Life is precious for all of us. But we can not ignore the unpredictable circumstances it brings with it. We need to be prepared for such situations, and therefore, coverage is required for you and your dear ones.
Many of us fail to understand the importance of such coverages but later regret it if an unforeseen problem arises. Life Insurance is one such coverage that protects the insured from any unanticipated expense.
We often misunderstand life insurance with compensation for death. Apart from the benefits related to injury or death of the insured, life insurance provides several other advantages related to tax, savings, education, security, and health.
In simple terms, life insurance is an agreement signed between the insurance company that is the insurer and the person seeking insurance that is the insured.
What is the Benefit of Life Insurance
Life insurance brings out several unrecognized benefits for the insured.
You not only get compensated for the uncertain death, but it provides health expenses, tax savings, and loan facility too. Below are some significant benefits that can be derived out of life insurance.
Life insurance policy should be taken for all the family members, but it is essential if the family has only one earning member working to cover all the expenses.
It is because, after the demise of that person, the family is assured financially. A Life Insurance policy brings peace of mind by knowing that your family will have financial security even if you die. A good insurance policy covers the financial security of your debts or loved ones.
The life insurance policy prevents you from paying taxes on the premium amount paid. The insurance plan provides dual tax benefits.
One at the time of maturity of the premium and one while you pay your premium amount. A fixed sum is deducted from your gross income while submitting the tax on income.
Buy young, Save more
Different insurance policies have different plans for different age groups. In life insurance, the premium amount is comparatively lesser for the youngsters than the old aged people.
It is always advisable to get life insurance at a younger age to save more amount from the premium. Therefore it is believed that the younger you are, the more you save while buying life insurance.
Coverage for Health Expenses
A health insurance policy may cover all your medical expenses and hospital bills. It requires a high premium amount and is for the short term, but when you buy a life insurance policy, it will cover your health expenses too.
A life insurance policy works both for unforeseen death and unpredictable health issues. It is, therefore, a two-in-one policy that provides an assured sum in both cases.
The insurance policy also covers critical illness treatment, and you can cut on the considerable expenses incurred in such situations.
Principles of Life Insurance
A life insurance policy works on different principles that are specially designed for the convenience of the insured. These principles ensure that the insurance companies make enough profits while facilitating security to the insured. There are three major principles on which life insurance works.
An insurance policy is a term or contract signed between the insurer and the insured. It, therefore, requires complete faith from both ends.
The insurer should have faith in the insured regarding the documents submitted and the information provided by him. The insured should have full faith regarding the premium amount received.
Hiding any information from the insurance company is illegal and can result in the termination of the insurance policy.
The insurance companies ask for insurable interest. The insured person can refer anyone from his family who will receive the insurance amount after his demise.
The insured interest can be the spouse or the parents, or the kids of the insured. Based on the person presented as an interest, the insurance policy can be continued or terminated by the insurance company.
Risk and minimal loss
Insurance involves many challenges, some related to the insured, some with profit-making, and some with frauds and fraudulent activities.
The insurance companies work on the principle of risk and the least expected casualties.
The insurer, therefore, collects the report of complete body checkups of the insured, and is, thus, becomes necessary to conduct regular checkups and more.
Term Life Insurance and Whole Life Insurance
The insurance policies are categorized into two categories. First is the term life insurance, and the other is whole life insurance.
The term life insurance is for a specific period and has to be renewed at the time of its maturity, whereas the whole life insurance begins from the time insurance is taken and ends with the insured’s demise.
The term insurance is an insurance product and only includes the amount related to the expenses incurred during the term period. In contrast, whole life insurance also covers cash value that prevents you from paying taxes and provides other cash benefits.
A term life insurance can be terminated if you don’t need it or cannot afford it, but whole life insurance is only terminated after the demise.
The term insurance can also be converted into whole insurance at the insured’s will.
It is, therefore, essential to secure yourself and your family members by taking life insurance. Different plans are available for different age groups and can be acquired as per the requirements of the insured.
A life insurance policy acts as an assurance that the people behind you will get financial security after your demise. It offers the satisfaction of being protected from any harm due to natural calamities, accidents, or any other unforeseen circumstances.
We can not predict the uncertainties of life, but we know that it may happen anytime.
It is therefore important to provide a security cover to yourself and your loved ones—research and know about different insurance companies and their conditions before buying a life insurance cover.
Please do not ignore the importance it holds, and get the best life insurance available for you and your family.