What is Life Insurance?
Life insurance is an essential part of financial planning. The main purpose of life insurance is protection against financial loss resulting from insured Individual’s death. In realistic terms, life insurance provides you and your family the financial security and certainty to deal with the aftermath of any unseen unfortunate events.
Today, there are many options available to a person who wishes to purchase a life insurance policy. Some policies provide coverage for lifetime and other provides coverage for a specific number of years. Certain policies allow combining different kinds of insurance. The choice of a particular policy should be based on the needs and the cost which a person can afford.
Why one needs Life Insurance
Everyone has a need for life insurance because everyone is exposed to some or the other risk in life which keeps on changing through the life stages of an individual. Only in exceptional cases, an individual may not need life insurance, if he is not exposed to risk. The situation can be cases where the individual is super rich or has no dependents.
You should take a life insurance if you have-
- Family that is financially dependent on you:
It provides protection to your family in case of any unforeseen events. The life insurance proceeds can be used to support your family members with the expenses.
- Loans or liabilities:
It is very important to insure yourself if you have taken a loan or mortgaged your assets. It not only provides peace of mind but also a steady source of income for your family.
- To provide for children’s school & college education:
Proceeds from the insurance policy could be used to fund future expenses such as child’s higher education.
- Partner in a firm or Self-employed:
It is highly needed by people who are partners in a firm or have their own proprietor firms. Life insurance can be a critical component for specialized business applications - such as funding a buy-sell agreement. The proceeds of a life insurance policy could be used to provide cash for the purchase of a deceased owner’s interest in the business or to pay off business liabilities.
Types of Life Insurance
Below are the basic types of life insurance policies. All other insurance policies are built around these insurance policies
- Term Insurance:
- Whole Life insurance:
- Endowment Policy:
- Money Back Insurance Policy:
- Unit Linked Insurance Plans:
- Retirement Plans:
- Savings and Investment Plans:
- Child Insurance Policy: