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Today, life insurance is a requirement. In the event of a mishap, the beneficiary’s name is mentioned in the contract, and the insurance company pays the specified amount to the beneficiary. A contract between the insured person and the insurance company is a life insurance policy document. The insurance company guarantees compensation for loss of life to the policyholder in exchange for premium payments.
The benefits of Life insurance are as follows:
1. Various Plans: In the insurance industry, there are many insurance companies. Insurance companies offer a variety of plans from which the client can select based on his specific requirements and financial resources.
2. Saving hard-earned money: We are saving our hard-earned money by purchasing a life insurance policy and receiving long-term benefits in the form of a fixed rate of interest.
3. Guaranteed sum: In the event of a mishap, insurance policies guarantee a specified sum to the insured’s nominee or provide survival benefits to the insured.
4. Loan to the insured: Insurance companies also have a provision of a loan to their customers. Customers can borrow a certain amount on the policies.
5. Tax Rebate: Section 80C of the Income Tax Act of 1961 states that insurance premiums are tax-deductible and one can get a rebate on it. The goal is to cultivate saving among the masses.
Kinds of Life Insurance
Some of the life insurance policies are as under:
1. Endowment policy: Endowment policy is very popular among those looking to purchase life insurance. It entails both protection and investment. Bonuses are also given out when a policy reaches maturity or when the policyholder dies.
2. Term Life Insurance: Term life insurance is extremely popular with the general public. The duration of such policies is usually between 5 and 30 years. In the event of the policyholder’s death, this sum assured is paid to the nominee.
3. Unit Linked Insurance Policy: These policies evolve in growth with market expansion. A unit-linked policy is a combination of an investment and an insurance policy. In a unit-linked insurance policy, a tax rebate can be claimed. Such policies may be purchased by people with a higher income who want to diversify their investments.
4. Money back policy: The policyholder receives a set amount from time to time in a money-back policy. The policyholder receives a survival benefit on maturity.
5. Whole Life Policy: This policy will last the policyholder’s entire life. It can last for many years, ranging from 25 to 40. If the policyholder dies, the sum assured is paid to the nominee.
6. Pension Policy: This policy is ideal for people who want to have a steady/regular source of income after they retire. It does not provide a higher return on investment, but it does provide some satisfaction to the policyholder.