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Life Insurance Premium | Who Should Buy Life Insurance ? All About Life Insurance

Life Insurance can be defined as a contract between an insurance policyholder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period. Here, at ICICI Prudential Life Insurance, you pay premiums for a specific term and in return, we provide you with a Life Cover. This Life Cover secures your loved ones' future by paying a lump sum amount in case of an unfortunate event. In some policies, you are paid an amount called Maturity Benefit at the end of the policy term.

There are two basic types of Life Insurance plans -

Pure Protection

Protection and Savings


What is Pure Protection Plan?

A Pure Protection plan is designed to secure your family's future by providing a lump sum amount, in your absence.

What is Protection and Savings Plan?

A Protection and Savings plan is a financial tool that helps you plan for your long-term goals like purchasing a home, funding your children's education, and more, while offering the benefits of a Life Cover.

Click here to know more about the different types of Life Insurance Plans.


Life Insurance Premium

Simply put, "life insurance premium" is the amount of money you pay your life insurance company in exchange for your coverage. Life insurance premium can either be a regular monthly/annual payment or a one-time payment as the case may be. The payout (called a death benefit) is the amount of money the life insurance company would pay your beneficiaries if you died unexpectedly during the term period.

Let us understand some commonly used terms in Life Insurance:

Life Assured: It is the person who is covered under the insurance policy

Proposer: It is the person who pays the premiums of the policy. For example: If you have bought the policy for yourself, then you are both the Life Assured as well as the Proposer. Similarly, if you purchase an insurance policy for a family member, then you are the proposer and the family member is the Life Assured.

Nominee or Beneficiary: It is the person you appoint at the time of buying the policy to receive the benefits of your insurance policy, in your absence.

Insurer: The insurance company that sells the life insurance policy is called the Insurer.

Life Cover: It is the amount that the Insurer will pay to your Nominee in case of an unfortunate event.


Maturity Benefit: For Protection + Savings policies, the Insurer pays a certain lump sum of money on completion of the policy term. This amount is known as the Maturity Amount.

Premium: A premium is an amount you pay to the insurer for receiving the benefits of the insurance policy. These payments can be made regularly throughout the policy duration, for a limited number of years or just once, as per the options available under the policy you choose.

Premium Payment Term: The number of years for which you pay the premiums is known as the Premium Payment Term.

Policy Term: The number of years for which the Life Cover continues.


Key Takeaways

Life insurance is a legally binding contract.

For the contract to be enforceable, the life insurance application must accurately disclose the insured's past and current health conditions and high-risk activities.

For a life insurance policy to remain in force, the policyholder must pay a single premium upfront or pay regular premiums over time.

When the insured dies, the policy's named beneficiaries will receive the policy's face value or death benefit.

Term life insurance policies expire after a certain number of years. Permanent life insurance policies remain active until the insured dies, stops paying premiums, or surrenders the policy.

A life insurance policy is only as good as the financial strength of the company that issues it. State guaranty funds may pay claims if the issuer can't.



Who Should Buy Life Insurance?

Life insurance provides financial support to surviving dependents or other beneficiaries after the death of an insured. Here are some examples of people who may need life insurance:


Parents with minor children—If a parent dies, the loss of their income or caregiving skills could create a financial hardship. Life insurance can make sure the kids will have the financial resources they need until they can support themselves.

Parents with special-needs adult children—For children who require lifelong care and will never be self-sufficient, life insurance can make sure their needs will be met after their parents pass away. The death benefit can be used to fund a special needs trust that a fiduciary will manage for the adult child's benefit.1

Adults who own property together—Married or not, if the death of one adult would mean that the other could no longer afford loan payments, upkeep, and taxes on the property, life insurance may be a good idea. An example would be an engaged couple who took out a joint mortgage to buy their first house.

Elderly parents who want to leave money to adult children who provide their care—Many adult children sacrifice by taking time off work to care for an elderly parent who needs help. This help may also include direct financial support. Life insurance can help reimburse the adult child's costs when the parent passes away.

Young adults whose parents incurred private student loan debt or cosigned a loan for them—Young adults without dependents rarely need life insurance, but if a parent will be on the hook for a child's debt after their death, the child may want to carry enough life insurance to pay off that debt.

Young adults who want to lock in low rates—The younger and healthier you are, the lower your insurance premiums. A 20-something adult might buy a policy even without having dependents if there is an expectation to have them in the future.

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