What is life Insurance?
- Life insurance is a contract between insurer and insured.
- Insurance company promises to pay the beneficiary a sum of money in exchange for a premium on the death of an insured person or the policyholder.
- Other events such as terminal illness or critical illness can also trigger payment.
- Premiums are paid either regularly or as lump sum.
- Insurance is a tool to plan effectively for financial goals like retirement and children’s higher education needs.
Why do we need Life Insurance
You need life insurance
- To help replace earnings that would have ceased at the death of the insured.
- To avail of tax benefits.
- To help pay for milestone events in your life.
- To help plan for your child’s education.
- To plan for your retirement.
How much Life Insurance one should take?
- The thumb rule is 10 – 12 times your current annual income is your Human Life Value.
- The insurance needs vary for every individual.
- Before deciding the amount, one needs to consider the life goals and the ongoing inflation rate.
- Human Life Value gives a fair estimate of how much life insurance is good to have.
- It is calculated as the amount, which if invested in a fixed deposit, would generate an income equal to your current income.
- Be clear about current financial situations, future aspirations and current liabilities to decide on the insurance cover you need.
What are the products available under Life Insurance?
Following are the different types of life insurance plans
- Term plans
The most basic form of life insurance that promises to pay a beneficiary a certain amount in case of untimely death of the insured, but nothing in case the insured survives the term of the plan.
- Endowment plans
Not only provides death benefit but also provides maturity benefit.
- Whole life plans
The insured is covered for his entire life and the benefit is paid on death, whenever it occurs.
- Annuity plans
Retirement plans that provide annuity upon retirement.
Life Insurance products available in Bank of Baroda?
Bank of Baroda offers a variety of products of IndiaFirst Life Insurance Company. Following are the IndiaFirst Life Insurance products offered by Bank of Baroda:
- IndiaFirst Maha Jeevan Plan – A traditional non – linked participating plan. This plan also offers Term Rider to enhance life cover. Guaranteed death benefit and maturity benefit is the key feature of this plan.
- IndiaFirst Life Cash Back Plan – A traditional non – linked non – participating plan which offers guaranteed additions as a percentage of premium paid depending on the premium paying term. Periodic survival benefits as a percentage of sum assured and balance sum assured on maturity is payable under the plan.
- IndiaFirst Life Wealth Maximizer Plan – A unit linked plan offering three investment strategies to suit your profile. A plan which provides additions to your fund value for paying your premiums regularly and Systematic Partial Withdrawal (after completion of 5 policy years) to access your funds when you require.
- IndiaFirst Life Money Balance Plan – A unit linked plan offering market linked returns. The Automatic Trigger Based Investment Strategy helps you to safeguard your returns from the upside of the equity market.
- IndiaFirst Life Plan – This is a pure term plan which offers only death benefit. Nothing is payable if the life insured survives the policy term. This plan offers high cover at very economical rates.
- Baroda Jeevan Suraksha – A group term plan offering only death benefit to the group members. Ideal for employer to take care of the employees’ families in case of untimely demise of the employee.
- IndiaFirst Group Credit Life Plan – A group term plan to take care of your loan liabilities so that the burden of repaying the outstanding loan does not fall on the shoulders of the family members of the person who has taken a loan.
What is Human Life Value (HLV)?
Human life value is an estimate of the financial value of a human life. In insurance, this value is used to determine the amount of insurance that a person should buy. Simply expressed the sum insured must equal the human life value. The present value of the family’s share of the breadwinner’s future earnings is considered as Human Life Value, for the purpose of life insurance.
Is Life Insurance is only for risk cover or can be used for other financial goals?
- Provides Life Cover
In a world of uncertainties, life insurance provides financial security to your family even in your absence. It allows them to continue with the same lifestyle that you would have provided them.
- Life Stage Planning
You can fulfil your goals and financial milestones like child’s education and marriage. Plan for your retirement and leave a legacy for the next generation.
- Long-term Savings
Life insurance is a vehicle of long term investment that can help fulfil your financial goals and future needs.