Life Insurance is a financial cover for a linked with human life, like death, disability, accident,
retirement etc.
Human life is mean to risks of death and disability due to natural and accidental causes. When
human life is lost or a person is disabled permanently or temporarily, there is loss of income to the
household. Hence, in life insurance, the Sum Assured or the amount guaranteed to be paid in the
event of a loss by insurance company so it is the way of a ‘benefit’.
Life Insurance products provide a definite amount of money in case the life insured dies during the
term of the policy or becomes disabled on account of an accident.
Life insurance is about taking care of loved ones.
It’s about your responsibilities and keeping promises to your family members. You take decision to
purchase life insurance from your family's point of view, not your own.
Life insurance as a tool that protects your spouse and children from the financial losses that can
result if you die prematurely.
LOOKING AFTER YOUR LOVED ONES EVEN AFTER YOU'RE GONE: This is the most important factor
of life insurance. Your family is dependent on you even after you're gone and you certainly don't
want to let them down in financial condition.
Whether it's for replacing lost income means by after your death you also support your family
financially. paying for your child's education or making sure that your spouse also get financial
security in your absence
DEALING WITH DEBT: You don't want your family is responsible for your financial liabilities. Any debt
like home loan, personal loan, or a loan on credit cards- also some other person will be taken care by
the right life insurance policy.
HELPS ACHIEVE LONG-TERM GOALS: life insurance as a financial support tool keeps you invested for
the long term, it would help you achieve your long-term goals such as buying a home or planning
your retirement, your daughter marriage, higher education in abroad etc.
PEACE OF MIND: you can’t avoid death in any day you will be death unfortunately by some cause.
But your responsibility keeps your family member financially secure even your absence. Even if it is a
small policy or big policy, you know you can help them as a finical security over difficult times.
Replace income for dependents. If people depend on your income, life insurance can replace that
income for them if you die.in some cases the parents make a life insurance plan with young children
because f the parent died in middle age so that in future they will not be feel like they have not
money for survive or any future demand may be education, marriage, buy land, doing any business.
So all the demand they fulfilled .However, it can also apply to couples in which the survivor would be
financially support by the insurance company the death of a partner
To Protect Children
It supports children’s education cost when the insured dies suddenly. Even as an investment,
children policy helps in managing the cost of their education and marriage.
To Build Wealth
The long-term nature of life insurance plays a crucial role in building wealth along with
insurance benefits. There are different types of life insurance plans that can help you plan
your future financial goals.
To Protect Loss of income
Loss of income due to injury or hospitalization or disability can be covered under a life
insurance policy, provided you pick the right one. This is an excellent reason to buy such
policies.
To Cover Loans
f you have incurred debt, it is advisable to protect the loan with the life insurance policy. This eases
the burden on your family in case the insured borrower dies. The policy amount takes care of the
repayment obligation.
Why you should buy Life Insurance:
All of us face the following risks:
Dying too soon
Living too long
Life Insurance is needed :
To ensure that your immediate family has some financial support in the event of your
demise
To finance your children’s education and other needs
To have a savings plan for the future so that you have a constant source of income
after retirement
To ensure that you have extra income when your earnings are reduced due to serious
illness or accident
To provide for other financial contingencies and life style requirements
How much Life Insurance is needed:
The amount of Life Insurance coverage you need will depend on many factors such as:
How many dependants you have <="" li="">
What kind of lifestyle you want to provide for your family
How much you need for your children’s education
What your investment needs are
What your affordability is
What Life Insurance to Buy
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Kinds of Life Insurance Policies:
Term Insurance
You can choose to have protection for a set period of time with Term Insurance. In
the event of death or Total and Permanent Disability (if the benefit is offered), your
dependants will be paid a benefit. In Term Insurance, no benefit is normally payable if
the life assured survives the term.
Whole Life Insurance:
With whole life insurance, you are guaranteed lifelong protection. Whole life
insurance pays out a death benefit so you can be assured that your family is protected
against financial loss that can happen after your death. It is also an ideal way of
creating an estate for your heirs as an inheritance.
Endowment Policy
An Endowment Policy is a savings linked insurance policy with a specific maturity
date. Should an unfortunate event by way of death or disability occur to you during
the period, the Sum Assured will be paid to your beneficiaries. On your surviving the
term, the maturity proceeds on the policy become payable.
Money back plans or cash back plans:
Under this plan, certain percent of the sum assured is returned to the insured person
periodically as survival benefit. On the expiry of the term, the balance amount is paid
as maturity value. The life risk may be covered for the full sum assured during the
term of the policy irrespective of the survival benefits paid.
Children Policies:
These types of policies are taken on the life of the parent/children for the benefit of
the child. By such policy the parent can plan to get funds when the child attains
various stages in life. Some insurers offer waiver of premiums in case of unfortunate
death of the parent/proposer during the term of the policy.
Annuity (Pension) Plans:
When an employee retires he no longer gets his salary while his need for a regular
income continues. Retirement benefits like Provident Fund and gratuity are paid in
lump sum which are often spent too quickly or not invested prudently with the result
that the employee finds himself without regular income in his post - retirement days.
Pension is therefore an ideal method of retirement provision because the benefit is in
the form of regular income. It is wise to provide for old age, when we have regular
income during our earning period to take care of rainy days. Financial independence
during old age is a must for everybody.
There are two types of annuities (pension plans):
Immediate Annuity
In case of immediate Annuity, the Annuity payment from the Insurance Company
starts immediately. Purchase price (premium) for immediate Annuity is to be paid in
Iumpsum in one installment only.
Deferred Annuity
Under deferred Annuity policy, the person pays regular contributions to the Insurance
Company, till the vesting age/vesting date. He has the option to pay as single
premium also. The fund will accumulate with interest and fund will be available on
the vesting date. The insurance company will take care of the investment of funds and
the policyholder has the option to encash 1/3rd of this corpus fund on the vesting age /
vesting date tax free. The balance amount of 2/3rd of the fund will be utilized for
purchase of Annuity (pension) to the Annuitant.
