Life insurance- an effective insurance policy that is popular as one of the strong pillars of personal finance, deserving consideration of almost every household. Still, with great features and coverage that it holds, there is always confusion, even you can call it skepticism, related to the life insurance industry. But if you have appropriate information about the product that you are looking for then you can simplify the entire decision-making process and can easily make an informed choice for you and your family. It will not only safeguard your future but can also assist you in the process of wealth creation.
A life insurance policy is an agreement between the insured and insurance company. In return for premium payments, the insurer will pay a lump-sum amount to the insured family or beneficiary in case of need which is known as a death benefit. In the case of the death of the insured, the beneficiary of the nominee as stated in the documents will be liable to get the sum assured amount to have a financially stable life in such hard times.
The insurance covers two major purposes:
• To provide coverage to the family of the insured if he/she dies.
• To qualify the insured for favorable tax treatment.
Generally, the decision of choosing the right life insurance plan completely depends upon the needs and goals of the owner.
An effective term life insurance offers protection for a specified period of time, whereas permanent insurance is there as a whole and universal life policy which provides lifetime coverage. If we talk about the young families of India then life insurance makes an instant estate before they have sufficient time to gather other assets, and it offers liquidity to the named recipient long before deceased’s matters are settled.
Some common forms of Life insurance in India are:
• Term Life Insurance: It is basically designed to offer the financial protection of the family of the insured for a specific period of time, after which the plans may offer constant coverage, it is comparatively less expensive as compared to permanent life insurance.
• Universal Life Insurance: It is a permanent life insurance policy that is designed to offer lifetime coverage at a nominal price. It comes along the flexibility to lower your premium for entire life and offers the required benefits.
• Whole Life Insurance: Again a life insurance policy for a lifetime. Because of lifetime coverage and several other associated benefits, it generally costs high as compared to other available plans. It is fixed and has a cash value that completely works as a savings tool and accumulates tax-deferred.
• Unit Linked Insurance Plans: ULIP is an effective life insurance product that offers the twin benefits of insurance and investment. It allows you to stay secure and support a lot in wealth creation. This is one of the best investment products in today’s market.
• Money Back Policy: Money back plan is again life insurance as well as an investment product that offers the life insurance cover against the death of the insured along with periodic returns as a percentage of sum assured.
Nowadays, Life insurance is one of the fastest-growing industry in India. Even the government has come out with several beneficial life insurance policies such as Pradhan MantriJeevanJyotiBimaYojana(PMJJB) (Life Insurance), Pradhan MantriSurakshaBimaYojana (PMSBY) (Accidental Death & Disability Insurance), and many more. They are designed in ways that can offer the required coverage to the poor section of the society. PMSBY offers cover of up to Rs.2 lac in case of any mishappening, that results in death or disability of the insured. In case of death or full disability (loss of both eyes or legs or hands), the family of the insured will get a cover Rs.2 lac and in case of partial disability (loss of one eye or leg or hand), they will get Rs.1 lac. It is a great step by the government of India, these moves are attracting people to get insure under the life insurance plan and to get the coverage against the risks of untimely death.
Pros and Cons of Life Insurance
Pros:
- Protection
- Remove worries 3)Cash values 4)Tax benefits 5)Flexibility 6)Affordability
Cons: - Lack of trust
- Confusing
- Stuck in Limbo
Life insurance is not only a necessity in today’s era, but it is also a helping hand for your family to deal with a hard time. When you are not there, or in case of any mishappening, with a life insurance policy your family will be able to deal with the financial problems and can stand strongly. In case of the insured death and or any mishap that can leave your family stuck both financially and emotionally, an effective life insurance plan can offer the required financial stability to them for the future. So, without having a second thought, just invest your money in a life insurance plan today and secures the smiles of your loved ones.