Contrary to popular belief, buying life insurance in Pakistan is not complicated at all. It’s a simple and straightforward process that requires you to choose a preferred plan, decide on the premium that you can easily pay and choose your beneficiaries.
Buying a life insurance policy is a great way to make sure your spouse and children don’t face any financial troubles in the unfortunate event of your death. However, before you sign on any dotted lines, there are a few basic things you need to learn and understand.
What is Life Insurance?
To put it simply, life insurance is an agreement between an individual and an insurance company, more commonly referred to as policyholder and the insurer. In exchange for monthly or yearly payments, also known as the premium, the insurance company guarantees to provide an agreed-upon sum of money to the beneficiaries of the policy upon the policyholder’s death.
An individual can buy a life insurance policy on someone else’s behalf as well, such as their children.
How Does It Work?
Once the policyholder signs the contract, they are required to pay a certain amount to the insurance company either on a monthly, quarterly or yearly basis. There are several ways to pay your premium, including through credit card, demand draft, crossed check and money order, to name a few.
Depending on the insurance plan, the company will pay out the death benefit to the family or/and any other chosen individuals following the policyholder’s demise. One of the main benefits of a life insurance policy in Pakistan is that it provides financial support to the deceased’s loved ones along with the additional amount to cover burial expenses and other funeral-related costs.
However, in the case of term life insurance, which only provides coverage for a certain period of time, the assured sum is paid to the policyholder once the policy has matured.
Moreover, depending on the life insurance plan, most insurance companies in Pakistan also provide accidental death benefits, accidental disability benefits and accidental hospitalization benefits.
The Ideal Age to Buy Life Insurance in Pakistan
An individual needs to be at least 18-years-old to buy life insurance in Pakistan. The cutoff age, for most insurance providers in the country, is 60 years.
It is important to mention that parents can buy life insurance for their children as soon as they are born. Similarly, children above the legal age can also purchase an insurance policy on behalf of their parents, given they are still below the cutoff age.
So, ideally, one should consider buying life insurance in Pakistan as soon as they start earning. Preferably, this should be done when one is in their early to mid-20s as the premium increases with age.
Types of Life Insurance Plans in Pakistan
Based on the duration of the policy, life insurance plans in Pakistan can be classified into two distinct types:
Whole Life Insurance
As the name suggests, whole life insurance does not expire and remains in force throughout the policyholder’s lifetime, provided the payment of required premiums.
When an individual selects a whole life insurance plan, also known as permanent insurance, the company pays the death benefit to the beneficiaries upon the policyholder’s demise either all at once or in instalments.
Term Life Insurance
Term life insurance in Pakistan provides coverage for a certain period of time, for example, 10 years. Once the life insurance plan matures, the money is paid to the policyholder. However, if the insured passes away before their term policy ends, the death benefit will be granted to the beneficiaries without them having to pay the premium for the rest of the term.
Usually, term life insurance policies are relatively affordable and considered a reliable way to save money for future goals while ensuring a safe future for your family in case something happens to you.
Whether you choose term or whole life insurance, ask your service provider about their payout policy in the event of accidental death, accidental disability and accidental hospitalization.
Meanwhile, based on coverage, insurance companies in Pakistan offer a wide range of life insurance plans. Here are some of the most common ones.
- Education Plans
- Marriage Plans
- Retirement Plans
Education Plans
This is one of the most popular types of life insurance in Pakistan among young parents who want to secure their child’s future. After the death of the policyholder, the child receives the assured sum or cash value, whichever is higher.
Some insurance companies in Pakistan also offer education continuation plans where the assured sum is paid in monthly instalments for a certain period of time in order to cover tuition fee of the deceased’s children.
Marriage Plans
Just like the education plan, the marriage plan ensures a child gets the wedding of their dreams without having to worry about how they’ll foot the bill. Most insurance providers offer this plan in confluence with the education plan.
This coverage plan allows parents to save money for their children’s wedding by paying a premium for a certain period of time. They will receive the lump-sum once the term ends.
Retirement Plans
One needs to be smart about their retirement plan since it means loss of regular income in addition to an increased risk of health problems.
If you want to spend your post-retirement life without worrying about financial responsibilities, it’s recommended you plan ahead. This type of life insurance in Pakistan usually covers accidental hospitalization as well.
How to Choose the Right Life Insurance Plan
When it comes to choosing between different life insurance policies in Pakistan, you should always choose a plan that suits your budget and your future goals.
If you are purchasing life insurance for your child’s education, you need to make sure the payout will be sufficient for their tuition and other aspirations. The same goes for marriage and retirement plans, as you need to ensure the assured sum your beneficiaries receive would actually be enough to support them.
How to Buy a Life Insurance Policy in Pakistan?
Once you choose a service provider, either contact them on phone or browse through their website to get familiar with their coverage plans. You can also visit their office for more information.
A lot of leading insurance companies in Pakistan provide customers with an opportunity to sign up for a policy online. The premiums can also be paid online. If you have an account in a bank that has partnered with a specific insurance provider, you can simply allow a yearly premium deduction, which is convenient and hassle-free.
How Much Does Buying Life Insurance Cost?
There is no fixed cost for life insurance plans, as premium for each policy varies based on a number of different factors. These include your age, marital status, gender, number of dependents and monthly income among others.
Insurance companies in Pakistan offer a number of coverage plans with varying premiums, which can mostly be paid on a yearly basis.
How to File an Insurance Claim in Pakistan
In order to file an insurance claim, the beneficiary must directly contact the insurance company.
Here is a list of documents most insurance companies in Pakistan require in order to provide death benefits.
- Copies of policyholder’s CNIC
- Copies of claimant’s CNIC
- Claimant’s statement form
- Medical records of the deceased
- In case of violence or accident, FIR and/or post-mortem report
- Hospital death certificate
- NADRA death certificate
Please note the list of required documents is determined on a case-by-case basis. Also, it takes up to 30 days, in most cases, for the beneficiary to receive the assured sum.
Moreover, there are a few instances where the insurance company can refuse to provide death benefits to the beneficiaries. Although these conditions are explicitly mentioned in the contract, they may vary with each provider. However, generally, life insurance plans in Pakistan do not cover suicide, death by self-inflicted injury and death due to pre-existing conditions. Death during the waiting period or due to reckless endangerment is also not covered.
Meanwhile, you should also read up on different types of policies for car insurance in Pakistan and get one for your vehicle. Similarly, you can take a look at our detailed guide on how to get your home insured. Usually, house insurance policies provide cover for cash and jewellery as well along with home structure and home contents.
If you are seeking more information about insurance policies in Pakistan, stay tuned to Zameen Blog, the best lifestyle blog in Pakistan. You can also get in touch with us by sending your suggestions and queries on blog@zameen.com. Moreover, don’t forget to subscribe to our newsletter on the right to receive the latest updates about the real estate sector in the country.
