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Basics of life insurance

21 May, 2009 By:Unknown in Life Insurance,

Life insurance provides a family with financial support in the case of death of the breadwinner of the family. According to a life insurance policy, a fixed amount of money is paid to the insured or the beneficiary at the end of its term or upon the death of the insured. Life insurance also offers investment benefits. With an insurance policy, you can save for your old age, fund your child's education, save taxes and so on.

Besides other saving benefits a life insurance policy can be linked to a person's pension plan. A person can make contributions to a pension scheme, funded by a life insurance company. A policy can provide security for your family, protect your home mortgage, take care of your estate planning needs and look at other retirement savings/income vehicles.

Besides serving as a protective cover, life insurance acts as a good money-saving scheme, which enables one to accumulate wealth to acquire assets, get children educated and retire comfortably. Most life insurance policies also provide tax benefits under various sections of the Indian Income Tax Act. Insurance policy holders pay a monthly, quarterly or annual premium to insurance companies. When individuals die or when the policy has reached maturity, a pre-determined amount is paid to the policy holder or the dependents as nominated by them.

It is a wise decision to go for a life insurance policy. Lack of sufficient life insurance coverage when a loved one dies can have devastating consequences for a family. The loss of income following the breadwinner's death will cause the family immediate economic hardship and make it harder for them to realize future goals like paying for children's education. Whether you are married or not you may need life insurance to protect your partner or surviving family members. Unless you already have sufficient financial resources, your survivors will need insurance cover. A life insurance policy can be the basis of protection and financial stability after one's death. There can never be adequate compensation for the loss of a dear one. But, if the family is also left without sufficient money to meet basic needs, they will suffer more.

Insurance companies collect premiums from a large number of people. Only a few of these insured people may actually suffer the loss. Thus insurance companies invest the money they collect and end up making money.

Comment:(5)
on 19 Feb, 2016

Here are some things to csionder and ask when comparing policies. What is the liability coverage limits? Do I need excess liability? What are the medical payment limits? Do you need more of either for your purposes (like do you entertain a lot, have hired help on your property, etc.) Does it include worker's comp (in CA it is mandatory) and it is mandated in your state? What is the coverage for out buildings (sheds), fences, yard ornamentation, etc. Are there mold and mildew restrictions? (Many insurers are excluding both after Katrina). Am I in a FEMA flood plane and do I require flood insurance? Do I need tornado insurance? Is wind damage covered? How are payments structured (i.e. do they have nuisance fees if the policy is not paid in full up front) and if so, is it recurring, a percentage or a specified amount per payment? Do I get a discount for: combining home and auto, fire and burglar alarms, being located close to a fire hydrant or fire station, fire proof construction (i.e. concrete roof shingles, metal framing), clearing a 100 foot defensible boundary, being a certain age, having no claims, having fire extinguishers in the kitchen and garage, etc. If going through a broker, ask how they are compensated, by commission you pay or commission paid by the company. If you are college educated, check with your alumni to see if they have an agreement with any certain insurer for discounts (same applies if you belong to professional membership organizations or a union). What is the personal possession coverage and do you require riders for special collections or jewelry or power tools in a workshop?

on 18 Dec, 2015

Sure, pay for the visit out of pocket, inatesd of using insurance. The policyholder (your father) will get an explanation of benefits, showing the doctor charge. If you're NOT a dependent of your father, you should have your OWN coverage. As long as he's covering you and both of you are agreeing that you are his dependent (otherwise, you wouldn't be using HIS insurance!), he's entitled to this info.

on 13 Mar, 2015

my father depending on me I pay his LIC policy premium in this year. can I eligible to take rebate on my income salary u/s 80c.

on 06 Feb, 2014

meri policy ko 5 sal ho gya

on 06 Feb, 2011

Good article! Keep it up!

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