Life insurance is a contract between an insurance policy holder and an insurer where the
insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange
for a premium, upon the death of an insured person (often the policy holder). Depending on
the contract, other events such as terminal illness or critical illness can also trigger
payment. The policy holder typically pays a premium, either regularly or as one lump sum.
Other expenses, such as funeral expenses, can also be included in the benefits.
Benefits of Life Insurance
- Risk Coverage:
risk coverage to the insured family in form of monetary compensation in lieu of premium
- Difference plans for different
Insurance companies offer a different type of plan to the insured
depending on his need for insurance. More benefits come with the more premium.
- Cover for Health Expenses:
policies also cover hospitalization expenses and critical illness treatment.
- Promotes Savings/ Helps in Wealth
Insurance policies also come with the saving plan i.e. they
invest your money in profitable ventures.
- Guaranteed Income:
policies come with the guaranteed sum assured amount which is payable on happening of
- Loan Facility:
companies provide the option to the insured that they can borrow a certain sum of
amount. This option is available on selected policies only.
- Tax Benefits:
is tax deductible under section 80C and 80D of the income tax Act, 1961.