Life Insurance
What does life insurance mean?
Life Insurance is a promise or legal binding between the one receiving the insurance, i.e., the insurance policyholder, and the one insuring the former, based on the consideration of payment of a certain amount at regular intervals or as the case may be. A Life Insurance Policy Covers Death—natural or accidental—and provides monetary compensation to the family of the insured, i.e., the beneficiaries. Various riders to cover critical illness or other benefits can also be added.
What is the significance of a life insurance policy?
Life Insurance is not only a contract, but it is also a promise and trust between two dealing individuals or businesses. The person who is promised financially or legally is known as the insured, and the person insuring is known as the insurer. In the event of someone’s untimely demise, the concerned person’s family needs financial support equally as they need emotional support. The Life Insurance policy compensates the family financially after the unfortunate event occurs, as life is full of uncertainties. The aspect of financial compensation and stability cannot be ignored, especially in such circumstances, to ensure survival.
Why does one need a life insurance cover?
Having life insurance provides peace of mind to the insured by addressing concerns such as:
- Financial security: The money paid to the insured’s family after the unfortunate death compensates for financial losses or covers certain financial obligations.
- Security of child’s education: Certain child benefit policies help accumulate money with regular cashback to cover expenses for your child’s education at various stages of life.
- Removes loan burden: Life insurance payouts can help repay loans, ensuring the family doesn’t face stress in arranging funds.
- Enjoy tax benefits: Life Insurance premiums offer yearly tax deductions up to Rs. 1.5 lakhs under Sec 80C.
Types of life insurance
Below are the 8 types of Life Insurance:
| Types of Insurance | Overview |
|---|---|
| Term Life Insurance | All eventual risks are covered under this policy. |
| Whole Life Insurance | This policy provides life insurance cover till 100 years. |
| Endowment Life Insurance Policy | This policy combines savings with life insurance coverage. |
| Money Back Insurance Policy | This policy provides periodic returns combined with life insurance coverage. |
| Retirement Insurance Plans | This plan helps create a corpus for retirement. |
| ULIP Life Insurance Plans | This is a market-linked insurance cum investment plan. |
| Child Insurance Policy | This plan aims to provide financial support for a child’s future needs alongside life insurance coverage. |
Bottom Line
Life is the most precious gift for all living beings. To ensure safety, one must look at the bigger picture and always say “YES” to saving it. But since life is also equally uncertain, insuring it becomes a necessity.