Life Insurance FAQ: Common Questions Answered

Responses to Common Questions Concerning Life Insurance

In recent years, there has been a notable surge in the demand for life insurance products. The need for insurance is growing, and with it are doubts and questions. It is essential to do adequate research before to choosing a life insurance coverage. To help you with this, we have gathered a list of frequently asked questions (Frequently Asked Questions about Life Insurance) and provided the answers below.


  1. What is life insurance, first of all?
    An agreement regarding life insurance is made between a policyholder and an insurance company. This agreement states that the insurance company will have to pay a lump sum, usually predetermined, to the policy buyer’s chosen beneficiary in the case of the insurer’s death. But it’s a two-way process. For a sum pledged, the insured/policy buyer agrees to pay the insurance company a predetermined amount in the form of premium payments; these payments can be made once, monthly, or quarterly for most life insurance policies.

Once the insurance term has expired, the money is then given to the policy buyer or, in the event of the policy buyer’s death, to the designated beneficiary.

  1. Why is purchasing life insurance a wise decision?
    Every person makes a decision to get life insurance based on a range of factors. A plan for endowment insurance may offer numerous benefits. One of the reasons life insurance could be a smart purchase is that it helps you pay off your personal bills and mortgage.

It also helps to maintain a decent level of living for your family. years in age.periods of scarce resources. Moreover, an endowment plan premium payment of up to ₹1,50,000 might be tax deductible under Section 80C.

  1. What distinguishes life insurance from other forms of insurance, such as general, health, and plan types?
    There are two varieties of term insurance contracts available to you. However, you can only make an informed decision if you can tell the many insurance plans available from one another.

An endowment insurance policy ensures the policyholder guaranteed1 returns (defined monetary rewards), but a general insurance plan covers any and all risks that beyond the life-risk bracket.

A general insurance policy is also more of an indemnification contract than an investment because it lacks a savings component. On the other hand, one could consider an endowment plan to be an investment.

  1. Is it wise for me to have life insurance?
    Everyone has different goals in mind. In particular, if you are the family’s sole provider, this type of insurance helps your dependents replace their income. Additionally, you may keep your mind at ease because premium payments will guarantee returns1.

Because of this, you can select from a range of endowment insurance plans based on your needs; all of them prioritize guaranteed1 returns for multiple areas of your life.

Tata AIA Life Insurance is one such reputable firm if you’re looking for a good term plan.
5. What varieties of life insurance exist?
Fortunately, there aYears old.lenty of options to choose from when buying life insurance. In India, there are eight primary categories of guaranteed1 return life insurance policies.

These consist of retirement plans, investment plans, savings plans, whole life, endowment, money-back, and term insurance policies, as well as child insurance policies.
6. How will I be able to determine which approach is most effective for me?

 Selecting the ideal endowment plan type is simple. When looking for a plan, consider the following. These include figuring out what your goals are and estimating what future expenses might be. The maximum degree of financial protection, including income insurance, is provided to your family in this way. Examine the coverage offered by different insurance companies to make sure you make an informed decision.

  1. What is not covered by life insurance?

 Endowment insurance does not cover certain types of deaths; life insurance plans cover a wide range of causes of death. This suggests that your recipient will not receive the guaranteed1 returns.

The insurance buyer’s claim is rejected if the insured passes away due to beneficiary murder, STDs, or self-inflicted wounds. The examples that are examined here demonstrate how completely false the allegation is. In addition, there are other restrictions that apply to the beneficiary in the event that the insured commits suicide.

  1. What is the price of life insurance?
    Nothing is too expensive to safeguard your life from financial harm. It’s critical that you compare several term life insurance plans and select the best fit for your needs.

An additional deciding factor is the policyholder’s age. Younger individuals will pay less in premiums than older ones do.

  1. What questions do they ask while buying a life insurance policy?

When acquiring a life insurance policy, you should be prepared to answer questions about the following topics.


  • both prescription and over-the-counter medications.
  • earlier or more organized processes.
  • family medical history, including any illnesses related to lifestyle.
  • genuine reactions to tobacco and alcohol use.
  • Age.
  • passions.
  • occupation (history of previous and current jobs).
  • driving record, which includes traffic violations, DUIs, and speeding fines.

Furthermore, a number of businesses need medical examinations; during these visits, a paramedic will likely draw blood, take your blood pressure and pulse, and collect a urine sample.

  1. Do the proceeds from a life insurance policy have to be taxed?

The beneficiary’s financial prize is typically not considered taxable* income. Recipients are therefore excused from paying taxes* on the money they get. However, in this instance, there are also exceptions. Estate taxes* on the assured amount are due from the estate’s owners in the event that the death benefit is received.

If the insured person chooses to retain the premium with the company for a predetermined period of time following their death, the beneficiary will then be liable for paying taxes* on the interest received during the specified term.

A difficulty may arise if the policyholder decides to transfer ownership of his insurance before passing away. In this case, the amount paid to the beneficiary listed on your policy will be considered taxable* income for that beneficiary. It is always imperative to consult with tax specialists and carefully read any policy documents prior to taking any action.

Final remark

Reputable data and empirical research back up these claims. We hope that the responses to your questions are relevant and acceptable.

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