Life Insurance

Nivesh shuraksha helps in to chose better insurance plan for you and your family. Life Insurance:

A life insurance policy is a contract-based promise established between the policyholder, who is the insured individual, and the insurer. Under this agreement, the policyholder is required to make periodic premium payments to the insurer. In return for these premiums, the insurer commits to providing a sum of money, known as the death benefit, to the beneficiary chosen by the policyholder, in case of the policyholder's demise.

The primary purpose of life insurance is to secure the financial well-being of the policyholder's family after their passing. This financial protection can be utilised to cover various expenses, such as paying for funeral costs, clearing loans, and other ongoing living expenses.

Life insurance policies come in different types, with Whole Life and Term Life being prominent options. In the case of Term Life insurance, coverage is provided for a predetermined term. If the insured person passes away during this period, the selected beneficiaries receive the death benefit. However, if the person survives beyond the term, no payout is made. On the other hand, Whole Life insurance offers a cover for the entire life of the insured person, and regular premiums are paid by the policyholder throughout their lifetime.

How does life insurance work?

Life insurance operates on a simple concept.

  • When you purchase a life insurance policy, you enter into a contract with an insurance company.
  • In this contract, you agree to pay regular premiums for the duration of the policy.
  • In return, the insurance company promises to pay a lump sum amount, known as the death benefit, to your beneficiaries if you pass away during the policy term.
  • Let's consider an example to better understand how life insurance works in India.

    Meet Mr. Kumar, a 35-year-old married man with two young children. Concerned about the financial well-being of his family in case of his untimely demise, Mr. Kumar decided to go for a Term Life Insurance policy.

    • Choosing the right policy: Mr. Kumar assesses his family's needs, including outstanding debts, future financial goals, and his children's education expenses. Based on his analysis, he decided to opt for a Term Life insurance policy with a coverage amount of INR 1 crore and a policy term of 25 years.
    • Premium payments: The insurance company calculates Mr. Kumar's premium based on various factors, such as his age, health condition, lifestyle, and the chosen coverage amount. He chooses to pay an annual premium of INR 10,000.
    • Coverage period: In this scenario, Mr. Kumar's policy is valid for 25 years. If he passes away during this period, his chosen beneficiaries, typically his wife and children, will receive INR 1 crore.
    • Peace of mind: With the life insurance policy in place, Mr. Kumar gains peace of mind, knowing that his family will be financially secure even if he is no longer around to support them.

    Types of Life insurance in India

    • Term life Insurance
    • Whole life insurance
    • Endowment Plan
    • Unit-Linked Insurance plans
    • Pension Plan
    • Return Of Premium

    Benefits of a Life Insurance Policy

    • Financial Protection for Loved ones
    • Peace of mind
    • Accumulation of savings
    • Tax benefits
    • Supplementing retirement income
    • Loan facility
    • Financial Legacy
    • Business Continuity
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