Fin Bank India

What is Life Insurance?

Life insurance is a contract between an individual (the policyholder) and an insurance company. Under this agreement, the insurance company promises to provide a financial payout (sum assured) to the policyholder’s family or beneficiaries in the event of the policyholder’s death during the term of the policy. This ensures that the family’s financial needs are met and their lifestyle is protected even in the absence of the insured individual.

In some cases, life insurance policies also provide maturity benefits (a payout at the end of the policy term) or additional benefits, such as coverage for critical illnesses or accidental disabilities.

Types of Life Insurance Policies

Term Life Insurance

A pure protection plan offering high coverage at low premiums for a fixed period (e.g., 10, 20, or 30 years).
If the policyholder survives the term, there’s no payout unless a "Return of Premium" option is chosen.

Whole Life Insurance

Provides coverage for the entire lifetime of the policyholder, ensuring a guaranteed payout to beneficiaries.

Endowment Plans

Combines life insurance coverage with savings. A lump-sum amount is paid at the end of the term or on the policyholder’s death.

Unit-Linked Insurance Plans (ULIPs)

Offers life cover and investment opportunities. Part of the premium is invested in funds (equity, debt, or hybrid) based on the policyholder’s choice.

Child Plans

Designed to secure a child’s future financial needs, such as education or marriage, with a guaranteed payout.

Retirement Plans

Helps in building a corpus for post-retirement life by providing a regular income or lump-sum payment after retirement.

Money-Back Plans

Periodic payouts are made during the policy term, ensuring liquidity for short-term financial needs.

Why is Life Insurance Important?

Financial Protection

Provides a secure future for your loved ones in case of unforeseen events.

Debt and Loan Repayment

Ensures that outstanding liabilities, such as home loans or personal loans, are cleared without burdening the family.

Future Goals

Helps achieve long-term goals, such as a child’s education, marriage, or retirement planning.

Peace of Mind

Offers reassurance that your family will be financially stable in your absence.

Tax Savings

Offers dual benefits of protection and tax efficiency.

Key Features of Life Insurance

Financial Security

It ensures your loved ones are financially supported to handle expenses like household needs, education, and loans in your absence.

Risk Coverage

Provides a safety net against the uncertainty of life by offering monetary compensation to the family after the policyholder's demise.

Savings and Investment Options

Certain types of life insurance policies, such as endowment plans or Unit-Linked Insurance Plans (ULIPs), combine life coverage with investment growth.

Tax Benefits

Premiums paid for life insurance are eligible for tax deductions under Section 80C, and the payouts are tax-free under Section 10(10D) of the Income Tax Act, 1961.

To purchase a term insurance policy, you need to provide certain documents for identification, income verification, and medical assessment. Below is a detailed list of the commonly required documents:

1. Identity Proof

Documents that establish your identity:

Aadhaar Card
Passport
Voter ID
PAN Card
Driving License

2. Address Proof

Documents to confirm your residential address:

Aadhaar Card
Passport
Voter ID
Utility Bills (electricity, water, or gas bill – typically within 3 months)
Rent Agreement (if applicable)
Driving License

3. Age Proof

Documents to verify your date of birth:

Aadhaar Card
Birth Certificate
Passport
Voter ID
PAN Card
School or College Leaving Certificate

4. Income Proof

Required to determine the sum assured you’re eligible for. Acceptable documents include:

Latest salary slips (for salaried individuals)
Income Tax Return (ITR) of the last 2–3 years (for self-employed or salaried individuals)
Form 16 issued by your employer
Bank statements (last 3–6 months)

5. Medical Reports

Depending on your age, health conditions, and the policy amount, insurers may require you to undergo a medical check-up.
Some insurers waive this requirement for younger individuals with lower coverage amounts.

6. Recent Photograph

A passport-sized photograph is usually required during the application process.

Additional Documents (if applicable):

Existing Policy Details: If you already have other life insurance policies, the insurer may ask for policy details to assess your total coverage.
Business Documents: For self-employed individuals, business proof such as GST returns, profit and loss statements, or registration certificates may be required.

How to Submit Documents

Online: If purchasing term insurance online, you can upload scanned copies of the required documents.
Offline: For branch or agent-based purchases, you’ll need to submit physical copies of the documents.