Life Insurance

Family and friends are the ones who fill our lives with love. Life is fun when we have our family and friends to share our happiness. And sometimes, happiness is, to be a part of these special moments in the life of our loved ones. But, Life can also be full of uncertainties where bad things are bound to happen. Life can hurl in our path any unexpected incident that can turn disastrous or even fatal, eclipsing the safety, security and happiness of our family and loved ones. And in this moment of turmoil, to have a friend who can care for you and help you and your loved ones out of their hour of need is a true friend. Life insurance can be your truest and the most reliable of friends in your and your loved ones true hour of need by providing with financial support to your family event after your life. And as every relation has to be nurtured, the same is applicable to the life insurance in the form of premium, or the agreed upon sum money as a one-time payment or as installments depending upon your plan that you can choose according to your need and requirement from a vast variety of plans provided by different insurance companies.

Life insurance is the safety net that one can provide for their family loved ones and those who are dependent on them, in case of the unfortunate event of an untimely demise of the policy holder. It is a pact between the policy holder and the insurance company, where the policy holder pays the insurance company an agreed upon sum of money for a defined period either as a one-time payment or as installments, the money paid by the policy holder to the insurance company is known as ‘Premiums’. In return, the insurance company promises to pay an agreed upon sum of money to the person nominated by the policy holder, also known as the ‘beneficiary’, in case of an untimely demise of the policy holder within the term of policy. There is a variety of Life Insurance Plans available in market today, and these are broadly categorized into Pure Life Insurance Plans which can be further categorized into Term Insurance, Endowment Policy, Money Back Life Insurance, Whole Life Insurance, Child Insurance, and Pension Plans; and, Insurance and Investment Plans which includes ULIP or Unit Linked Insurance Plan.

Types of Life Insurance

Pure Protection Plans:- The purpose of these plans is to provide insurance and security, rather than for the purpose of investment.

Term Insurance :-  It is the most basic and economical insurance plan that to provide financial security for your family for a defined period of time. Though, if you outlive the term of your policy, the insurer is not liable to pay you anything as these Term Insurance Policies have low premium rates compared to the insurance cover, providing higher Return over Investment in case you die during the policy term.

Money Back Life Insurance :- These plans provide monthly payments as partial survivor benefits throughout the term of the policy to the policy holder. And, in the case of the demise of policyholder, the beneficiary receives the agreed upon sum of money, along with the survivor benefits from the insurance company.

Child Life Insurance :- In this plan, the nominee or beneficiary is the child and it provides a large sum of money to the child, in case of the unfortunate demise of the policy holder. Moreover, it absolve all the premiums and provides money to the child as planned by the policyholder.

Pension Plans :- These plans help in saving for retirement, along with life insurance. It provides a monthly pension after retirement; or, in the case of untimely demise of the policy holder, the nominee has the option of either taking the money as a one-time payment or opt for a timely pension for the remaining period of the policy.

Whole Life Insurance :- These plans provide benefit of both insurance and investments. Plan covers the whole life of the person or up to 100 years whichever is earlier. Also, a bonus is calculated by the company on the sum assured, paid to the nominee after the demise of the policy holder.

Endowment Policy :- Insurance and Investment. Part of premium is invested in asset markets – equities and debts. Periodic bonus paid either on maturity or demise of the policy holder.

Insurance and Investment Plans

ULIP – Unit Linked Insurance Plan : The amount of premium in these plans is divided in two parts. One Part is the life cover and the other part is the investment in equities and debts as per the risk taking capability of the policy holder. The ULIP is classified on the basis of their purpose, they are: for retirement; for wealth collection; for children education; and, for health benefits.

Why should everyone invest in an Insurance Policy?

Life insurance has become an essential part of every household as it provides a number of benefits. First and foremost, life insurance guarantees the financial security of one’s family and loved ones in case of any unfortunate event happens in the future. The life insurance plans available in the market provide you with multiple options to choose from according to your own need, requirement and budget. Long considered to be a reliable way of saving money over the long haul, life insurance plans now, have also become lucrative investment options with periodic bonus and maturity schemes which not only allows the policy holders to not only save money, but also to invest it on assets markets in debts and equities while keeping track of the invested money. Life insurance also provides policy holders to plan specific stages of their family life may it be planning a bucket list for after retirement or planning for the Ivy League education of your future child, life insurance can help you plan and execute to the fullest of your potential without the undue stress of uncertainty in life. The biggest benefit or the most direct benefit one gets from life insurance is the exemption in Income Tax under the Income Tax Act of 1961.