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Life Insurance:
What Is Life Insurance?
Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against.
The contract is valid for payment of the insured amount during:
» The date of maturity, or
» Specified dates at periodic intervals, or
» Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium periodically to the Corporation by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates ‘risk’, substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilisation’s partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:
1.That of dying prematurely leaving a dependent family to fend for itself.
2.That of living till old age without visible means of support.
Aid To Thrift:
Life insurance encourages ‘thrift’. It allows long-term savings since payments can be made effortlessly because of the ‘easy instalment’ facility built into the scheme. (Premium payment for insurance is either monthly, quarterly, half yearly or yearly). For example: The Salary Saving Scheme popularly known as SSS, provides a convenient method of paying premium each month by deduction from one’s salary. In this case the employer directly pays the deducted premium to LIC. The Salary Saving Scheme is ideal for any institution or establishment subject to specified terms and conditions.
Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides, a life insurance policy is also generally accepted as security, even for a commercial loan.
Tax Relief:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force. Assessees can also avail of provisions in the law for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise.
Money When You Need It:
A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time. Children’s education, start-in-life or marriage provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies. Alternatively, policy money can be made available at the time of one’s retirement from service and used for any specific purpose, such as, purchase of a house or for other investments. Also, loans are granted to policyholders for house building or for purchase of flats (subject to certain conditions).
Medical And Non-Medical Schemes
Life insurance is normally offered after a medical examination of the life to be assured. However, to facilitate greater spread of insurance and also to avoid inconvenience, LIC has been extending insurance cover without any medical examination, subject to certain conditions.
With Profit And Without Profit Plans
An insurance policy can be ‘with’ or ‘without’ profit. In the former, bonuses disclosed, if any, after periodical valuations are allotted to the policy and are payable along with the contracted amount.
In ‘without’ profit plan the contracted amount is paid without any addition. The premium rate charged for a ‘with’ profit policy is therefore higher than for a ‘without’ profit policy.
Keyman Insurance
Keyman insurance is taken by a business firm on the life of key employee(s) to protect the firm against financial losses, which may occur due to the premature demise of the Keyman.
Useful Tips To Buy Life Insurance
Life insurance premiums are calculated based on an individual’s age. The younger you are, the lower the premiums charged. Buy a policy early to avail a long-term, low-cost cover to protect your immediate and extended family.
When estimating how much coverage you need, consider all your present as well as future financial obligations, as well as those of your dependents. Life insurance term plans are the most popular protection plans, offering high coverage at low premiums.
When buying term insurance plans, account for inflation! A cover of Rs.50 lakh may look sufficient today but may not cut it 20 years from now. When estimating how much you should cover yourself for, consider how rising prices will affect future financial requirements.
Online life insurance policies are the most economical and convenient life insurance products you can opt for. By cutting out the middlemen i.e. the agents, these policies are more easily accessible and offer time-saving features like online renewability.
Your Life insurance premium is determined by
The younger you are, the lower your premiums will be. Premiums increase with age, as does insurer’s level of risk. Make use of your youth, apply quick!
The battle of the sexes extends to the life insurance premium battlefield too. Since women on an average live longer than men, their insurance premiums are lower by a tiny margin.
Cigarettes? Chewing tobacco? Snuff? Insurers calculate premiums based on the risk they undertake while insuring your health, which tobacco destroys. We aren’t preaching, just telling you what to expect.
Insurers undertake greater risk the longer they cover you. Premiums on short-term policies are more expensive, but long-term life insurance plans have more payments.
How much of Life insurance coverage a person should get depends on
The more dependents you have, the higher the life insurance pay-out will have to be, to take care of them after you’re gone.
For those you leave behind to maintain a comfortable lifestyle, calculate your expenses and get a life insurance policy with a matching pay-out.
If you’re leaving your house, car and business to your dependants, you may also be leaving them your debt through unpaid house and car loans. Arrange to clear your debts, or to have an insurance pay-out large enough to clear it for you.
If you’re confident that you have ample savings and investments to carry your dependents through their lives without you to provide for them, choose a policy with a lower pay-out and consequently lower premiums. If not, do the opposite.
Associated Financial Institutions
We are amongst the top most preferred channel partners for loans, for Delhi and Delhi NCR’s widest network of Banks, NBFCs.
Associated Financial Institutions
We are amongst the top most preferred channel partners for loans, for Delhi and Delhi NCR’s widest network of Banks, NBFCs.
