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Terms, bonus, sum assured: Making sense of life insurance policies

Insurers' products are complex; investors must have a rational expectation about the returns they will get

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Life insurance maturity proceeds are exempt from tax only if the death benefit is at least the annual/single premium. (FIle photo)

Deepesh Raghaw

6 min read Last Updated : Sep 21 2023 | 4:51 PM IST

An investor forwarded me a traditional life insurance product and asked me whether he should invest in it. I had to evaluate purely from the point of view of returns or suitability as a fixed income investment. The investor didn’t need life cover.

Breaking down a life insurance product is not easy. There are so many terms, bonuses, loyalty additions, sums assured and much more. There is a play on the timing of payments, too.

I wondered why these plans are so complex and what could have the insurance company done to make it easier for the investor to decide

Topics : IRDAI Life Insurance life insurance industry

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