subject: Life Insurance Much More Than A Tool To Get Financial Security [print this page] Life insurance policy is not just a way to get financial security for family. It also serves as an investment plan as well as provides the policy holder with tax benefits. Insurance plans designed for various needs of the people are available in India.
Life is very unpredictable and you never know what is in the offing. It is better to pre-plan things and one essential thing you need to do is to provide your family members with financial security after your retirement, death or any accident.
Life insurance is the perfect way to ensure financial security for family members. It is simply a contract between two parties. One of them is the person buying the policy and other one is the insurance company selling it. As per the contract of the policy, the insurance company pays a fixed amount of money to the family members in case the policy holder dies prematurely. If the policy holder survives, they are paid a pre-fixed amount as well as bonus at the end. Some policies also provide for periodic payments to the policy holder. The holders of life insurance policies are required to pay a fixed amount as insurance premium.
In fact, the life insurance policy is much more than insurance. You can also get the benefits of an investment plan by buying it. The Unit Linked Insurance plans (ULIP) not only provides you with life insurance, but investment flexibility as well. It is an easy way for a buyer to enter the stock market. Moreover, the investment plans offer you the options of investment funds, surrender & switching and extra riders.
Buying a life insurance plan would also provide you tax benefits. Rebate is available to Indian citizens under Section 80C of Income Tax Act, 1961. In case of individual assesse, tax benefit is available to the person, spouse and children. In case of Hindu Undivided Family (HUF) assesse, the tax benefit can be availed by any member.
There are various insurance products that are available in the Indian market to meet the wide financial requirements of policy holders. There are health insurance, general insurance, education insurance and pension products, all of which have their own utility. However, life insurance is certainly the most important among these as it provides financial security in the event when earning member of a family is no more.
Life insurance policies are usually of two type term plans and money back plans. Term plans, as the name suggests, mature at the end of a pre-determined term. The policy holder is provided with the total amount invested as well as the bonus. Money back plans, on the other hand, offer a pre-set amount at regular intervals and the balance at the end of the term.
There are life insurance plans which provide cover for critical illnesses. You can get the benefit just by paying extra premium. Such plans are also called hybrid policies as they blend the features of life insurance with medical insurance.
Along with the kind of policy you have, your age and other factors have a bearing on the premium. A policy bought at lower age will have lower premium than the policy which has been purchased at mature age. Moreover, if you are suffering from a critical illness, insurance companies are likely to demand more premium from you.
Whichever insurance policy you want to buy, it is better to clearly understand its terms and conditions. Further, it is advisable to compare insurance policy plans of various companies to buy the best one at affordable price.
by: Sukanya Mitra
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