Life insurance is nothing but insuring yourselves or exactly your life. People normally get cars, trucks, motor cycles; house etc insured so that if anything unexpected happens causing damage to them and the people using them insurance would help them to pay for the losses incurred or even to pay for medical expenses for curing the people hurt in those accidents. Insuring your life would mean that the beneficiary of the insurance who is specified in the policy when it is taken, would get certain amount from the insurance company basing on the premium chosen if the insured dies unexpectedly due to any reason.
Normally the whole family is dependent on a single person for the income to run the household, to pay of children’s education, medicines of old parents, house rent or anything and everything. If such a person dies in any accident quiet unexpectedly then the whole family is thrown into a serious financial crisis. In order to avoid such a situation, Life Insurance is highly necessary. This would provide for the monetary support of the aggrieved family as per their policy premiums paid.
The family must always have a back up plan if the bread-earner was to die in any unfortunate event. The only solution would be to go for sufficient coverage in the life insurance which would give them income equal what the person would earn if he was alive. If there are any loans or debts like home loans to be repaid, then coverage must be set accordingly in order to be able to repay those loans even if the earning member dies.
There are two kinds of Life Insurance, Term life insurance and endowment or money back policies. In Term life insurance you need to pay premiums regularly but the insurance company would pay the money promised in the policy to the beneficiary only if the insured person dies unexpectedly. If the insured person does survives well they would get nothing. All the premiums paid will go completely to the insurance company. Endowment life insurance or the other hand returns the money paid as premiums at the end of the term of insurance. If the person dies in the middle the amount promised as the cover would be given to the beneficiary.
Though endowment life insurance looks appealing, actually the premiums for this kind of life insurance are very high. The entire coverage amount is divided into premiums and you are supposed to pay the whole amount yourself. If you survive the term you are just returned what you pay to them. Only few pay some interest, even then it would not be worthy taking note of the high inflation. To pay such high premiums one would have to forgo buying many things or investing the extra amount when compared to term life insurance premiums, in any other high return investment. The term life insurance premiums are very low when compared to the endowment life insurance premiums and this means you would have the extra amount in your hand for at your own disposal. You can buy anything or invest in better options.
Related posts:
- 10 Things You Must Know Before Choosing Life Insurance
- Why We need Life Insurance?
- LIC’s Jeevan Chhaya: Gives Shelter To Your Life -A Complete Review of Jeevan Chhaya
- Taxation of Income of non-life Insurance Business – Amendments Made in Finance Act 2010
- LIC Jeevan Anand Review: Covers Life After Endowment Term
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