10 benefits of life insurance

10 benefits of life insurance

What is life insurance?

Before you know the benefits of life insurance or life insurance, do not know what it is basically? Generally speaking, this is a type of savings where you will deposit a certain amount of money every month and the insurance company will give you the promised amount in case of any accident or loss later on.

Got a little hard to understand? Usually when we open a savings account in a bank, we deposit some money for a certain period of time in exchange for a certain dividend every month. After a certain period of time, we do not raise that money at interest. But not so with insurance.

Suppose you have a life insurance of 5 lakh rupees. Where you have to pay a premium of 3 thousand rupees per month. But the insurance company will not give you any profit for this 3 thousand rupees. Instead, if you die in an unintentional accident or illness, they will hand over the 5 lakh rupees to your family which will be a financial help for your family.

Simply put, life insurance is a contract or guarantee arrangement where you enter into an agreement with the insurance company to pay compensation to your family after your death in any unforeseen accident by depositing a certain monthly amount.

Benefits of Life Insurance

Life insurance pays your dependents cash. When you die this money replaces your paid income and can be used for anything – funeral expenses, living expenses, college tuition, mortgage payments, and even daily bills and expenses. This facility protects the financial health of your family.

1. Post-death benefits

If an unforeseen event occurs to the insured, resulting in loss of their family income, the insurance company compensates them in the form of death benefit. The recruited candidates get the promised full money and bonus deposited within the stipulated time.

In addition to providing death protection, many life insurance plans offer monthly income benefits. This type of insurance is an excellent benefit for people who have reached retirement age and whose income is declining.

However, when getting life insurance, you need to be careful to evaluate the features and benefits of several plans and choose the best one for your needs to provide the best protection.

2. Receipt on investment

Eminent financial advisers suggest that everyone should invest in a life insurance policy. Not only to provide financial security to the family when you are not there, but also to get excellent return on investment.

In addition, life insurance is a secure financial instrument compared to other investment options. The money you have invested in insurance at the end of the term or after the death of the insurer will be paid to you in full as guaranteed money.

3. Tax benefits

A significant life insurance benefit is the tax benefit. If you are a salaried employee and have purchased a life insurance policy, you may be eligible for a discount.

4. Loan facility

When your money is needed in an emergency, you can take out a loan against life insurance coverage. Almost all major insurance companies now offer loan benefits to policyholders against insurance. Depending on the terms of the policy, you can borrow a certain proportion of the sum insured or the sum insured. So before you sign a contract for insurance, get acquainted with the policy of taking a loan from the insurer.

5. The right decision of financial planning

It is important to plan your financial decisions carefully as you go through the steps of life. Life insurance can help you in this case. You can use the benefits of various term life insurance to provide financial support to the family in case of your untimely death.

Not only will this help them to fulfill their financial responsibilities, it will also enable them to live a financially independent life without interrupting their livelihood. It will be of great help in various important occasions such as marriage of children, payment of school fees for fifteen children and building a dream house for a life after retirement.

6. Guaranteed source of income

Another of the benefits of life insurance is the guaranteed source of income. Your family feels financially secure in your presence. Because you earn regular income to meet their needs. What you are earning helps pay off debts (if any), house rent, daily bills, children’s education and other household expenses.

But what if you suddenly leave this world? Some life insurance policies offer regular pay-outs, which can offset the loss of income due to the death of an earning member of the family.

7. Business security

There are currently several life insurance companies that offer a benefit with their insurance policy. If you purchased the policy and run the business, your business partner may purchase a portion of the policyholder after the policyholder dies.

10 benefits of life insurance
10 benefits of life insurance

Disadvantages of life insurance

1. High premium for older people

This is the main problem of life insurance policy. The higher the age, the higher the premium to be paid in life insurance. This is due to the fact that the risk increases with age so does the premium. Therefore, it is advisable to take out life insurance at a very young age to refrain from paying high premiums. There is a chance that insurance companies refuse or refuse to pay their policies if the elderly have an illness.

2. Returns are difficult to calculate

The income of a life insurance policy is quite complex and it is very difficult to predict income. Income from life insurance is based entirely on market conditions and performance. So unlike PPF and other fixed deposit schemes, it is difficult to reach a definite figure in life insurance.

3. Complex principles

 In India, many insurance companies offer different types of life insurance plans. You can choose the best life insurance plan according to your needs. But it can also create confusion in the mind of the customer as different insurance policies have different features. Some principles are simple, and some are not. Choosing the right life insurance policy can be difficult.

4. Insurance companies cannot pay benefits

Insurance companies resort to various tactics to avoid paying the benefits even after the expiry of the policy and they refuse to provide insurance or death benefits to the policyholder or nominee. They will mention many secret charges or clauses to reduce pay-outs.

Therefore, it is important to carefully understand the details of the policy and choose a company that has a positive pay-out rate. It is advisable to talk to our agents before entering into an agreement to know the merits and demerits of life insurance and the importance of life insurance.

5. Awareness of exclusion, hidden clause

Any financial product available in the market must have some exclusions and hidden clauses. It is your job to discover what that is and to bring it about. For example, most policies do not pay for suicide in the first year, and almost all policies exclude loss of life due to drug overdose or involvement in criminal activity.

Frequently Asked Questions

Life insurance pays your dependents cash. When you die this money replaces your paid income and can be used for anything - funeral expenses, living expenses, college tuition, mortgage payments, and even daily bills and expenses. This facility protects the financial health of your family.

  1. Post-death benefits

If an unforeseen event occurs to the insured, resulting in loss of their family income, the insurance company compensates them in the form of death benefit. The recruited candidates get the promised full money and bonus deposited within the stipulated time.

 

In addition to providing death protection, many life insurance plans offer monthly income benefits. This type of insurance is an excellent benefit for people who have reached retirement age and whose income is declining.

 

However, when getting life insurance, you need to be careful to evaluate the features and benefits of several plans and choose the best one for your needs to provide the best protection.

 

  1. Receipt on investment

Eminent financial advisers suggest that everyone should invest in a life insurance policy. Not only to provide financial security to the family when you are not there, but also to get excellent return on investment.

 

 

In addition, life insurance is a secure financial instrument compared to other investment options. The money you have invested in insurance at the end of the term or after the death of the insurer will be paid to you in full as guaranteed money.

 

  1. Tax benefits

A significant life insurance benefit is the tax benefit. If you are a salaried employee and have purchased a life insurance policy, you may be eligible for a discount.

1. Post-death benefits,
2. Receipt on investment,
3. Tax benefits,
4. Loan facility,
5. The right decision of financial planning,
6. Guaranteed source of income,
7. Business security.

1. Post-death benefits,
2. Receipt on investment,
3. Tax benefits,
4. Loan facility,

1. Post-death benefits,
2. Receipt on investment,
3. Tax benefits,
4. Loan facility,
5. The right decision of financial planning,
6. Guaranteed source of income,
7. Business security.

1. High premium for older people

This is the main problem of life insurance policy. The higher the age, the higher the premium to be paid in life insurance. This is due to the fact that the risk increases with age so does the premium. Therefore, it is advisable to take out life insurance at a very young age to refrain from paying high premiums. There is a chance that insurance companies refuse or refuse to pay their policies if the elderly have an illness.

2. Returns are difficult to calculate

The income of a life insurance policy is quite complex and it is very difficult to predict income. Income from life insurance is based entirely on market conditions and performance. So unlike PPF and other fixed deposit schemes, it is difficult to reach a definite figure in life insurance.

3. Complex principles

In India, many insurance companies offer different types of life insurance plans. You can choose the best life insurance plan according to your needs. But it can also create confusion in the mind of the customer as different insurance policies have different features. Some principles are simple, and some are not. Choosing the right life insurance policy can be difficult.

4. Insurance companies cannot pay benefits

Insurance companies resort to various tactics to avoid paying the benefits even after the expiry of the policy and they refuse to provide insurance or death benefits to the policyholder or nominee. They will mention many secret charges or clauses to reduce pay-outs.

Therefore, it is important to carefully understand the details of the policy and choose a company that has a positive pay-out rate. It is advisable to talk to our agents before entering into an agreement to know the merits and demerits of life insurance and the importance of life insurance.

5. Awareness of exclusion, hidden clause

Any financial product available in the market must have some exclusions and hidden clauses. It is your job to discover what that is and to bring it about. For example, most policies do not pay for suicide in the first year, and almost all policies exclude loss of life due to drug overdose or involvement in criminal activity.

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