Life insurance Benefits and Plans 2023 - healthforty
Life insurance benefits and plans:
If you are wondering what life insurance means, you should know that a life insurance policy is a contract between an individual and an insurance provider, whereby the insurance company provides financial protection to the policyholder in exchange for a monthly or annual fee (known as a premium). ). Before you buy your life insurance, it's important to understand the definition, types, benefits, and features of life insurance.
Under the definition of life insurance, the insurer (insurance company) provides insurance to the policyholder or designated nominees, in exchange for payment of the life insurance policy premium, in the event the policy holder dies prematurely, his family or nominee receives an insurance sum. Based on the contract, the death of the policyholder, or the expiration of the policy, the insurer pays a lump sum to the individual or their family after a specified period of time.
What is life insurance or life insurance premium?
Simply put, the "life insurance premium" is the amount you pay to your life insurance company in exchange for your coverage. The life insurance premium can be regular monthly/annual payments or lump sum payments. The payments (called death benefits) are payments the life insurance company makes to your beneficiaries if you die unexpectedly during the term.
What are the different types of life insurance?
Now that you know the meaning of life insurance and the definition of life insurance, you should know the main types of life insurance plans:
-Traditional life insurance:
Traditional life insurance plans offer multiple benefits in terms of life coverage and returns, providing security and protection to policyholders. These policies are considered risk free. This is because they pay a fixed benefit (covered amount) at the death of the insured or at the end of the term.
3 types of life insurance plans bellow:
1. Term life insurance:
Term life insurance plans are basically risk-free, low-cost, and generally considered to have the highest coverage. These plans are purchased for a fixed term (for example, 10 years or 20 years). This plan provides a fixed payment at the death of the insured or at the end of the term. Term life insurance plans are the purest form of life insurance, providing life coverage without any savings or earnings component.
2. Endowment Plan or Guaranteed Profitability Plan:
Endowment plans provide financial protection through life coverage with guaranteed returns. If the policyholder survives to the expiration date of the policy, he will get a lump sum. The amount of life coverage with these plans is very low and people generally buy these plans because of the benefits that expire. These plans are great if you're saving for a big purchase.
3. Money return policy:
In a money-back policy, the customer receives a fixed percentage of the sum insured for a guaranteed payment at a specific time interval. In short, cash back plans are endowment plans with liquidity. Therefore, the insured can achieve short-term financial goals.
-Market Linked Life Insurance (ULIP):
The Ulips (Unit Linked Insurance Plans) offer protection and savings to the individual with flexibility. Since these products are tied to the stock market, they have the potential to provide better returns than traditional life insurance plans. There is a risk of low profitability with high profitability, which will depend on the behavior of the market. Depending on the policyholder's risk tolerance, you can invest in various funds offered by the insurance provider. The underwriter then invests the amount collected in various stocks and shares.
Advantages of life insurance plans:
Once you understand what life insurance means and the different types of life insurance policies, let's find out what the top 4 benefits of getting the best life insurance policy are and what they are.
1. Financial Security:
this insurence can be unpredictable & full of uncertainty for us. It is difficult to reduce the probability of an unfortunate event like death. In such situations, families face a financial crisis stemming from the lack of fixed income. Investing in the best life insurance policy early in life acts as a security blanket during such incidents. Under the definition of life insurance, the insurance provider is obligated to pay a predetermined sum assured to the nominee or beneficiary. As a result, even in the absence of the insured, his family is protected.
2. Long Term Savings:
If one wants to invest for the long term, it is important to think about the value of life insurance. These types of insurance plans help you save consistently and build a corpus, which can be used for a number of reasons, such as building a new home, getting your child to a quality education, and financing a child's wedding expenses.
3. Investment Options:
Understanding what life insurance means in your financial context will allow you to plan your investments efficiently. Life insurance providers offer Unit-Linked Investment Plans (ULIPs), which are basically yield-based investment vehicles tied to market and life insurance, meaning you can get dual benefits through a single product. financial. These market-linked life insurance plans offer significant returns to maturity, making ULIPs a reliable investment tool.
4. Tax Benefits:
There are tax benefits on life insurance under Sections 80C and 10D of the Income Tax Law. Under Section 80C, you pay the premium of a qualifying life insurance policy for a deduction of up to ₹1.5 lakh, while Section 10 (10D) exempts income at maturity if the premium does not exceed 10% of the sum insured or insurance. least 10 times the insurance premium.