Life Insurance
Life Insurance is the safest and the most secure way to protect your family or dependents against financial contingencies that may arise post the unfortunate event of your untimely demise. Under a Life Insurance Contract in India, the insurer assures to pay a definite sum to the policyholder’s family on his demise during the policy term.
What is Life Insurance?
Life Insurance is an agreement between an insurance company and a policyholder, under which the insurer guarantees to pay an assured some of the money to the nominated beneficiary in the unfortunate event of the policyholder’s demise during the term of the policy. In exchange, the policyholder agrees to pay a predefined sum of money in form of premiums either on a regular basis or as a lump sum. If included in the contract, some other contingencies, such as a critical illness or a terminal illness can also trigger the payment of benefit. If defined in the contract, some other things, such as funeral expenses might also be a part of the benefits.
If mentioned in the contract, a policy may also cover some other costs like funeral expenses as a part of benefits. Except for the death benefits, a Life Insurance plan also provides maturity benefits. These benefits are provided in the form of a payout if the insured survives the entire term of the policy. Moreover, life insurance schemes also offer several tax benefits under Section 80C of the Income Tax Act, 1961.
The insurance company will determine the premium payment that has to be made by the policyholder to the company. However, the claimant is given the option to choose the term of the policy and the sum assured. A number of factors are taken into consideration while determining the premium amount for every individual. The sum assured is among those factors. Higher the sum assured, higher the amount of the premium.
Why Need of Buying Life Insurance?
It acts as a financial net for an eventuality linked with human life, such as retirement, disability, accident, death, etc. Life is unpredictable; one can never guess what happens next. In case of sudden demise of the primary breadwinner of a family, apart from the emotional trauma, his/her family is at the risk of a financial crunch. In case this person is the sole breadwinner of the family, his/her dependents face a loss of income.
Though there is no premium calculator that can calculate the worth of a human life, what needs to be done must be done. To calculate the sum assured, the insurer takes your lifestyle and finances into consideration. This sum assured is provided to insured’s family after his/her demise in order to offer them a much-needed financial support. In order to make sure that one’s family doesn’t have to make any compromises due to financial crunches, one should buy a suitable life plan.
Unpredictability-Life is unpredictable .
Unpredictability-Life is unpredictable. One can’t predict when his/her life will come to an end. If it were up to people, nobody would want to leave
without ensuring the financial security of his/her family. Sadly, it’s not up to them. The solution is, one must buy life insurance and be a step ahead
so that the financial goals set for his/her family can be accomplished even when he/she isn’t around.
Financial Cushion- It provides much-needed financial support to insured’s family by compensating for the loss of income.
Debt-Proof Future- The sudden demise of a breadwinner is nothing short of a catastrophe. While it is an emotional crisis initially, it can get
converted into a financial one in no time. With the help of life insurance, any outstanding debt, such as a motor loan, personal loan, a home loan, etc. would be taken care.
The Accomplishment of Retirement Goals- While life plan is a perfect option to accomplish long-term goals, it helps accomplish retirement goals as well. Some life insurance plans offer diverse investment opportunities and some insurance plans offer performance-based dividends.
Tax Benefits- A policyholder can avail tax-benefits regardless the type of life insurance he/she purchases. As per section 80 C of the income tax act, the premium paid towards an plan is eligible for tax benefits up to Rs. 1 lakh 50 thousand.
Mental Peace- It offers much-needed peace of mind to the policyholder by assuring financial future of his/her family. Even a basic plan helps to generate corpus to take care of the future financial needs of insured’s family.
