ICICI Prudential Life Insurance Review

An “ICICI Prudential life insurance” Review policy is a contract between a policyholder and an insurance company. In a life insurance policy, the insurance company promises to pay a sum of money to the loved ones of the policyholder in case of the death of the policyholder during a certain period. In return, the policyholder pays a small amount a as premium to the insurance company.

In certain types of ICICI Prulife insurance policies, the policyholder can also opt for critical illness benefits or choose additional protection to cover against an unfortunate event due to an accident. The insured person is referred to as the life assured. In the unfortunate event of the life assured’s death, the nominee receives the insurance price. This is the duration for which the insurance company provides coverage. Policy tenure for a life insurance plan can range anywhere from 1 year to 99 years.

Why it’s important to buy a life insurance?

  • Assured Income for Retirement

Insurance plans like pension plans or annuity plans can be great for retirement planning. They offer low-risk and assured returns that can secure your post-retirement life.

  • Financial planning for life

If you are getting married, a life insurance plan can help you safeguard your spouse’s financial future. In the case of an unfortunate event, your spouse can use the life insurance and carry on with their life with dignity. The birth of a child can present new financial responsibilities for a parent. If you have a child, purchasing a life insurance plan can help you secure the child’s future in your absence. Moreover, child insurance plans can also help you save for higher education or marriage expenses.

Types of Life Insurance PoliciesCoverage
Term life insurance policyPure Risk Cover
Endowment life insurance policyInsurance Cover + Saving
Non-Linked Participating Endowment PlanInsurance cover
Unit Linked Insurance Plans (ULIP)Insurance Cover + Market-linked Investment Benefits
Non-participating Non-linked endowment planFixed Insurance Cover
Retirement PlanInsurance Cover + Saving
Child PlanInsurance Cover + Investment Benefits

Term Insurance Policy

This is the simplest type of life insurance policy. It pays your family a sum of money in case of your death, during the policy term. It does not pay anything if you survive the policy term. However, the premiums on this type of policy tend to be low. For instance, a monthly premium of just ₹ 1,057 can get you a life insurance cover of 1 crore rupees with a regular income payout option (for a 30-year-old, non-smoker) for 40 years.

Endowment Policies

Policies other than term life insurance, are called endowment policies. These can in turn be divided into participating, non-participating and unit-linked.

Non-Linked Participating Endowment Plan

This type of policy lets you ‘participate’ in the profits of the life insurance company and get a share of them. It pays your family a sum of money on your death but it also pays you an accumulated sum, if you survive the policy term. The survival payment or benefit is linked to the profits of the life insurance company.

Unit Linked Life Insurance Policy (ULIP)

This policy pays an amount on your death and a maturity amount if you survive the term. However, unlike a traditional participating policy, the maturity amount is more dependent on your investment choices rather than the profits of the life insurance company. Your policy is invested in funds and divided into ‘units’ similar to those of a mutual fund. You typically get a lot of freedom to choose the type of fund your money will be invested in.

Non-participating Non-linked endowment plan

A non-participating policy defines exactly how much your family will get on your death and how much you will get on the maturity of the policy. There is no variable or investment-linked component. You know beforehand exactly how much you will get, in each scenario.

How to select the right Life Insurance Policy?

  • Claim settlement ratio: This is the number of claims that an insurance company receives in a year versus the number of claims it settles in the same year. The higher the claim settlement ratio, the more reliable thus there is a lower chance of your claim getting rejected
  • Solvency ratio: The solvency ratio indicates the insurance company’s ability to meet its debt obligations. It gives you an insight into the insurer’s cash flow and financial health. Pick an insurer with a high solvency ratio to ensure financial security
  • Premium: Affordable premiums can help you save money. Look for a life insurance plan that offers cost-effective insurance premiums
  • Claim settlement process: Pick an insurance company with a simple claim settlement process. This will ensure that you and your family members do not face any hassles at the time of claim settlement
  • Customer feedback: Positive customer feedback can help you gauge the insurance company’s performance and willingness to assist its customers. You can look for customer reviews online or refer to friends and colleagues for recommendations when purchasing a life insurance policy.

How much Life Insurance coverage do we need?

  • Early Adulthood from 20 to 30 years of age. At this stage in your life, you can pick a life insurance policy with a sum assured that is at least 10 times3 your annual salary plus your outstanding loans. Such a sum will help your family in your absence and also beat inflation. Term plans, endowment plans, and unit-linked investment plans can be a suitable picks at this age. Remember, the younger you are, the easier it is to get a life insurance plan and the lower the premiums
  • Middle Adulthood from 30 to 45 years of age. At this stage in your life, you would likely be married and have children. Hence, you must consider your children’s and spouse’s needs when picking out a life insurance plan. Take into account the future education costs and inflation and try to opt for a life cover that is at least 15 times your annual salary plus your outstanding loans. You can invest in term plans, endowment plans, and unit-linked investment plans at this age. In addition to this, if you have children, you can also invest in child plans.
  • Mature Adulthood 35 to 45 years of age. Your children will most likely be starting college in a few years at this age. Hence, you must account for their graduation, post-graduation, and marriage expenses. Try to opt for a life cover that is 15 to 20 times your annual salary plus your outstanding loans. You can continue to invest in term plans, endowment plans, pension plans, and unit-linked investment plans.
  • Late Adulthood 45 to 55 years of age. Since your financial responsibilities towards your children are likely to be less in retirement, you can opt for a life cover of at least 10 times your annual salary plus your outstanding loans. In this age bracket, you can consider purchasing a term insurance plan and a pension plan like an annuity plan.

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