You may think that you are financially secure and safe. Then up comes an unforeseen and sudden expense which derails your savings plan and financial security. Yes, life is weird that way. You never know what it might throw at you next.
That is why, instead of wondering, thinking and believing you are financially secure, you need to make sure you actually are. There is no way to foresee and thus plan for emergencies and accidents, but one can prepare for them from beforehand. The way to do this is through insurance. These offer some support to minimize your financial problems due to unforeseen circumstances.
Here are the various types of insurances:
- Property insurance
- Mobile insurance
- Life Insurance
- Motor insurance
- Health insurance
- Travel insurance
- Cycle insurance
- Bite-size insurance
Just knowing these types won’t help you. Instead, it helps to know how these work. This is because without enough knowledge you may choose the wrong insurance plan, or have a wrong idea about insurance plans together.
A Fact of Life - Life Insurance
Life Insurance is a type of insurance plan in which a policy holder invests for the financial benefit of his or her family after death. These plans are essential if you are the only earning member of your family or if there are dependents on you. For instance, your wife and children depend on you for finances each month.
Your death can devastate your family, not just emotionally, but financially as well. Even if you are not the sole earning member of your family, your death can result in a big gap of income loss. Life insurance policies make sure these things do not happen to your loved ones after your demise.
Various types of life insurance policies
There are many types of life insurance policies. These are:
- Term plan: A term plan’s benefit can be availed only after a specific period originally agreed on, such as 40 years after you bought the policy. The downside here is you can’t get it sooner if you need it.
- Endowment plan: These are life insurance policies in which a part of your premiums go towards your death benefit. The amount that remains is invested. This life insurance policy type gives you benefits like periodic bonuses, death benefit, and maturity benefit.
- ULIP: These stand for Unit Linked Insurance Plans. These are quite similar to Endowment Plans. In the case of ULIPS, a part of the premiums are invested in mutual funds and the rest go towards your death benefit.
- Whole Life Insurance: These policies cover the entire life of a person. They are not for a specified term. However, some insurance companies can restrict the tenure to 100 years.
- Child’s Plan: This is a type of investment and insurance policy. It gives financial help to a child of your choice after a certain interval. After the death of parents, the child gets a lump sum payment.
- Money Back: This is a type of survival benefit in which a part of the sum assured is paid to you at regular intervals.
- Retirement Plan: Known as pension plans, these fuse insurance and investment plans. A portion of the premiums given by you go towards the development of a retirement corpus. After the policyholder’s retirement, he or she gets a lump sum or monthly payment.
Benefits of Life Insurance
There are several benefits in getting life insurance:
- Tax benefits: You get tax benefits if you pay LIC premiums in India after the Section 80(C) and 10 (10D) of the Income Tax Act.
- It encourages the habit to save: When you pay premiums at regular intervals, you develop the habit of saving money.
- It secures your family’s financial future: With a life insurance policy, you won’t need to worry about what shall happen to your family after your demise.
- It helps plan for your retirement: A big benefit of certain insurance plans is that you can save for your retirement, which can otherwise be very difficult without any type of saving plan.
No comments:
Post a Comment