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What is life insurance?
Life insurance is a contract between an individual and an insurance company, in which the insurance company provides financial security in return for regular payments(known as premiums)to the insurance company. In case of the policyholder’s death or if the policy matures, the insurance company shall pay a lump sum to the individual after a period of time or to their family, on basis of the contract Typically, this type of policy is chosen based on your needs and goals.
How insurance can be useful
Insurance can prove advantageous in meeting several financial goals of the individual and his family. Here are some of the important ones:
Financial cover against loss of life, which makes sure your family can support itself in your absence
Child’s education
Child’s marriage
Buying a house
Pension or regular income post-retirement
Post-retirement income for NRIs
These are just some of the financial goals you can achieve with the help of life insurance. More importantly, life insurance plans are flexible. This means although you won’t find an insurance plan dedicated to buying a house, you can buy an endowment plan (traditional or market-linked) with the aim of paying for a house at a future date.
What are the Benefits of Life Insurance?
1.Protection
Life is unpredictable and full of uncertainties. The risk of an untoward incident such as death cannot be eliminated. In such a situation, your family will have to face financial constraints caused by the loss of your regular income. Investing in a life insurance plan provides the safety net during such times. Your insurance provider is liable to pay the beneficiary or nominee the pre-determined death benefit, thus keeping your family protected even in your absence.
2.Long-term savings
It is important to consider life insurance if you are seeking to make long-term savings. Such a product helps you to save systematically and build a corpus for your future. The accumulated amount may be used for multiple purposes, such as purchasing a new home, funding your child’s future education or meeting his marriage expenses, among many others. What’s more, life insurance plans also offer regular pay-outs in the form of annuities, and is therefore, an excellent method to meet your retirement goals.
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