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Insurance Guide

Insurance Guide

  1. What is Life Insurance?
  2. Life Insurance is a contract between you and a life insurance company, which provides your beneficiary with a pre-determined amount in case of your death during the contract term.

    Buying insurance is extremely useful if you are the principal earning member in the family. In case of your unfortunate premature demise, your family can remain financially secure because of the life insurance policy that you have purchased.

    The primary purpose of life insurance is therefore protection of the family in the event of death. Insurance is also seen as a tool to plan effectively for your future years, your retirement, and for your children's future needs. Today, the market offers insurance plans that not just cover your life and but at the same time grow your wealth too.

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  3. Do you need life insurance?
  4. If you have dependents and financial responsibilities towards them, then you certainly need insurance.

    Having a family means dependents, which, in turn means financial commitments. Financial commitments come in the form of loans, expenses incurred on children's education, medical expenses etc.

    Imagine what would happen if you were to lose your life suddenly or become disabled and cannot earn. Being insured in a situation like this is a necessity.

    When you insure your life, in effect what you are doing is insuring your earning capacity. This guarantees that your dependents will be able to continue living without financial hardships even in case of your demise.

    Most insurance plans available today come with a savings element built into it. These policies help you plan not only for protection against death but also for a financially independent future, which would enable you to have a comfortable retirement.

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  5. How much does life insuranc?
  6. In order to buy a life insurance policy, you must pay premiums to the life insurance company. The amount of premiums payable depends upon the type of policy, term of policy contract, sum assured and your age.

    You could pay these premiums monthly/ half-yearly/ annually/ or as a single premiums.

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  7. How else does life insurance help?
  8. The primary need is buying financial security for your family. Other aspects that insurance helps fulfill are:

    Tax benefits

    The Tax exemption available under our insurance and pension policies are described below:

    • Benefit is available to individual assessee and Hindu Undivided Family assessee.
      • In case of individual assessee - himself/herself, spouse, children of such individual
      • In case of HUF assessee - any member of HUF.
    • Premiums paid under a life insurance policy are eligible for deduction under Section 80C* of the Income Tax Act, subject to the provisions of the said section.
    • Contributions to a pension plan are eligible for deduction under Section 80CCC* of the Income Tax Act, subject to the provisions of the said section.

    • *The aggregate amount of deduction under section 80C and 80CCC shall not exceed one lakh fifty thousand rupees.

    • The proceeds under a life insurance policy are exempt under Section 10(10D) of the Income Tax Act, subject to the provisions of the said section.

      Note: If the amount of premium paid in a financial year for a policy is in excess of 10% of the actual capital sum assured, then deduction will be allowed only for premiums up to 10% of the actual capital sum assured.

    As a tool of financial planning

    Most insurance plans available today have a built in savings element. Plans like the Kotak Classic Endowment Plan, Kotak Premier Moneyback Plan, Kotak Assured Savings Plan, etc. allow you to meet your dual financial goals of Life Cover and Savings for the future.

    As a tool of financial planning

    You may avail of a loan from the insurance company against certain plans. Your policy could also be pledged as a collateral to raise funds from banks and other financial institutions. In case of your unfortunate death the loans may be repaid from the proceeds of the life insurance policy.

    Savings Insurance promotes compulsory savings with regular premium payments and helps build up a corpus of funds along with financial security for the dependents in case of premature death. For your medical needs and that of your family

    Hospitalization costs and quality healthcare is becoming increasingly expensive. Without insurance, you can actually face a situation where you have withdrawn all your money and borrowed to pay the medical bills. This can be provided with our Critical Illness Benefit. Insurance provides you the option of covering yourself towards any critical illnesses that can become extremely costly. Choosing this facility pays you a lump sum upon diagnosis of certain diseases like cancer, kidney failure, heart attack, stroke, coronary bypass, vital organ transplants, Alzheimer's disease, paralysis, etc.

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  9. How much do I insure myself for?
  10. One of the simplest rules is to assume that insurance is a replacement for your lost earning capacity. Calculate your total income for the years that you expect to work.

    Assuming that the prevailing interest rate is 8%, you need to insure your life for at least 12 times your current annual income. Assuming that a family needs Rs.100 annually for household expenditure and the rate of interest would be at 8%, then the breadwinner needs to have a life insurance policy of approximately Rs.1200. If the insurance amount were to be put in the bank by the family, the family would get a comfortable Rs.96 p.a., which would at least let the family maintain the current life style.

    However to calculate your insurance need more precisely, use the following steps:

    • Calculate Monthly Livable Income required (Post tax). This is the monthly amount that the survivors of the policyholder will need in the event of his death. This is taken at 70% of the current total family expenses. Denote this as "M".
    • Calculate Monthly Income required (Pre tax) as M/ (100-t)%. Denote this as "M1". Here t = Tax rate.
    • Calculate Annual Income (A) = M1*12.
    • Assume Estimated-earning rate on capital as 8%. Denote this as "r".
    • Calculate Capital livable income required (C ) as A/ r%.
    • Subtract Existing Insurance Cover amount (if any) from "C".
    • The final amount you arrive at is the amount for which you should buy insurance.
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  11. What is Term Insurance?
  12. Term Insurance, also known as pure life cover, is the cheapest and the simplest form of insurance. Under this insurance policy, against payment of regular premium, the insurer agrees to pay your beneficiaries the Death Benefit in event of your premature death. However, if you survive till the end of the policy term, nothing is payable to you. This policy has no savings component and the premiums you pay are purely a cost to buy you a life cover. For example, Kotak Preferred e-Term Plan.

    This is suitable for you if

    • You are looking for a low cost life cover without any savings benefits attached. Or
    • You are at that stage in life where insurance cover is vital but you cannot afford high premium payment due to low income.

    Further if you are a non-smoker not only good health is guaranteed but also cheaper insurance through the Kotak Preferred e-Term Plan.

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  13. What is an Endowment Policy?
  14. An Endowment Policy is a combination of savings along with risk cover. These policies are specifically designed to accumulate wealth and at the same time cover your life. In simple words, these polices are issued for specific time periods during which you pay premiums. If you die during the tenure of the policy, your beneficiaries will receive the death benefit along with the accumulated bonus additions and if you outlive the policy tenure you will receive the maturity benefit along with accumulated bonus additions (if any). For example, Kotak Classic Endowment Plan or Kotak Premier Endowment Plan.

    This is suitable for you if

    • You want to accumulate capital for anticipated financial needs like buying an asset such as a home, providing for your old age, your children's education, marriage, etc.
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  15. Is there any policy where I can receive money during the tenure of the policy?
  16. Yes, a MoneyBack Policy. This is an anticipated endowment policy with an additional feature of receiving a benefit at regular intervals during the tenure of the policy. The risk cover continues for the entire policy term inspite of the installments already paid. If you outlive the policy, the maturity benefit along with accumulated bonus is paid back to you. For example, Kotak Premier Money Back Plan.

    This is suitable for you if

    • You plan to coincide the funds received from the policy with your future anticipated needs like a car, an overseas holiday, children's educational needs, marriage expenses, etc.
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  17. What are the different premium paying options available?
  18. Nearly all policies provide yearly, half yearly, quarterly and monthly modes of premium payment.

    In addition, some plans also have the option to pay the premiums only for a limited period of time and not for the full policy term.

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  19. Can I buy insurance for my children too?
  20. Yes, Kotak Headstart Child Assure Plan, which can be used as an investment option to build wealth for your child's anticipated financial needs like education or marriage or business.

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  21. What are riders?
  22. Riders are additional benefits that can be attached onto your basic life insurance policy. These riders give you the benefit of increasing your risk cover in case of certain events happening. For instance if you have taken an Accident Death Benefit rider and you die due to an accident then your beneficiaries can get up to a maximum of twice the basic sum assured subject to Claims acceptance.

    Similarly there are different riders addressing different contingencies like Critical Illness, Permanent Disability Benefit, etc. There are riders available that waive your future premiums in case of death or disability of the proposer.

    These riders come at a nominal cost and can be availed of depending on the policy taken. These can be taken at the beginning of the policy term or during the policy term.

    Riders offered by Kotak Life Insurance are Accidental Death Benefit, Permanent Disability Benefit, Critical Illness Benefit, Term Benefit, Kotak Life Guardian Benefit, and Kotak Accidental Disability Guardian Benefit.

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  23. What will happen to my policy if I miss a premium payment due date?
  24. The maturity values are product specific. Please refer to individual product pages for exact details.

    Kotak Life Insurance offers a grace period of 30 days after the premium payment due date for paying the outstanding premium. If you fail to pay the premium on your policy within this grace period your policy will lapse. You can revive your lapsed policy by paying your outstanding premium and late payment charges. This facility is available for six months. However, you can still revive the policy within revival period as per respective plans.. But if you are applying for revival of your policy in this period, then shall entail submission of proof of good health. For plan specific conditions, please refer respective Plan's terms and conditions for more details.

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  25. What will I receive on maturity of my policy?
  26. On maturity, you will receive the maturity benefit as defined as for respective Plan.

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  27. Are there any advantages in buying insurance at an early age?
  28. Yes. The premium that you pay on your insurance policy is mainly dependent upon two things - your age and the tenure of the policy. The younger you are, the lower is your insurance premium amount. At younger age, you would be physically sound and may not be suffering from illnesses/ medical. This would entitle you to a lower premium on the policy. Therefore it is advisable to buy insurance at an early age to reduce the cost of insurance.

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  29. Is there any policy where I have the flexibility of making lump sum injections as and when I have or need liquidity?
  30. Yes. Kotak Platinum Plan gives you this option. This is a plan that creates wealth and at the same time multiplies your capital and retains your money for a time when you need it the most as and when you want it.

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  31. Is there any option where I can restrict my premium payment for a lesser number of years than the duration of the policy?
  32. Yes. With the Kotak Classic Endowment Plan, there is a Limited Premium Payment (LPP) option. Under this option you can take a policy for 15 to 30 years and opt for paying premiums term of either 7 years for 15 years policy term or policy term less 5 years. This option is suitable for people who are sure of secured income only for a specified period of their earning life during which they want to pay off all their premiums.

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  33. How safe is my investment with Kotak Life Insurance? OR How are the premiums collected invested by Kotak Life Insurance?
  34. Kotak Life Insurance's investment portfolio has been created in accordance with the IRDAI guidelines on investment.

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  35. How do I buy a policy?
  36. To buy a policy please Click Here to contact our Life Advisor. You can also enquire about our policies by contacting us either on 1800 209 8800 (This line is available from Monday to Saturday - 8 am to 10 pm) or email your contact details to us at

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