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What is Life Insurance ?

In its most basic form, life insurance is a legal agreement between two parties: the insured (also known as the policyholder) and the life insurance company (the insurer or insurance provider). The insurance company guarantees that the policyholder's family will be financially protected for the duration of the policy. The family of the insured person is provided with financial security by the insurer in the event of the insured person's passing in the form of a lump sum payment or a monthly income.

Benefits

Benefits of Life Insurance

Financial Protection

Your family will be financially secure in the event of your passing thanks to a life insurance policy. If you pass away unexpectedly during the policy period, the life insurance coverage pays the sum insured to your family or beneficiary.

Wealth Creation

When it comes to savings plans or unit-linked insurance plans, you can make a long-term investment in the policy by paying the premium. If you live over the policy's term, this financial corpus will be paid out as the maturity benefit.

Assured Returns

Plans for savings or retirement savings provide returns that are guaranteed and ensured. If you pay your premiums over time, you can accumulate savings. This cash can be accessed upon maturity either as a lump sum or as a recurring income.

Tax Benefits

You may deduct up to 1.5 lakhs in taxes from the paid premiums under Section 80C of the Income Tax Act. Section 10 provides that the death benefits and maturity benefits, bonuses, and loyalty enhancements are tax-free (10D).

Low Premiums

If you want to buy life insurance, getting it when you're younger ensures lower premiums because your health risks are lower. If you purchase life insurance later in life and when you are older, the premium is greater.

Long Term Coverage

Some term insurance policies provide lengthy protection; some even extend coverage to age 100. By doing this, you can guarantee lifelong protection for your family and yourself.

Why Do You Need Life Insurance?

These are some reasons why life insurance is a must:

Long-term financial stability

Your life insurance policy contributes to building a financial foundation for the security of your family's future. You can set early goals for your finances and save enough for the future with the help of a savings plan.

Secure your child's future

Whether it's a savings plan or a plan for your child's education, life insurance can assist you in meeting your child's future demands. Also, your child will be able to fulfil their ambitions even in the event of your death or the death of your spouse.

Financial liabilities

Debt repayments can be troublesome, and defaulting on payments increases the risk of accruing penalties and damaging one's credit. With a life insurance policy, you may protect your family from the threat of unpaid obligations while you are away.

Tax benefits

Your insurance premiums may qualify for tax deductions under Section 80C of the Income Tax Act. Additionally, as Section 10(10D) exempts the death benefits from taxes as well, your family might inherit a tax-free legacy for their security.

How Much Life Insurance Coverage Do You Need?

If you know more about it, calculating your life insurance coverage can be a complex but straightforward process.

Your family’s needs

Major financial occurrences in your life may be covered by life insurance. Hence, even without you, your family ought to be able to accomplish all of their objectives and realise all of their aspirations. Choose a policy that will cover their tiniest necessities as well.

Your financial capacity

The amount of life insurance that your family needs will depend on your present income. At least 10 to 20 times your annual salary should be covered. Regarding the ability to afford fair premium payments, your financial situation is equally crucial.

Medical emergencies

Setting aside some life insurance coverage for potential family medical emergencies is usually a good idea. This will allow them to receive the high-quality medical treatment they need while you are away.

Documents required

A few necessary documents are required in order to submit the claim. As follows:

Statement of the claimant
Initial statement of policy

Death certificate & police FIR
Post-mortem exam report in case of an accidental death

Certificate and records from the hospital
Advance discharge form

Factors That Affect Life Insurance Premiums

The following factors can affect your life insurance premiums:

Higher insurance premiums result from selecting a greater life insurance amount assured. This does not, however, imply that you should choose life insurance with insufficient protection. To make your premium payments more bearable, decide on a coverage amount.

When they begin working, the majority of people purchase life insurance. You can secure low premium payments by getting an insurance when you're young because you'll probably be healthier at that time. The cost of life insurance increases as you become older.

Because men and women typically face distinct health risks at different phases of their lives, life insurance premiums are gender-specific. Men, for example, are typically more susceptible to heart diseases than women.

Your premiums may be impacted by your medical history or any prior diseases in your family. You'll probably pay a greater premium than someone without a medical history if you still have any health issues as a result of past illnesses.

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