Question 1

Why are term insurance premiums so low?

Accepted Answer

Term insurance provides pure death benefit coverage with no maturity return. Since the insurer only pays out if the insured dies, the risk is lower, resulting in cheap premiums.

Question 2

What is Return of Premium (ROP)?

Accepted Answer

ROP policies promise to return all the premiums you paid if you survive the policy term. However, the initial premiums for ROP are significantly higher than standard term plans.

Question 3

Does smoking increase my premium?

Accepted Answer

Yes! Smokers are statistically at a much higher risk of critical illness and death, so insurers typically charge them 30% to 50% more than non-smokers.

Question 4

Are life insurance premiums tax-deductible?

Accepted Answer

Yes, premiums paid towards life insurance policies are eligible for tax deduction under Section 80C of the Income Tax Act, up to a maximum limit of ₹1.5 Lakhs per year.

Question 5

What happens if I stop paying my premiums?

Accepted Answer

If you stop paying premiums during the grace period, your policy may lapse. Depending on the policy type and how long it was active, you might lose the life cover and any accumulated cash value.

Life Insurance Premium

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