When you are planning your long-term financial targets, considering buying a life insurance plan is essential. Life cover comes with many financial benefits. To understand how it works, you must learn about the life insurance payout and its different aspects. Once you learn that, you can plan your finance accordingly.
When do you receive a life insurance payout?
If you are asking yourself how does life insurance work then you first need to learn when the benefits that you will receive by investing in an life insurance policy. Generally, life insurance cover is paid when the policyholder dies and the nominee claims for the death benefit. They have 30 days to submit the claim, after which the insurer pays the benefits.
A copy of the death certificate, policy document, and duly filled claim intimation form along with other supporting documents are to be submitted by the nominee in time of making the claim. Only then, the insurance company can accept the claim.
When the life insurance payout can be delayed
Once a claim is made, the life insurance claims process is initiated by the insurer. In certain cases, this might take longer than expected, which results in a delayed claim settlement. Most policies come with a certain clause, which can delay the payout if the policyholder dies within one to two years since buying the policy. In case the policyholder’s death is caused by homicide and the nominee is a suspect, the insurer delays the claim settlement until he or she is freed from the charges.
Another thing most people ask is, “does life insurance pay for suicidal death in India?” and the answer to that is ‘no’. However, if the suicide is committed after more than a year from the policy initiation then some insurers reimburse the premium paid during that time. The reimbursement happens after deducting applicable charges.
How the sum assured is paid
To know how life insurance works in India, you first need to know what sum assured is. It is the money that is paid to the nominees once the claim is accepted by the insurance company. The amount of this life insurance payout is decided at the initiation of the policy.
A certain percentage of the sum assured is paid when the claim is settled. After that, the remaining money is paid as installments over a certain period of time.
Types of benefits
When the life insurance claim is made after the death of the policyholder, the insurer pays the sum assured to the nominee. This payout is called the death benefit. There is also maturity benefit, which is offered by some life insurance plans. This benefit is paid at the end of the policy tenure, even if the policyholder is alive. There are also added bonuses, which are offered by some insurance companies.
The life insurance policy provides the policyholder and their family with financial security and peace of mind. When you buy a policy, it is important that you learn about every aspect of it, including the payouts and payment process with respect to claims. Knowing a policy closely makes sure that when a claim is made, it is not delayed or rejected.