Categorized | Life Insurance

Scope of Life Insurance

Life Insurance is seen as security to the family under unforeseen situation. Nowadays, in this volatile world anything might happen at any time, so to safeguard your family and to give them comfortable and tension free life one should opt for life insurance. Basically life insurance offers financial protection to dependents of the family in unexpected scenario or unfortunate death. The insurance company will charge a Premium amount to the Insured periodically. Based on the sum assured, the insured family will be paid fixed lump sum amount by the insurance company after the death of the insured or at the end of a specific term.

Life insurance is growing rapidly since 2000 as the Indian government has allowed private players to participate in this sector. In India, life insurance companies are regulated by Insurance Regulatory and Development Authority of Indian (IRDA).

Why One Has to Get Life Insurance

Imagine a family with its members and only one person is the bread winner of the family. Irrespective of the family size, only the head of the family earns money and feeds everyone.The earning person takes care of the financial need of the family members. All of a sudden, one day if the family head dies in an Accident or any other unexpected circumstances, what will happen to rest of the family members who are totally dependent on the family head earnings.This is a very critical situation; besides the psychological trauma the whole family will suffer a financial crisis.. This is where the life insurance comes in handy and safeguards the family members. They can live a safe and secured life even after the demise of the earning person. 

Life Insurance Types
  • Term Insurance: This is the simple and cheap form of life insurance as the premium rates are very low. It offers Coverage for a limited period and when nothing happens to the Insurer after the maturity, there is no profit to the insurer. However, if an insured dies during the Policy period, a lump sum amount is paid to his nominee.
  • Endowment Plans:  This is considered as the great savings cum investment plan; a lump sum amount is given to the policy holder after a certain fixed period. Bonuses and additional profits are also offered  along with Maturity benefits.
  • ULIP: Unit linked insurance plans or ULIPs are getting popular day by day; here the insured is being offered the advantages of life insurance along with mutual benefits. In this plan the premium amount is divided into two funds; one part is kept for life coverage and other part of the amount is invested in bonds, equities or stocks.
  • Pension Plans: This  plan offers financial security to the policy holders at their old age. The rates are hiking each day and you can imagine how it will be when you are old. You can pay a monthly premium and on maturity the amount is used to offer regular income stream which is also known as Pension or annuity.
  • Money Back Plans: This plan is ideal for those looking for savings as well as insurance coverage. Here the insured has to pay premium for a fixed period for that he would get rate of returns and feasibility to withdraw fixed proportion of sum Assured at regular intervals and at the end of the period balance of lump sum money would be paid to him.
Life Insurance Benefits
  • Death Benefit: This is the foremost benefit of life insurance, in case of unfortunate death of the insurer, the insurance company offers the lump sum amount based on the sum insured.
  • Tax Benefit: Under section 80C individuals can save tax on the premium amount paid and the limit is 1 lakh rupees.
  • Loan Option: Some of the insurance companies even offer loan on the policy taken. The loan amount usually depends on the Sum Assured and the overall tenure.
  • Maturity Benefits: Once after the maturity, the insurer is entitled for guaranteed  returns with other additional benefits.
  • Riders: In some life insurance plans, along with life insurance coverage, Riders are also offered which are extra benefit with the basic insurance policy. Riders are helpful to enhance the insurance cover.
Life insurance has a great scope and immense benefits. Life insurance sector growth rate is terrific and it is expected to grow more in the near future.