Who hasn’t heard of LIC?! The Life Insurance Corporation of India (LIC) was set up in 1956 with the aim of providing insurance cover to wider sections of the population – especially in the rural areas – and at a reasonable cost. From 112 branch offices in 1956, LIC now has over 2000 branch offices and issues more than 1 crore policies a year. It is the leading issuer of life insurance policies in the country.
Life insurance protects you financially from two main uncertainties in life:
1.Premature death, leaving the family without the means to support itself
2.Old age without a secure means of income
Life Insurance Corporation offers a variety of insurance policies that will help you overcome the financial crisis brought about by the either of the above two situations and helps you plan ahead. Having insurance cover brings both financial and mental well-being and peace of mind with regard to an uncertain future. Anyone who is of majority age can get a life insurance policy.
What are the advantages of life insurance?
• It provides you with financial protection against potential losses in the future due to untimely death.
• It is a form of saving. You can pay the premium in monthly, quarterly, semiannual or annual installments. You can have your income deducted directly as well under the Salary Saving Scheme (SSS). All these payments will help you save for a rainy day, later in life.
• Allows you to take loans using the policy as collateral, provided the policy has enough value. You do not need to offer any other asset, you can simply use your policy to secure a loan, if you qualify on other counts.
• Offers tax benefits on premiums paid. Not only are you saving money, getting insurance cover, but also getting tax relief on the amount paid.
Age at which to buy life insurance
In general, the younger you buy life insurance, the cheaper it is. Even if you are unmarried or without children, it is a good idea to invest in a life insurance policy now while you are young, so that you enjoy the advantages of lower premiums and can save for a lump sum payment later in life.
If you have a dependent family, then it is a good idea to buy a life insurance policy right away. The older you get, the more expensive the premiums become and there is no advantage in postponing the decision.
How to reduce the cost of a life insurance policy
• Buy when you are young – the policy is cheaper since the risk of premature death is lower.
• Buy insurance for a long period.
• Opt for a large assured sum and pay an annual premium, which will enable you to avail of discounts