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Common Features of a Life Insurance Plan

Published On Jul 30, 2021

If you are the family's sole breadwinner, preparing for the day when you won't be around your dear ones through a life insurance plan will preserve your household from any financial burden resulting from reduced or no income. Hence, you need to be familiar with the most basic and fundamental aspects of a life insurance plan. There are mainly seven kinds of life insurance policies - term life insurance plan, whole life insurance plan, endowment plan, money-back insurance plans, unit-linked insurance policies and retirement plans. The following article aims to provide you with some information on term insurance policies to assist you in selecting the best plan for yourself.

Common Features of a Life Insurance Plan

The following is a list of the key features of a life insurance policy.

1. Financial Protection

The primary and most important goal of a life insurance policy is to safeguard your family financially, which could include your dependent parents, spouse, children, or siblings. The death of the primary breadwinner could cause significant hardship for dependents, especially given today's high cost of living. Life insurance ensures that your loved ones will be taken care of in the event of your death.

2. Affordable Premiums

Life insurance is essentially a contract between the insurers and the policyholder. Premiums are paid to the corporation on a quarterly, half-yearly, or annual basis. In exchange, the insurer will pay your family a lump payment in the case of your death. The premium amount varies from person to person and is determined by the length of the insurance, the life assured's age, health condition, and the type of policy. Often policies, particularly term insurance, have reasonable premiums and are well worth your money because of the protection they provide.

3. Easy Accessibility

Purchasing insurance from an insurance firm is simple. Insurance companies will send a representative to your home or workplace to assist you in selecting the policy and filing documents and necessary paperwork. Besides this, you can even purchase a policy online from the comfort of your home. Moreover, online websites, portals and premium calculators can help you compare different policies offered by various insurance providers in minutes.

4. Tax Benefits

Another advantage of having a life insurance policy is that the premiums you pay can be deducted from your taxable income under  Section 80C of the Income Tax Act. Moreover, through Section 10(10D) of the Act, the policyholder or the nominee can get tax exemptions on the maturity benefits or the death benefits, respectively. 

5. Savings and Investments

Some life insurance policies offer savings and insurance opportunities through their plans. For instance, unit-linked insurance plans( ULIPs) provide dual benefits of life coverage and investment options. Moreover, an endowment plan has a twofold advantage of life coverage and savings. Opting for such policies can be a smart method to save for the future while also protecting your family.

Take Away

The features mentioned above should be enough to convince you to purchase an appropriate life insurance policy. You can even consult a financial counsellor or an insurance agent to help evaluate your needs and requirements and select appropriate sum assured, policy tenure and premium prices according to your wants and wishes. 

You may also like to read - How can I Generate Returns on Investment through Unit-Linked Insurance Plans?

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.

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