When it comes to securing the financial immunity of a family, people leave no stone unturned. With this agenda, a life insurance policy assuages the primary objective of offering financial security to the family when the breadwinner is absent. As a contract between the policyholder and insurance company/ government, it ensures the designated beneficiary an amount of money in return for a specified premium, in case of the untimely death of the breadwinner.
What are the Benefits of Life Insurance in India?
1. Risk Coverage
In exchange for premium payments, the beneficiary receives monetary compensation in the event of an unfortunate event.
2. Different uses for the plans
The life insurance policy can be divided into several types, and an investor can choose the model that best suits their requirement:
- Term Insurance: It is an insurance plan that is purchased over a fixed term. However, since this policy does not carry out any cash value, it does not have any maturity benefits, unless on the occurrence of an event.
- ULIP: It is a combination of investment with life insurance. Under ULIP, the investors can withdraw their money after a five-year lock-in period.
- Endowment plan: It is similar to term insurance. However, this scheme gives the policyholder a lump sum amount if he/she survives until the policy maturity date.
- Money-back policy: It offers many survival benefits distributed over the policy period.
- Whole life policy: Unlike the other schemes, this policy provides complete life coverage for the policyholder and doesn’t expire after a specific period. This policy also allows the holder, partial withdrawal, against the plan.
3. Health expense coverage
Life Insurance policy also covers costs incurred during hospitalization or critical illness treatment.
4. Saving tool
Besides offering life coverage, life insurance policies are excellent money-saving avenues.
5. Guaranteed income
It ensures a financial guarantee to the beneficiary, especially during the occurrence of any unfortunate event.
6. Loan facility
On specific policies, the life insurance companies provide a small amount loan for the insured against the plan.
7. Tax benefits
Under Income Tax Act 80 and 80C, life insurance policies in India are tax-deductible.
What are the Pointers to be considered before signing up for life insurance?
Since a lot of companies come up with numerous policy options, narrowing it down to a single choice can be a stumper. However, it is essential to research, compare the various policies, and choose the plan that gives maximum benefits with money-saving privileges.
2. Read thoroughly through the rules and regulations.
It is essential to understand and not skim through every content mentioned under the rules section before signing with any policy.
3. Lock-in period
The lock-in period varies between the different types of policies. Investors are advised to make an informed decision after meticulous research on the lock-in period and policy flexibilities.
4. Consider the payment options
Almost all insurance policies offer premium payment options on an annual, semi-annual, monthly basis.
5. Masking information
The policyholder mustn’t mask any information while filling out the application form, as this could cause misinformation while executing claims.