Understanding Life Insurance and Its Benefits
Protecting the future of our loved ones is one of the most important priorities especially if you are the sole breadwinner of the family. Life insurance plans are tools to ensure that your family is safe and secure financially even when you are not around to look after their needs. Life insurance protects your family and loved ones by providing a protective financial coverage in case of any unforeseen event. It ensures that your dependents get the required financial support in your absence.
Before we dive deep into the features and life insurance benefits let us see what are life insurance plans?
What is Life Insurance?
Life insurance plan is an agreement or contract between two parties i.e. the insurer and the insured. The contract works by providing a designated sum assured in case of any event leading to the demise or disability of the policyholder. In return to the services, the insured party is supposed to pay a fixed amount regularly known as the premium of the plan. Based on the type of contract and services illnesses, accidents, or other events might trigger payments.
There are numerous types of life insurance plans, here’s a quick rundown:
- Term insurance
- ULIPs (Unit-linked Investment Plans)
- Endowment plans
- Savings Plans
- Whole Life Insurance Plans
- Retirement and Pension Plans
Life insurance ensures financial protection against losses that would come into the picture due to the untimely demise of the sole breadwinner of the family. The sum assured also known as the death benefit of the plan is payable directly to the nominees of the plan which helps them to overcome the phase of financial instability.
Benefits of Life Insurance Plans
Buying the right term insurance plan secures the financial future of your family. Life insurance plans are an integral component of a well-versed risk mitigation portfolio. Although there are numerous benefits of buying life insurance plans, major benefits have been listed below:
- Protects Your Family and Loved Ones: The primary objective of buying a term insurance plan is to safeguard one’s family against unforeseen events on the uncertain trail of life. In case of any event leading to the demise or disability of the policyholder, the life insurance plan provides financial coverage that helps them to counter the situation financially.
- Pays off Debt: In the event of the death of the sole breadwinner of the family, all the liabilities become a liability of their nominees. If you have any outstanding debt your loved ones will be liable to repay it. With the right life insurance plan in place, your loved ones and family will not have to struggle since the insurance will take care of the outstanding debt.
- Helps to Accomplish Long Term Goals: With the right term insurance plan in place, one can achieve long term goals safely and simply without any hassle since they have an investment component associated with them. Long term goals might include buying a new house, paying for child’s education or marriage.
- Provides Peace of Mind: Buying a life insurance plan not just offers financial security but also provides peace of mind. If you are the sole breadwinner of your family, your loss may result in financial instability. However, with the correct life insurance plan in place, you can ensure that your family does not struggle with finances even when you are not around. The feeling of financial security for your loved ones brings peace of mind.
- Safeguards your Business: Life insurance plans are not just limited to protecting the future of your family but also your business and source of income. The insurance market is full of tailored life insurance plans that are designed and developed in a way to protect your business by allowing the immediate business partner to acquire the share of the policyholder in case of their demise. With the correct plan, right planning the sum assured and profit obtained from the business is paid to the nominee of the policy.
- Retirement Planning: Retirement is similar to long-awaited vacations that allow you to travel, explore, and pursue all your hobbies. In order to spend the twilight years of peacefully without any worries, it is crucial to start planning early. Life insurance plans are the first and the simplest step one can take towards a peaceful retired life. With proper planning, the insurance seeker will be able to build a corpus for their retired that will allow them to live a trouble-free and pacific retired life.
In a Nutshell
Life is an uncertain and unpredictable trail that goes through several ups and downs. It might appear depressing to plan for your death but it is vital to ensure that your loved ones don’t have to struggle when you are not around. The monetary future of your loved ones can be secured by getting life insurance.