What is Life Insurance?
Life insurance is really a legal contract between two parties, namely the insurance organization, and the policyholder. It ensures that the beneficiary receives financial support in case of the insured's death or accident. The terms of the insurance plan state that the policyholder agrees to pay the specific premium at regular intervals. Life insurance depends on a number of factors, including the age, income, expenses, outstanding financial loans, number of dependents, health, etc. It is mainly of four different kinds, universal life insurance, term life insurance, whole life insurance coverage, and endowment life insurance.
Benefits of Life Insurance
- Besides providing your family monetary coverage in times of turmoil, life insurance has other benefits too.
- It acts being an excellent investment, protecting your assets. Life insurance provides custom-made investment options which are suited to one's changing financial needs at different age range. Planning for your children's higher education, marriage, a house, and even retirement options can all be taken care of by purchasing life insurance. For a young couple with kids, life insurance can provide education in addition to wealth insurance. Whereas for an elderly couple, the same will offer retirement and mortgage plans. Whatever money you saved whenever you earned, now serves as a source of income whenever you retire.
- After the demise of the insured, life insurance could be a constant source of income for the bereaved family people, making it easier to fund children's education and settle payments on time. If the policyholder has incurred any financial debt during his lifetime, a policy cover will help his spouse/family to settle the debt.
- Funeral expenditure nowadays is costly. Spending money on the services, at a time when you are still numb and reeling from the sudden loss of a family member can be hard, to say the least. In this kind of cases, a life insurance policy can come to your own aid, by taking care of the funeral expenses.
- You can include riders or health insurance plan to your life insurance plan, and have guaranteed protection against the increasing hospitalization expenses and critical ailments.
- When you apply for an insurance policy, you need to pay the stipulated premium at normal intervals. This practice gets you into the habit of saving some money for long-term use, which is essential to fulfill your financial needs.
- Life insurance is non-taxable, and therefore makes for a great source of savings.
- In the event of a cash crunch, when the policyholder needs a mortgage, he can avail of one through the insurance plan, without having to worry about the hassles of payment. The insurance carrier deducts the loan amount from the life insurance coverage upon maturity.
- If the policyholder owns a parcel, he has to pay estate taxes. If he expects to transfer the possession to his heir, a life insurance coverage can help by offering the required funds.
Thus, you have seen how essential it is nowadays to choose a life insurance policy. If you haven't yet applied for just one, do it without delay. Do it at a time when you're young and healthy, with no major ailments. The faster you apply, the lesser the premium amount you have to pay out. In case anything happens to the breadwinner of the household, life insurance can come instantly to your rescue. It may be your ally in the worst of times, working just like a protective blanket, offering monetary assistance and peace of thoughts.