Life Insurance
Insurance in India: How it works!
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What is Life Insurance?
A life insurance is a financial agreement or arrangement between one person, that is, the policyholder, and an insurance company. The agreement trades regular premiums paid to the insurance company with death benefits to policyholder-beneficiaries in case of the death of the policyholder. Life insurance is to give financial protection and assistance to loved ones or beneficiaries in case they die.
Types Of Life Insurance:
Term Life Insurance: This is a long-term pure financial protection plan designed for safeguarding the financial well-being of your family.
Whole Life Insurance: This provides lifelong cover, up to 99 years of age. Long-lasting life protection is provided.
Unit Linked Insurance Plan (ULIP): This investment is made in a diversified mix of equity and debt funds and has a lock-in period of 5 years for partial withdrawal.
Endowment Plan : It helps you ensure the guaranteed amount at maturity of the policy and provides financial security.
Money Back Plan: It helps in managing the cash flows, especially towards such goals as funding for your child’s education or marriage.
Retirement Plan: It helps you build up a sizeable retirement fund or a pension to ensure a financially comfortable golden life.
Child Insurance Plan: Lock your child’s education and even marriage plans by saving against higher education and even by procuring life insurance.
Group Insurance Plan: Organisations like corporation use these to protect both their employees as well as customers from various unexpected risks.
Savings & Investment Plans: Direct your savings to achieve future financial goals
Life Insurance
Life Insurance is a type of term life insurance that provides a cover for a specified number of months or years or for a term. In case the policyholder dies during the tenure of the policy, a benefit amount would be given to the nominee under such life insurance policies. There are many affordable term insurance plans that provide very good coverage for life. For example: A monthly expense for a term insurance covering $1 billion could be as low as $485*. Premium is paid either all at one time, periodically, throughout the term of the insurance policy, or only for a temporary period. Amounts vary according to what payment method is chosen by the buyer in terms of their selected premium payment type.
Term Insurance
Term insurance is the type of life insurance which covers a person for a specific period, say 10, 20, or 30 years. In case the policyholder dies during the term, then a certain amount is paid to the beneficiaries. The term insurance is purely aimed at providing financial support in case of the death of the policyholder.
Who Should Buy a Life Insurance Policy?
– People with financial dependents, such as spouses, children, or aging parents.
Breadwinners or contributors to the household income
– Individuals with large outstanding debts, including mortgage, loan, or credit card balance
– Parents who are interested in providing for children’s education and their eventual financial future
– Business proprietors interested in protecting their business and securing for their family in case anything happens to them
– Individuals interested in specific financial goals, for example, leaving an inheritance or legacy.
– Those who wish to pay for funeral and final expenses without burdening additional family members.
– Those wanting to build cash value or investment potential through certain types of life insurance, such as whole life or universal life.
Know a few terms related to Life Insurance
– The regular premium paid for the life insurance policy.
– The person or business that will receive the death benefit when the insured dies.
– Amount paid at death of the assured to the beneficiary
– Duration of the time to which the life insurance applies
– Amount on which it pays cash to the nominee.
– Underwriting in respect of risk level from which the company can come to a conclusion whether one can take the policy and accordingly set the price of a premium.
– A Saving portion of certain policies
– In some time, those will grow in the amounts
– Addition of secondary covers or benefit forms within the policy selected. Pays a smaller premium amount over any specified time duration.
– Suggest lifetime coverage with a savings component and higher premiums.