Learn more about life insurance policy features
Congratulations!! You are a step close to finding out the best life insurance policy features for you. If you are reading this article, it means that you are eager to get the best coverage. You might already read a lot of, or this is your first bits of information about a life plan. If you want to get the best coverage for your unique needs, then read on and find out more about these life insurance policy features.
What are the main features of life insurance
Now that you’ve gotten a good idea of a life insurance policy, it’s time to take a look at the many features of life insurance –
1. Issued in the name of the policyholder
One of the primary features of life insurance plans is that it is issued only in the policyholder’s name. A policyholder is an individual who purchases a life insurance policy and pays the requisite premiums.
Generally, there tends to be just one policyholder for a typical life insurance plan. That said, that’s not always the case. Like a joint life insurance plan, some plans allow you to have more than one policyholder.
2. Flexible premium payments
As you’ve already seen above, to be able to enjoy a life cover, you’re required to pay premiums to the insurance service provider. You can also choose the frequency of premium payments you wish to make.
For instance, you can choose to pay the premiums for your life insurance policy as a lump sum amount. Alternatively, you could choose to pay them at periodic intervals such as monthly, quarterly, half-yearly, or annually.
3. Customizable tenure
When you purchase a life insurance policy, you’re required to choose the plan’s tenure. The policy only offers protection until the end of the selected tenure, known as the policy term. The life cover is only valid during this tenure.
This tenure can be customized according to your needs and requirements. For instance, you can choose a term of 20 years if you require life insurance coverage for the next 20 years. Some life insurance plans offer you whole life coverage, meaning that they are valid till you attain 99 or 100 years of age. This varies from one program to another.
4. Customizable sum assured
The sum assured component of a life insurance plan is the pay-out that your nominee gets from the insurance service provider in the event of your demise. Like the tenure of a life insurance plan, you can also customize the sum assured when purchasing the policy. That said, here’s something that you need to know. The premium you’re required to pay for a life insurance policy depends on the sum assured amount you choose. So, for example, the premium for a life insurance plan with Rs. 1 crore as the sum assured is likely to carry a higher premium than a similar plan with just Rs. Fifty lakhs as the sum assured.
5. Pay-out on death or on maturity
Another one of the important features of life insurance is that the insurance service provider pays out the sum assured only under one of two incidents – upon the death of the policyholder or the maturity of the life insurance plan. For pure term insurance plans, pay-outs are only made on end.
When the insurer pays out the sum assured to the nominee in the policyholder’s death, the pay-out is termed the death benefit. Similarly, when the pay-out is made to the policyholder themselves on the policy’s maturity, it is termed as maturity benefit.
6. Ability to assign nominees
Nominees are the individuals entitled to receive the sum assured in the event of the policyholder’s demise. Nominees usually need to be assigned at the time of purchase of a life insurance policy itself.
However, you can also choose to assign them at a later point as well. That’s not all. You can also choose to switch your nominees at any point during your life insurance plan tenure.
7. Features an investment component
Not all life insurance policies stick to just providing a life cover. Unit Linked Insurance Plans (ULIPs) and savings plans also come with an investment component over and above a life cover. This feature ensures that you get benefits paid out to you on maturity.
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Life insurance policy details
Life insurance policy details outline the major pieces of the policy. This includes what’s covered by the insuring company and your rights as an owner, such as changing the beneficiary and, when applicable, borrowing against the policy’s cash value. The insuring agreement comprises smaller sections, which vary based on your specific policy. They may include:
- Tables or illustrations.
- These are used to show potential future premiums, cash value details and death benefits. They can also demonstrate how the cost of insurance may fluctuate over time.
- Most policies include a section that defines the terms used in the policy. Knowing what the words mean can help you better understand the policy.
- This section provides instructions on how a beneficiary can make a claim and the choices available for receiving the policy’s benefit.
- Endorsements and riders.
- Additional coverages that make changes to the policy or other benefits will be listed in this section.
Additional provisions will likely be included in your life insurance policy. State insurance regulations, the insurance company and the type of policy you purchased determine the conditions contained in a policy. Common provisions include:
- Your application.
- Most states consider the insurance contract the application and policy pages together.
- Incontestability provision.
- This establishes the period during which a life insurance policy can be contested for potentially inaccurate information on the application. Assuming premiums have been paid, insurance companies can typically only investigate the application in the first two years the policy is in force.
- Grace period.
- If you miss a payment, most policies provide a specified amount of time for you to make a payment before the policy lapses.
4 types of life insurance that are available
There are two major types of life insurance—term and whole life. Whole life is sometimes called permanent life insurance, and it encompasses several subcategories, including traditional whole life, universal life, variable life and variable universal life.
What does life insurance cover
Life insurance policies cover almost all deaths, with a few exclusions. As long as your policy is active when you die, life insurance providers will pay out if your death is caused by:
- Natural causes: Like a heart attack, old age, or illnesses like cancer
- An accident: Including accidental overdose from a prescribed medication
- Suicide: As long as it occurs after the policy’s two-year suicide clause period ends
- Homicide: Unless the beneficiary played a role in the murder
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About Coach B.
After starting his financial career with Phoenix Home Life Insurance Company back in 1992, Scott decided he wanted to provide people with an easier and more enjoyable way to buy life insurance. That was the start of Coach B. Life Insurance, whose mission is to be transparent, honest, and helpful to customers — without ever bugging or pushing them.
In the years since then, he has worked tirelessly to improve the process of shopping for insurance. His goal is to make sure that everyone who comes to Coach B. — whether they end up buying a policy or not — has the best possible experience.
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