THE PRIVATE SIDE The new private insurance companies are also offering a whole range of innovative riders along with the ‘base’ policy.
Riders are flexible options that add value to the customer’s life insurance needs. By adding these riders, a number of combinations of ‘covers’ are possible with just a few basic plans.
Some of the riders on offer from private players are: *Accidental death *Permanent total/partial disability *Waiver of premium *Critical illness rider, which provides risk cover against diseases like cancer, stroke, heart attack, kidney failure, etc *Hospital cash rider *Double sum assured *Guaranteed insurability option
The critical illness rider could also qualify for tax deduction under section 80 D of the IT Act.
The critical illness rider from Tata AIG which qualifies for this tax benefit, offers two options: An accelerated type or a lump-sum type. Under an accelerated benefit scheme, the policy will be terminated if the critical illness claim amount being paid out is the same amount as the sum assured of the basic policy.
In case of lumpsum benefit schemes, the basic policy remains in force even after payment of the critical illness rider amount. Some insurers terminate the basic policy after the settlement of a claim in case of critical illness.
This is not good for the individual, since it is very difficult and expensive to get a fresh insurance policy after suffering a critical illness.
The new life insurance companies are also offering flexibility in the form of premium payment options like single pay, level premium and limited premium payment periods according to what is convenient to the investor.

Some new players have also launched unit-linked products like: Birla Sun Life — unit-linked with certain guarantees. ICICI Prudential Life — unit linked.
Aviva — unit-linked and unitised with profits.
A ROOF OVER YOUR HEAD If you have taken a housing loan, there is a Mortgage Redemption policy which offers cover on the outstanding indebtedness under a housing loan.
Here, the sum assured is equal to the outstanding loan amount. In the event of the untimely death of the borrower, the outstanding loan is automatically repaid out of the policy proceeds.
Corporate agents like HSBC also offer premium financing — that is, finance for the premium amount payable under a Home Loan Protection Plan.
This novel option allows the customer to bundle the premium portion into the housing loan EMIs.
THE TIME TO BUY The best time to buy insurance is while you’re healthy and the rates are low — the older you get, the higher the premium.
Mortgages, car loans, medical bills and credit card debts are often left unpaid when someone dies.
These obligations must be paid from the assets left behind. This can deplete resources that your family needs. Life insurance proceeds can help you keep your other assets intact for your family to use.

Often, non-liquid assets may have to be sold in order to meet obligations/debts/mortgages when they fall due.
This may cause a financial loss if the assets must be sold cheaply in order to get the money on time. Life insurance can avert this situation, because the proceeds are available almost immediately upon the individual’s death, and are tax-free too.
Life Insurance : A Money Spinner?