance.
The type of policy that suits you best depends on many factors, such as your insurance objectives, your income, assets, liabilities, number of dependent members in your family and family expense. Life insurance policies are broadly classified in to three categories
» Endowment policies
» Whole life policies
» Pension policies
Endowment policies cover the insured for a specified period. Thus, the insured may select to insure himself until retirement; e.g. if he is 25 years old, he may choose to insure himself for 35 years, until he reaches the age of 60.
» Upon the death of the insured (during the term of the policy), the nominee receives the sum assured plus the bonus, if any. Bonus is paid for the number of years the policy was in force.
» Upon surviving the term of the policy, i.e. upon maturity, the insured receives the sum assured plus the bonus for the term of the policy, if any. Thereafter, the insured is not covered by the policy.
» Endowment policies are usually more expensive in comparison to whole life policies. Endowment policies are broadly classified into two types - Endowment - Without profit and Endowment - With profit.
» Endowment - Without profit or Term products - offer the nominee the sum assured only, upon death of the insured. Upon surviving the term of the policy or upon maturity, the insured may receive the sum assured or a portion of the sum assured or a refund of the premium only. Typically, such policies are low-cost policies.
» Endowment - With profit policies - offer a bonus (which could be guaranteed) in addition to the sum assured, upon death of the insured or at the end of the term of the policy. These policies cost more than the Endowment - Without profit policies. Currently, four types of Endowment - With profit policies are offered in the market:
» Upon death of the insured, the nominee receives sum assured plus bonus for the number of years the policy was in force.
» Upon surviving the term of the policy or upon maturity, the insured receives sum assured plus bonus for the term of the policy. The amount receivable upon maturity is tax-free.
» Many people prefer to buy such policies for terms that mature during their retirement period. Often, the maturity amount is utilized to supplement the pension income (pension income is taxable).
» During the term of the policy, the insured receives a fixed portion (percentage) of the sum assured at regular intervals. This money received during the term of the policy is tax-free.
» Upon surviving the term of the policy or upon maturity, the insured receives the balance amount of the sum assured plus bonus for the term of the policy.
» Upon death of the insured, the nominee receives full sum assured plus bonus for the number of years the policy was in force. (Money received by the insured during the term of the policy is not deducted from the amount paid to the nominee.)
» Money back policies cost more than Endowment - With profit policies. Many people prefer to purchase such a policy to utilize the money receivable for going on a holiday, re-furnishing their homes or even re-investing the same amount.
» The child receives sum assured plus bonus (if any) at a pre-determined time. This money is receivable irrespective of the fact that the proposer is dead or alive.
» The proposer for such a policy could be the parent/guardian/grand parent; he pays the premium for the policy.
» In the event of death of proposer, usually no further premiums need to be paid by the family. However, depending upon the policy type, the child may or may not receive the sum assured upon the death of the insured. However, the policy continues and the child receives the sum assured plus bonus, if any, at the pre-determined time of the policy.
» Upon survival of the term of the policy, the child receives money at the pre-determined time.
» Such policies are best suited for planning children’s higher education and marriage expenses.
» A portion of the premium is invested in the stock market or in a mutual fund. Thus, the returns earned on such a policy are transparent (unit-linked) since they can be tracked on a daily basis.
» The company utilizes balance part of the premium to cover insurance and administrative costs.
» In the event of death of insured, the nominee receives sum assured plus returns earned in the market by the insurance company.
» Upon surviving the term of the policy, the insured receives the returns earned in the stock market by the insurance company.
Whole life policies provide insurance until the death of the insured person.
» Upon the death of the insured, the nominee receives the sum assured plus the bonus, if any.
» Whole life policies typically offer no survival benefits, since there is no definitive term to the policy. However, the insured could make withdrawals or take loans against the cash value of the policy.
» Typically, the cash value (the interest or bonus earned on the premium) of a Whole Life policy is higher than that of an Endowment with Profit policy.
» Moreover, the premium for a Whole Life policy is paid for a longer duration of time (since the insurance coverage term is longer). However, the insured has the option of selecting the premium paying term.
» Pension policies provide a regular sum of money to the insured or to his nominee for a fixed period.
» The insured has the option of selecting when and for how long (term) she or he would like to receive the pension amount.
» In the event of death of the insured during the term of the policy, the nominee has the option of taking a lump sum amount or receiving a regular pension for the remaining term of the policy.
It is advisable to have a portfolio of policies with varied benefits, as a single policy cannot meet all your insurance objectives.
Term Insurance covers “Risk” and Risk means “Death”. Here a lump sum amount is payable only if death occurs during a selected period. If the insured survives till the end of the selected period, nothing becomes payable.
The insurer will receive a lump sum amount either at death during the term or at maturity of the term.
Whole life insurance risk covers the death of the insured, whenever it may happen. It means that there is no fixed term under whole life insurance. Most policies provide a dividend to the policy holder which helps with retirement.
There are two variations in the whole life insurance products i.e. » Pure Whole Life Insurance: - where premiums are payable continuously throughout the life of the insured till death. Risk coverage is for the entire duration of life and the life insured amount is paid on the happening of the death of the insured at any time. » Limited Payment Whole life Insurance: - where premiums are paid for a limited and shorter period and the option of the insured or till death if earlier. Risk coverage is however throughout the life of the insured.
Unlike endowment plans, in money back policies, the policy holder gets “periodic payments" during the term of the policy and a lump sum amount on surviving its term. In the event of death during the term of the policy, the beneficiary gets the full sum assured, without any deductions for the amounts paid till date, and no further premiums are required to be paid. These type of policies are very popular, since they can be tailored to get large amounts at specific periods as per the needs of the policy holder.
Rectification in relationship is subject to your declaration of the same at the time of buying the policy (on the proposal form or over the call). We would be able to rectify only after matching and verifying the details with the proposal form or call. Please contact us (firstname.lastname@example.org) with the policy details. You can also visit our nearest branch for the same
Please note that the increase / decrease of the sum insured is not allowed during the policy tenure. It can be done only at the time of renewal, subject to the terms and conditions of the policy and underwriter’s review.
Please note that the addition of a member is not allowed during the policy tenure. It can be done only at the time of renewal, subject to the terms and conditions of the policy and underwriter’s review. But you can buy a new policy for the additional member.
DOB change may affect the premium. Please contact us email@example.com or visit our nearest branch for the same.
Please contact us, firstname.lastname@example.org with the policy details. You can also visit our nearest branch for the same.
A health card mentions the contact details and the contact numbers of the TPA (Third Party Assistance). In case of a medical emergency, you can call on these numbers for queries, clarifications and for seeking any kind of assistance. Moreover, you need to display your health card at the time of admission into the hospital.
A health card is a card that comes along with the Policy. It is similar to an Identity card. This card would entitle you to avail cashless hospitalisation facility at any of our network hospitals.
For your ease of completition of formalities, please Cantact us email@example.com. You may also like to see more details in the 'Claims' webpage of your respective type of insurance cover.
Cashless Hospitalization is one of the two methods of effectively utilizing your health insurance cover. With cashless hospitalization, you no longer need to run around paying off hospital bills and then following up for a reimbursement. All you now need to do is get admission to any of our network hospitals and concentrate only on your recovery. Either in the case of an emergency or a planned hospitalization, all you have to do is use your health ID card at our network of more than 3,000 hospitals pan India and avail of the cashless service.
For any query related to customer service, kindly Contact us firstname.lastname@example.org anyday, anytime.
Cashless Hospitalization is one of the two methods of effectively utilizing your health insurance cover. With cashless hospitalization, you no longer need to run around paying off hospital bills and then following up for a reimbursement. Either in the case of an emergency or a planned hospitalization, all you have to do is use your health ID card at our network of more than 1700+ hospitals pan India and avail of the cashless service.
A mutual fund is a financial instrument that collects money from several investors like you, and invests it in various investment options like shares, bonds, etc. This fund is managed by experts.
Depending on where your money is invested, mutual funds can be classified into three types: Equity, Debt and Hybrid. Equity mutual funds invest in shares of companies listed on the stock exchange. Debt mutual funds invest in bonds of reputed companies and government bonds. Hybrid mutual funds invest in both, shares and bonds.
A mutual fund company collects money from many investors, and invests it in various options like shares, bonds, etc. This fund is managed by professionals who understand the market well, and try to achieve growth by making strategic investments. Investors get units of the mutual fund according to the amount they have invested.
Some of the major benefits on investing in a mutual fund are: - Diversification - Professional management - Convenience - Liquidity - Variety of schemes and types - Tax benefits
NFO stands for a New Fund Offer. When a new fund is launched for investors, it is known as a NFO. A NFO could also be the launch of additional units of a close-ended fund.
A fund of fund is a kind of mutual fund that invests in a variety of mutual funds.
A Systematic Investment Plan (SIP) is a convenient method of investing in mutual funds. Under this plan, an investor contributes a fixed amount towards the mutual fund scheme at regular intervals, and gets units at the prevailing NAV.
Investing in SIP offers two major benefits: - You can start investing with a small amount - You can average out your investment, as SIP involves buying units at different points of time and at different NAV levels
Under a Systematic Withdrawal Plan (SWP), an investor redeems a fixed number of mutual fund units at regular intervals.
Rupee cost averaging is one method to save regularly and minimise the effect of market volatility on investments. By investing through methods like SIP, you invest a fixed amount in mutual funds at regular intervals. So, you get more units when the NAV is low and fewer units when it is high. Eventually, your average cost per unit is brought down.
NAV stands for Net Asset Value of a mutual fund. This is basically the price of one unit of a mutual fund.
NAV can be calculated as follows: Assets of the fund – Liabilities of the fund / Number of outstanding units for that fund
Sectoral mutual funds invest your money in shares of companies of one particular sector. The main objective of these funds is to provide high returns from one particular sector that has the potential to grow.
Liquid funds are mutual funds that offer high liquidity. This means, the units of these funds can be sold immediately, and the invested amount can be redeemed quickly.
Capital protection funds are mutual funds designed to protect your capital. These funds put a major portion of the investment in bonds, and a small portion in shares. Over time, the portion invested in bonds grows to the size of your original investment. So even if the portion invested in shares does not do well, your capital is still protected.
Open-ended funds can be bought and sold at any time; they have no fixed tenure.
You can buy units of close-ended mutual funds only when a mutual fund company launches the fund. Once you buy them, you have to hold your investment for a fixed tenure.
Redemption price is the price that you receive on selling each unit of your mutual fund investment.
Suspension of AMFI Certificate. In case Self Declaration not submitted to AMC before the end of the financial year, or within 3 months from the start of next financial year then his brokerage will be suspended thereafter till submission.
Most mutual fund companies have their website, where information related to all the mutual fund schemes is available. You can also log on to the official website of the Association of Mutual Funds in India (AMFI):www.amfiindia.com To view information related to regulations and guidelines for mutual funds, addresses of mutual funds, etc. one can log on to www.sebi.gov.in and click on the ‘Mutual Funds’ section.
In order to extend the convenience that investors in the secondary market have, to investors in Mutual Funds, SEBI has allowed Stock Exchanges to offer their existing infrastructure for subscribing and redeeming units of a mutual fund scheme.
In accordance with the same, National Stock Exchange of India Ltd. offers Mutual Fund Service System (MFSS) and Bombay Stock Exchange Ltd. offers BSE Stock Exchange Platform for Allotment and Repurchase of Mutual Funds (BSE StAR MF) [collectively called as Stock Exchange Platform(s) for Mutual Funds] for transacting in certain schemes of Birla Sun Life Mutual Fund.
For further details on trading through Stock Exchange Platform(s), you may refer to the following websites:
All transactions carried out through the Stock Exchange Platform for Mutual Funds shall be subject to such guidelines as may be issued by NSE, BSE and also SEBI (Mutual Funds) Regulations, 1996 and circulars / guidelines issued thereunder from time to time, in this regard.
Yes. NRI’s are allowed access to Birla Sun Life’s Online Portfolio Management System.
This free and 24/7 service allows investors to:
- Track and manage their investment portfolio online - Transact Online – Additional Purchases, Switches and Redemptions - Download Account Statement - Post your queries & requests on email to a relationship manager
Payments by NRIs/FIIs may be made by way of Indian rupee drafts purchased abroad or out of funds held in NRE/FCNR account or by way of cheques drawn on non-resident external accounts payable at par and payable at the cities where the Investor Service Centres are located.
In case of Indian rupee drafts purchased and subscriptions through NRIs/FCNR account, an account debit certificate from the bank issuing the draft confirming the debit should also be enclosed.
NRIs investing on a non repatriable basis may do so by issuing cheques/demand drafts drawn on Non-Resident Ordinary (NRO) account payable at the cities where the Investor Service Centres are located.
Payment to NRI/FII Unit holders will be subject to the relevant laws / guidelines of the RBI as are applicable from time to time (subject to deduction of tax at source as applicable).In the case of NRIs :
- Credited only to NRSR account of the NRI investor where the payment for purchase of Units redeemed was made out of funds held in NRSR account or
- Credited, at the NRI investor's option, to his / her NRO or NRSR account, where the payment for the purchase of the Units redeemed was made out of funds held in NRO account or
- Remitted abroad or at the NRI investor's option, credited to his / its NRE / FCNR / NRO / NRSR account, where the Units were purchased on repatriation basis and the payment for the purchase of Units redeemed was made by inward remittance through normal banking channels or out of funds held in NRE / FCNR account.
Non Resident Indians and Persons of Indian Origin residing abroad (NRIs) / Foreign Institutional Investors (FIIs) have been granted a general permission by Reserve Bank of India Schedule 5 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 for investing in / redeeming units of the mutual funds subject to conditions set out in the aforesaid regulations