Life insurance is a financial contract between an individual and an insurance company. In this contract, the insurance company promises to pay a lump sum (called a death benefit) to the person’s nominee (usually a family member) in the event of the policyholder’s death during the policy term.
Key Purpose:
Household expenses, Children’s education, Outstanding debts (like home loans), Medical or emergency costs, Life goals like marriage or retirement (if survival benefits apply)
Documents Required
List of common documents required for buying a Life Insurance policy in India.
Identity Proof (any one of these)
Aadhaar Card, PAN Card, Passport, Voter ID, Driving License
2. Address Proof (any one of these)
Aadhaar Card, Utility bill (electricity/water/telephone), Passport, Voter ID, Rent Agreement
3. Age Proof (any one of these)
Birth Certificate, PAN Card, School Leaving Certificate, Passport, Aadhaar Card
4. Income Proof (especially for high cover plans)
Latest ITR (Income Tax Return), Salary slips (last 3–6 months), Bank statements, Form 16, CA-certified income proof (for self-employed)
5. Medical Reports (if applicable or requested by insurer)
Medical examination report
Blood test, ECG, etc.
Doctor’s evaluation
6. Recent Passport Size Photograph
7. Proposal/Application Form
Optional / Additional (in some cases):
Existing policy documents (for portability or add-ons)
Employer NOC (if buying through a group scheme)
Nominee’s ID proof (optional at proposal stage, required at claim)
Types Of Life Insurance
| Type | Purpose | Payout |
|---|
| Term Insurance | Pure risk cover | Only on death during policy |
| Whole Life Insurance | Covers entire life | On death, any time |
| Endowment Plan | Insurance + savings | On death or policy maturity |
| ULIPs | Insurance + investment (market-linked) | Based on fund value |
| Money Back Plan | Periodic payouts + maturity benefit | Partial during term + final |
Benefit Of Life Insurance
Life insurance offers financial protection and peace of mind, but its value becomes most clear through real-life examples. Here’s a breakdown of the key benefits, each followed by a realistic scenario:
1. Financial Protection for Family
Benefit: If the policyholder passes away, their family receives a lump sum (death benefit) to cover living expenses, education, loans, etc.
Real Example:
Ravi, age 35, had a ₹1 crore term insurance. He passed away unexpectedly due to a heart attack. His wife, a homemaker, received the ₹1 crore sum assured. This helped:
Pay off their ₹40 lakh home loan
Cover their 2 children’s education costs
Maintain household expenses without borrowing
2. Debt Repayment
Benefit: Life insurance can prevent your family from inheriting your debts.
Real Example:
Pooja, an entrepreneur, had a business loan of ₹25 lakh. She had a term insurance policy of ₹50 lakh. After her passing in a road accident, the insurance payout covered:
Her business debt
A safety net for her aging parents
3. Tax Benefits
Benefit: Premiums paid qualify for tax deduction under Section 80C, and payouts are tax-free under Section 10(10D) in India.
Real Example:
Arun, who pays ₹60,000/year as premium, saves approx ₹18,000/year in taxes (assuming 30% bracket), just by maintaining his term insurance.
4. Peace of Mind
Benefit: Knowing your family is protected helps you live with less financial stress.
Real Example:
Neha, a single mother, knew her ₹75 lakh term plan would ensure her son’s school and college fees would be covered, even if she wasn’t around.
5. Wealth Creation (for Investment-linked Policies)
Benefit: Endowment and ULIP policies offer maturity benefits if the insured survives the term.
Real Example:
Sunil, age 30, took an endowment plan with a ₹50,000 annual premium for 20 years. At maturity, he received:
₹14 lakh lump sum (including bonuses)
He used it for his daughter’s wedding expenses.
6. Coverage for Critical Illness (Add-on Rider)
Benefit: Provides payout upon diagnosis of diseases like cancer, heart attack, etc., even if the insured survives.
Real Example:
Kaushik had a critical illness rider of ₹25 lakh. When he was diagnosed with early-stage cancer, his insurer paid the full rider amount, which helped:
Fund treatment at a private hospital
Keep his income flowing during a year-long break