Life insurance is basically a contract that is made between the policy buyer and the insurance agency in which the insurance agency guarantees a certain amount to be paid to the named beneficiaries in the case of the death of the policy holder. The insurance company or agency assures a benefit based on the payment of the premium of the insured individual.
The purpose of a life insurance is to offer financial protection to individuals who are dependant on the policy holder after his/her death. There are various kinds of life insurance policies that are offered, and an individual can choose a particular type based on his/her standard of living.
Benefits of life insurance
- Risk coverage
- Various plans for different uses
- Cover for health expenses in some cases
- Promotes the habit of saving
- Helps in wealth creation for beneficiaries
- Has a guaranteed income
- Has Tax benefits
Before choosing a certain life insurance plan, it is best to do some research to make an informed decision. One must read the terms and conditions completely and remember the lock-in period for the insurance policy.