What Exactly Is Life Insurance, and How Can I Get It?
Updated On Jul 04, 2022
Table of Contents
Life Insurance is defined as a contract between the policy holder and the insurance company, where the life insurance company pays a specific sum to the insured individual's family upon his death. The life insurance sum is paid in exchange for a specific amount of premium. Life is beautiful, but also uncertain. Whatever you do, however smart and hard you work, you are never sure what life has in store for you.
It is therefore important that you do not leave anything to chance, especially ‘life insurance’. As death is the only certain thing in life, apart from taxes, it pays to insure it well in advance.
Benefits of Life Insurance
Life insurance is designed to minimize the impact of the financial loss your family may incur upon your demise. The benefits of such plans are fourfold, aptly contained within the acronym “LIFE”:
1. Liability Free
Life insurance gives your family the power to be independent and self-reliant. A good term plan can help them repay financial liabilities like home loan, auto loan, personal loan, or a loan on credit card. The term plan may also cover hospitalization charges and critical illness treatment, giving you a comprehensive protection package
2. Income Replacement
If you are the sole breadwinner in your family, a life insurance plan can provide a guaranteed income to your family every month, making sure that their everyday life is not disrupted and they remain financially stable.
3. Education and other expenses for dependents
The payouts from life insurance can help to pay the bills for the education of your children, as well as expenses for their wedding or medical costs if any.
4. Immediate Expenses after Demise
It will also help your family cover a part of essential expenses immediately after your demise, such as funeral costs and/or medical bills.
Conclusion
The significance of having life insurance is to avail the "peace of mind" that it brings along. However, having an adequate amount of life insurance effectively sets your mind free of some important situations that you have to come across.
Also read: What Are the Various Types of Life Insurance Policies Available in India?
