Human life is subject to risks of death and disability due to natural and accidental causes. Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc.
Life Insurance is needed:
- To ensure that your immediate family has some financial support in the event of your demise.
- To finance your children’s education and other needs.
- To have a savings plan for the future so that you have a constant source of income after retirement.
- To ensure that you have extra income when your earnings are reduced due to serious illness or accident.
- To provide for other financial contingencies and life style requirements.
Who needs Life Insurance:
Primarily, anyone who has a family to support and is an income earner needs Life Insurance.
How much Life Insurance is needed:
The amount of Life Insurance coverage you need will depend on many factors such as:
- How many dependants you have
- What kind of lifestyle you want to provide for your family
- How much you need for your children’s education
- What your affordability is
Type of life Insurance:
Term Insurance:
This type of life insurance policy is a contract between the insured and the life insurance company to pay the persons/s he has given entitlement to receive the money, in the case of his/her death, after a certain period of time. These policies can be taken for 5 to 30 years.
Endowment Policy:
In an endowment policy, periodic premiums are received by the insured person and a lump sum is received either on the death of the insured or once the policy period expires.
Money Back Life Insurance Policy:
This policy offers the payment of partial survival benefits (money back), as is determined in the insurance contract, while the insured is still alive. In case the insured dies during the period of the policy, the beneficiary gets the full sum insured without the deduction of the money back amount given so far.
Group Life Insurance:
This is when a group of people have been named under a single life insurance policy. It is popular for an employer or a company to add employees under the same policy. Each member of the group has a certificate as legal evidence of insurance.
Unit Linked Insurance Plan:
ULIPs (Unit Linked Insurance Plan) offer the insured the double benefit of protection from risk and investment opportunities. ULIPs are linked to the market where the insured’s money is invested to help earn additional monetary benefits.