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.