The importance of life insurance cannot be understated. It provides financial security for those who need it most in their time of need. In addition to providing financial security during difficult times, it also helps reduce stress levels and improve emotional well-being among family members left behind after the death of an insured individual. If you are looking for protection for your family in case something happens to you, then you should consider getting a life insurance policy.
Life insurance is an important part of financial planning. It is a financial safety net that can help you pay for your living expenses in case of an unexpected event. As technology advances, life insurance policies have also become more affordable and accessible to more people. However, it is important to understand the benefits, different types and how they work, what type of coverage you need, etc. Before diving into the topic let’s see the basic definition of the life insurance policy.
What is Life Insurance Policy?
A life insurance policy is a contract that provides financial protection in the event of death. It is an agreement between the life insurance company and the person who takes out the policy. A life insurance policy can be bought by individuals, companies, and other organizations to provide financial protection in case of death.
Types of Life Insurance Policy
There are different types of life insurance policies available in India
- Term Life Insurance: It is a time-limited insurance policy that lasts for a specific period.
- Whole Life Insurance: t is an insurance policy with no time limit, but it pays off only after you die or when the policy matures, whichever comes first.
- Unit Linked Life Insurance: Unit Linked Life Insurance is a type of life insurance that is linked to a unit of investment.
- Endowment Life Insurance: It is a long-term life insurance policy that provides the beneficiary with a fixed rate of return.
- Child Life Insurance: Child Life Insurance policy is a type of insurance policy that covers children up to a certain age.
- Retirement Life Insurance: This covers the cost of living expenses when you retire. It's meant for those who are retired and have a fixed income.
- Money Back Life Insurance: It returns the money invested by the policyholder. In this, the percentage of amounts at regular intervals, instead of getting the lump sum amount at the end of the term.
Need for Life Insurance
Life insurance is an essential part of your financial portfolio, making it possible for you to give your loved ones a secure future. A life insurance policy helps to minimize the risk of financial difficulties which would be faced by the families in case of the sudden death of the policyholder. Life insurance is one of the most important financial planning tools available in the market as it covers both the investment and insurance parts under a single policy. Life insurance is needed because manage finance for your children’s education, have a savings plan for the future so that you have a constant source of income after retirement, and ensure that you have extra income when your earnings are reduced due to serious illness or accident.
How Does Life Insurance Policy Work?
Life insurance is a contract that you sign with an insurance company, which promises to pay you a certain amount of money at a predetermined time if you die. The life insurance policy pays out when the insured person dies. The insurer will use the proceeds from the life insurance policy to pay for the funeral and other expenses associated with the death. An individual buys a life insurance policy to ensure that they are financially protected in case of death or in case they are unable to work due to illness or injury, etc.
One of the most important things to remember about life insurance is that it’s not for you, it’s for them. Life insurance is meant to help protect your family's financial future. Life insurance provides a death benefit to your beneficiary after you die. It can help give your loved ones access to money when they need it. Life insurance also helps you in creating a large pool of funds that can be used by your loved ones for a child’s future, marriage, purchasing a house, etc.
Importance of Life Insurance
Life insurance is important for every individual. It provides financial protection against sudden and unexpected death. Life insurance can be used to protect loved ones by making sure that their financial needs are met if the person dies before them. It can also protect you from a future financial collapse or a terminal illness. We should not think of life insurance as a form of savings, but as an investment in your future. Below are the points on how life insurance is helpful.
To Help You Financially & Protect Your Family
Having a life insurance policy benefits everyone and can make it easier to set up what would happen to your loved ones in the case of your passing.
Case Scenario:
For Insurance Mr. Ram is 40 years old married person and he is the sole bread earner of his family. One day he has planning to take a life insurance policy because he understands how life insurance is important to secure their family. But his family members do not believe in the concept of life insurance. One day Ram met with an accident and died of injuries. Ram’s family is worried about living expenses. At that time Ram’s family get money from the life insurance company. Then they realize why life insurance is important and how it will help in difficult situations.
Life Insurance is an Investment for your Future
Life insurance is an investment for your future. It provides you with a steady income if you die before retirement age. Another important aspect of a life insurance policy is that it bears the future educational expenses of your children.
Case Scenario:
There are two childhood friends named Rishi and Ashok. Rishi decided to buy a life insurance policy and suggested Ashok invest in a life insurance policy but he doesn’t believe in the concept of insurance investments. 30 years later, Rishi’s daughter wants to go for higher studies. He happily uses a lump-sum amount of matured life insurance policy to fulfill his daughter’s dreams. While on the other hand, Ashok plans to get his elder daughter married. He uses all his lifelong savings to meet the wedding expenses. One day Ashok’s younger daughter wishes to go for higher studies but he refused to go because all his lifelong savings are used in his elder daughter’s marriage. Had Ashok brought life insurance earlier, he would have saved his money for uncertain times and he can able to fulfill all the dreams of his family.
Benefits of Life Insurance
Here are some benefits of life insurance policy
- Financial Security: A life insurance policy helps to minimize the risk of financial difficulties which would be faced by the families in case of the sudden death of the policyholder. According to the life insurance definition, the insurance provider agrees to pay the nominee or beneficiary the pre-defined sum assured. As a result, even in the policyholder’s absence, his family stays protected.
- Long-Term Savings: Some life insurance plans offer you the opportunity to create wealth. If one wants to make long-term investments, it’s important to think about life insurance’s meaning. Such insurance plans help you make systematic savings and create wealth that can be used for your future goals.
- Tax Benefits: Life insurance offers tax dual benefits under prevailing laws as per the Income Tax Act, of 1961. You can avail of a deduction of up to Rs.1.5 lakh under Section 80C of the Income Tax Act. The maturity insurance plans may be completely tax-free. This tax benefit is under Section 10(10D) of the Income Tax Act.
- Peace of Mind: Death is unavoidable. In the case of your absence, your family may face financial difficulties so the least you can do for your family is to secure their financial future with a life insurance policy.
How to Buy Life Insurance Online
Buying life insurance online has the advantage of being cheaper than buying it offline or through an agent. However, there are several factors to consider before purchasing life insurance online. Some factors to consider when buying life insurance online include the type of policy you want the company’s reputation, customer reviews, etc. The process of buying a life insurance policy online has become simple with PolicyBachat. Following steps to purchase the life insurance policy online in our portal.
- Visit the official website of the PolicyBachat
- Fill in the requested details such as age, gender, income, etc.
- Select the desired options by comparing different premium quotes.
- Select the suitable plan with the premium quote
- Pay for your Policy by using online payment methods.
Conclusion
Life insurance is an essential part of a well-rounded financial plan. It can help protect your family in case you die, or it can provide them with financial support if you're unable to work. PolicyBachat is an online insurance web aggregator which helps in selecting insurance policies online for its customers based on the customer’s requirements. Please visit our portal to compare insurance policies from top life insurance companies and select the best life insurance policy that fits all your requirements.