Every person wishes to lead a secure and safe life till old age. Along with health, financial security is also critical. A life insurance policy is one of the best ways of securing your life from all sides.
Under the terms of a life insurance policy, the insurance provider agrees to pay the policyholder’s nominees a sum when the insured person is no more. To make a life insurance policy valid, the person must pay premiums to the insurance company during his lifetime. Therefore, life insurance is a legally binding contract offering your family financial security even after an unfortunate event occurs.
Importance of life insurance
Now that you know what life insurance is, let us learn about the many benefits of life cover insurance. When you buy a life insurance cover, you sign up for several benefits for you and your family. These benefits make life insurance a very important decision for people. For example, your family gets death benefits in case an unfortunate incident happens that affects you. Because of the life insurance coverage, your family gets long-term financial stability.
The sum of money and bonuses given out by the company takes care of your family even after your death. If you look at the practical side of life and wish to plan for the long term, you need to take a life insurance cover. It also has other advantages like tax benefits, covers last rite expenses and even provides some investment opportunities.
Types of Life insurance plans
You can ask your life insurance provider about the various types of life insurance plans. The most common types are as follows:
Term Insurance Plans
A term insurance plan is the simplest form of life insurance. Term insurance covers life insurance and offers a death benefit to the family when the insured person dies. There is no additional investment component under this insurance policy type.
Suppose you wish to go for a simple life insurance policy with easy-to-understand terms. If the policyholder passes away during the insurance plan term, their family members receive the insurance money agreed upon in the contract. Many people prefer to purchase a term insurance plan because it is affordable and simple.
Life insurance plans can also be endowment plans. Endowment plans are more centered on savings. This type of life insurance plan not only gives your family an insured sum of money upon your death but also generates returns on the money invested through insurance premiums. If the insured survives beyond the policy maturity term, he or she receives a sum of money at maturity.
This type of life cover is often opted for by many senior citizens as it helps with retirement and healthcare in old age. You also get tax benefits under such life insurance coverage.
A unit-linked insurance policy (ULIP) is a type of life insurance that helps you get life coverage and investment options from the market. Under a ULIP plan, you can invest in several market-linked assets to generate wealth over time. If you wish to get a life insurance cover while investing in wealth-generating assets, you should go for a ULIP.
You can choose the type of funds you invest in and choose a suitable combination. You can choose the ULIP plan based on your short-term and long-term financial goals. You also get tax benefits from such policies.
Whole Life Insurance Policies
The average life expectancy has increased in recent decades and lots of people are living into their late 90s and even 100s. With this in mind, a whole-life policy seems like the prudent choice for those looking for extended life cover. This is a type of life insurance that covers the insured for their entire life, as long as the premiums are paid.
Whole life insurance plans have a cash value component that grows over time and can be borrowed against or surrendered for cash. One of the main benefits of this insurance is that it provides a guaranteed death benefit, which means that your family or beneficiaries will receive a certain amount of money upon your demise. Additionally, whole life insurance policies generally offer fixed premium amounts for life, so you won’t have to worry about your premium payments increasing over time.
In a Nutshell
A life insurance policy is crucial for anyone with earning potential and needs to secure his family’s future. If you are the family’s breadwinner or contribute to your family’s finances, a life insurance policy ensures you fulfill your financial responsibilities even after death.
When looking for a good life insurance policy, always look for an insurance provider with a good reputation. After all, nothing is more important than the security and well-being of your loved ones! Get insured today!