However, if your policy is in force for alonger period like say more than2-3 years,and if you fail to pay a premium, then insurance company will deduct the premium amount from your accumulated funds, especially in permanent life insurance. This will continue till there is an available fund after which your policy will be terminated.
Generally, the benefits on the life insurance policy are tax free and the beneficiary is not liable to pay any tax after the death of the policy holder. But if you are changing your beneficiary for monetary gain or other purposes then the beneficiary has to pay tax on it.
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Yes, it is possible to convert as far as you are having a convertible life insurance policy. But there is a deadline that has to be taken care of, for converting term life insurance into permanent life insurance. Also, your premium will rise soon you convert your policy.
Like all types of insurance, in life assurance the policyholders all pay premiums into a common fund from which all claims are paid out. In order for the insurer to be sure it will have enough funds to pay out all the claims, there has to be a relationship between the premium charged and the benefit given under a policy.
The company got incorporated as a public limited company in Mumbai on 11 October 2000 and received Certificate of Commencement of Business from the RoC on 20 November 2000 and got registered with the IRDAI for carrying out business of life insurance on 29 March 2001.[5] SBI Life is listed on BSE And NSE (Stock Exchanges in India) and is a leading Life Insurance company in India.[5] SBI Life started as a joint venture with BNP Cardif S.A,which is the life and property & casualty insurance arm of BNP Paribas, one of the strongest banks in the world, in 2001.[5] While in its initial stage its business was mainly from bancassurance channel, and gradually developed an agent network consisting of 108261 Insurance Advisors (IAs)and 825 offices across the country as on March 31, 2018 for selling its life insurance products and also collaborated with other distributions channels which include direct sales and sales through corporate agents brokers insurance marketing firms and other intermediaries.[5] The company offers products in individual and group category which includes savings and protection plans addressing the insurance needs of diverse customer segments and has a comprehensive range of plans in life insurance and pension schemes.[5] During financial year 2004-05 company's Assets Under Management (AUM) crossed Rs 1000 crore mark and in January 2005 it launched unit-linked product.[5] In subsequent financial year of 2005-06 it became the first new generation private life insurance company registering profit and posted profit after tax of Rs 2.03 crore for that year. Its Gross Written Premium (GWP) crossed the milestone of Rs 5000 crores and AUM crossed the milestone of Rs 10000 crore and it also achieved cumulative breakeven wiping out all accumulated losses and also its share capital increased by Rs 500 crore to Rs 1000 crore during financial year 2007-08.[5] Its GWP crossed the milestone of Rs 10000 crore during financial year 2009-10 and in 2010-11 SBI Life's branch network crossed the milestone of 500 branches all over country and further during the financial year 2011-12 the company achieved the milestone of profit after tax (PAT) of Rs 500 crores as it reported PAT of Rs 556 crore for that year declaring a maiden dividend of 5%.[5] The company's AUM crossed the milestone of Rs 50000 crore and the total number of branches in the country crossed 750 during the financial year 2012-13.The company's GWP crossed the milestone of Rs 15000 crores during the financial year 2015-16 and in the subsequent financial year in 2016-17 SBI Life's renewal premium collection crossed the milestone of Rs 10000 crore and during the year two companies, Value Line Pte Ltd and McRitchie Investments Pte Ltd. bought stake of 1.95% each in the company from SBI.[5]
We all must face the inevitability of death and the economic hardship that others might face when we die. Buying life insurance is one way to ease the burden of that economic risk. We can protect surviving family members by paying a relatively small amount, called the premium, to an insurance company. Then, the insurance company will pay a relatively large sum of money to the beneficiaries of the policy when the insured person dies.
Even when protection needs have been met, it is a good practice to consider other forms of saving and investment plans for a family. Whether to save or invest through life insurance or other saving or investment media is a family choice, based on needs, preferences, and ability to manage finances. It is a saving/investment decision, not an insurance decision.
You may get a better return on your money through other saving or investment vehicles. In addition, a variety of saving and investment opportunities are available that do not require paying any commission, or require a commission that is lower than that for saving through life insurance.
Earnings on the saving or investment element of life insurance are tax-deferred; but there are a variety of other saving/investment media that also provide deferral of taxes on earnings. However, earnings in a life insurance policy that are part of the proceeds paid to a beneficiary after the death of the insured are not subject to income tax at all.
Term insurance is a type of life insurance that provides pure protection only. It insures an individual against the risk of financial loss in case of death. It does not include a savings plan; it is strictly an insurance protection contract, similar to auto, home, or health insurance. The owner buys a certain amount of coverage and pays an annual premium based on the insured's age. As the name suggests, this policy covers the insured for a certain term or period of time. At the end of the term, the coverage stops, unless the policy is renewed. The simplest form of life insurance protection is annually renewable term insurance. The owner of a term life insurance policy can continue protection for additional terms, but as he or she grows older, the premium per unit ($1,000) of coverage will increase for each new term.
Because the owner is building up savings as well as buying protection through this plan, the premium is higher than the premium for term insurance. As with all life insurance policies, the premium is based on the age of the insured when the policy is purchased. The premium for straight life insurance then remains the same through the life of the policy. This is because the policyholder is paying more than the cost of pure protection during the early years of the policy. The excess portion of the premiums, above the cost of pure protection, is what builds up the savings element of the policy. Because the protection element decreases over time as the savings element increases, the level premium continues to be adequate to cover the cost of the policy as the insured grows older.
The premium on limited payment life insurance is higher than for a straight life policy because you pay all the premiums into the policy in a given number of years. This means the policyholder is actually building up saving (cash value) within the policy at a considerably faster rate than would be true with the straight life insurance policy, and thus reducing the protection element in the policy faster.
This policy has limited use except for families that have very high incomes in their early years (for example, a professional athlete whose income may be decreased in later years). The typical family has more stress on its budget in the early years and, because of the higher premiums, will probably find it impossible to afford sufficient coverage with limited payment life insurance. And having enough protection to provide for determined needs in event of death of the insured is the most important consideration in buying life insurance.
The price per $1,000 of actual life insurance protection rises as the insured gets older, in a cash value type policy as in a term policy. In a cash value policy, the increasing cost of protection is not obvious, because as the savings component created by the higher premium increases, the amount of the actual insurance protection component decreases.
It is important to keep in mind that there are a variety of media for saving, but the protection feature of life insurance is the only medium for creating an instant estate at the death of the insured. If a man age 25 saves $150 one day and dies the next, that $150 will be part of his estate. But if he is in good health, for that $150 he can purchase a one-year renewable term life insurance policy that will provide about $100,000 to his beneficiaries or estate if he dies the next day. This illustrates the instant estate concept, and the difference between a savings plan, in which the principal is yours whether you live or die, and an insurance protection plan, in which you are paying a modest-size premium to provide a large dollar amount of protection which will be paid only in event of your death. The protection concept is similar to the insurance you buy for a defined time period to cover your home or automobile.
Life insurance provides financial protection for survivors of the insured, and may meet other financial objectives, as well (a gift to charity, for example). Families should review their life insurance program and policies regularly and make adjustments to meet changes in circumstances and needs.
Who is it for: Term life insurance is ideal for people who want life insurance coverage for a specific debt or situation. For example, some people buy it to cover their working years as income replacement for their family in case they pass away. Some people buy term life to cover the years of a mortgage or other large debt.
How it works: Whole life insurance can provide coverage for the duration of your life. An account within the policy builds cash value over time by using part of your premium payment and adding interest. A policy will have built-in guarantees that the premium will not increase, the death benefit remains the same, and the cash value will earn a fixed rate of return. 2ff7e9595c
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