What is life insurance and why it is important?

what is life insurance

Life insurance is a contract between an insurer and insurance policy holder. In this contract, the insurer promises or take guarantee to pay a sum of money in exchange of premium upon the death of an insured person or after the prescribed period of time. These contracts are legal.

Why life insurance is important?

As being a solo earning man or women in a house, and your kids or other family members are dependent on you to enjoy the life with some standards and to survive. But here the question arises that, how would you be able to serve your family after retirement or death? How will your family continue with the same life style? There is a need of something which will take care of your family…

Insurance is mandatory because life is uncertain and inevitable. There would a drastic impact on the family if you won’t plan from now. To reduce the burden after death or retirement or disability, life insurance is required. However, insurance can’t prevent risk involved in life but can compensate for any losses that can be arise.

importance of life insurance

There is a need of life insurance specially for those who has small kids or any other person who can’t earn for themselves and going to suffer financially.

Another reason is that after many years of your hard working and burdened of responsibilities, you forgot to enjoy your life in fulfilling dreams of your children and cancelled your vacations. In old age, you cannot work as you are working now. Insurance helps you to save money and secure your future.

What are the advantages of investing in Life Insurance?

  • Life insurance covers high level of risk involved in life.
  • Life Insurance is a good investment. It secures your money and gives you high return.
  • You will also get income tax benefit
  • It provides security for future.
  • It gives bonus plus assured money to the insured in case of any accident.
advantages of life insurance

At what age you should get life insurance?

There is no prescribed age limit to purchase insurance. However, if there is someone who is dependent on your income in that case it is beneficial to get the insurance policy as early as possible. According to some research, the optimal age for buying life insurance is below thirty five years and get life insurance in low premiums. Buying insurance policy doesn’t make any sense if you have not dependents.

life insurance policy

Which life insurance is best?

In order to get healthy and secured life, Life Insurance is essential. The company that comes first on our mind when we talk about life insurance company is LIC which is the most trusted brand and  have millions of customers. Products provided by LIC are –

  1. LIC Jeevan Amar, a non market linked plan, launched in August 2019. It is under the category of pure term insurance plan and minimum age required is eighteen years. The minimum term for this policy is ten years while maximum is 40 years. The rate of premium is classified into two parts. First is smoker and other is for non-smoker. If the policyholder dies during the policy, claim amount is payable to the beneficiary. Premium can be paid on regular basis or in lump sum. Medical Cotinine Test is mandatory for non-smokers. The benefit of this plan is it increases sum assured. It has low rates of premium for women. There is no limit for maximum Sum assured. Apart from it, it gives additional amount by paying extra premium in case of accident.
  2. LIC e-term plan which is again under the category of pure term marketing insurance plan and deals with family in providing complete financial help in case of any unforeseen event. The entry age should be 18 years and maximum is 60 years and term of policy is 10 to 35 years. You can buy this plan online only. Premium for this plan are to be paid yearly. Minimum sum assured is twenty lakhs and no limit for maximum. Along with this, medical examination is required for policy holders. It also gives concession to women and non smokers. Income tax benefit is available for this plan.
  3. LIC New Children’s money back plan comes under the category of traditional money back child plan. This plan is specially designed for to meet expenses for marriage and better education. Age limit is 0 to twelve years. Policy term gets mature at the attainment of twenty five years. You can opt any option to pay premiums, annually or half yearly or quarterly or monthly. It does not require any medical examination of policyholder. Minimum purchase price of this policy is ₹24000. There is no maximum limit for Sum Assured amount. Additional facility is that if you pay full premium for three consecutive years , then loan facility is available for you, In case of death of policyholder after the commencement of risk then the death benefit + accrued bonus + final additional bonus will be payable.
  4. LIC New Jeevan Anand Plan under the category of Endowment plan. It is a blend of saving and financial protection. This life insurance policy has numerous advantages and covers risk .Minimum amount of sum assured is rupees 100000 and no limit for maximum. It also gives loan facility. Other optional benefits are accidental death benefit or disability benefit . It also provides tax benefit under section 80C of Income Tax Act which means the insured will enjoy tax benefit on the premium he or she is paying. The age range of entry is 18 years and maximum is 50 years. Term of this policy is 15 to 35 years. Rebate on premium paid is applicable. This policy plan is ideal for women. The policyholder will get a lump sum amount during maturity.
  5. LIC Jeevan Umang, and the type of plan is whole life + endowment plan. Age at entry is 90 days. A fixed sum assured is paid to the insured at the maturity of the policy term. Minimum amount of sum assured is one lakh and has no limit for maximum. Mode for paying premium is yearly, quarterly, monthly. Policyholder privileged with tax benefit under section 1961. It also offers pension facility after retirement. It also ensures survival benefit, 8% of the basic sum assured which is payable every year till the maturity. On the maturity of the policy, along with sum assured it gives additional bonus. In case of death of policyholder, sum assured is paid to the nominee as given at the time of purchase.
  6. LIC Jeevan Pragati, a type of plan under the category of endowment plan and a mixture of monetary protection and saving. Minimum age limit is 12 years and maximum is 45 years. Term of policy is 16 to 25 years. It gives loan facility if premium is paid for consecutive three years. Sum assured is rupees one lakh fifty thousand and has no limit for maximum. It also offer tax benefit under section 80C and 10(10D) under Income Tax Act, 1961. If policyholder dies before completing policy years then it pays sum assured and complementary bonus. On surviving till the tenure of policy, it pays assured on maturity + final additional bonus. You can surrender the policy after the payment of three initial premium.

It is recommendable to go in detail while choosing plan and read clauses and know the benefits suitable for you and your family.

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