Why Life Insurance Is Required? Types & Choose The Best Policy

By Okbima 21 Jun 2024
 why life insurance is required

 

Life insurance is necessary that provide protection and security for your family in the event of your untimely death. There are many types of life insurance policies available, such as term life, whole life, and universal life insurance, each with its own unique features and benefits. 

 

Why Life Insurance Is Required?

There are many reasons to have a life insurance policy such as financial security for your family, covering debts and liabilities, business protection, retirement savings, etc.

  • Financial security for your family: Life insurance provides financial protection for your family in the event of your unexpected death. It can help cover expenses such as debt payments, education costs, and daily living expenses.

  • Covering debts and liabilities: Life insurance can help cover outstanding debts, such as loans or credit card bills, ensuring that your family is not burdened with financial obligations after your passing.

  • Business protection: If you are a business owner, life insurance can help protect your business by providing funds to cover expenses, buy out a partner's share, or replace lost income in the event of your death.

  • Retirement savings: Life insurance can be used as a retirement savings, providing tax benefits and a source of income in retirement.

  • Peace of mind: Knowing that your family will be financially secure in the event of your passing can provide peace of mind and reduce concerns about their future well-being.

  • Cover medical expenses: Life insurance can help cover medical expenses and funeral costs, relieving your family of the financial burden during a difficult time.

  • Secure Your Child's Education: If you have children, life insurance can help ensure they can still afford college or other educational opportunities even if you're gone.

  • Protection against inflation: Life insurance benefits can help protect your family from the impact of inflation by providing a lump sum payment that retains its value over time.

  • Access to cash value: Some types of life insurance policies, such as whole life or universal life, accumulate cash value over time that can be accessed for emergencies, used for retirement income, or funding education expenses.

  • Nominee designation flexibility: Life insurance allows you to designate nominees and specify how the proceeds will be distributed, providing you with the flexibility to ensure that your family is protected according to your needs.

 

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Types Of Life Insurance Plans In India

There are many different types of life insurance plans available in India, each with its own features and benefits.

  • Term Insurance: Term insurance provides a death benefit to your nominees if you die during the policy term. Term plans are a good option for people who need pure protection and don't have a savings option in mind.

  • Unit Linked Insurance Plans (ULIPs): ULIPs are a combination of insurance and investment. A portion of your premium goes towards life cover, and the remaining amount is invested in market-linked funds. The returns on your investment will depend on the performance of the chosen funds.

  • Endowment Plans: Endowment plans offer a combination of protection and savings. They provide a maturity benefit that is paid out at the end of the policy term, along with a death benefit if the policyholder dies during the term.

  • Whole Life Insurance: Whole life insurance provides lifetime coverage and also accumulates a cash value over time. The cash value can be borrowed against or withdrawn later in life. However, whole life insurance premiums are typically higher than term insurance premiums.

  • Retirement Plans: Retirement plans are designed to help you accumulate savings for retirement. They offer a combination of life cover and investment options.

  • Child Insurance Plans: Child insurance plans are designed to help you save for your child's future education or other needs. They provide a maturity benefit that is paid out when the child reaches a certain age.

  • Group Insurance Plans: Group insurance plans are offered by employers to their employees. They provide term life insurance coverage at a lower cost than individual plans.

 

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How To Choose The Best Life Insurance Policy?

Choosing the best life insurance policy can be a challenging task, but with some careful consideration and research, you can find a policy that suits your needs and provides peace of mind for you and your family.

  • Identify your needs: Before you start looking for a life insurance policy, take some time to evaluate your financial situation and needs. You should check some factors factors such as your age, income, debts & dependents. This will help you determine how much coverage you need and what type of policy would be most suitable for you.

  • Understand the different types of life insurance: There are two main types of life insurance which include term life insurance and permanent life insurance. Term life insurance provides coverage for a specific time, while permanent life insurance offers coverage for your entire life.

  • Compare quotes from multiple providers: Once you know how much coverage you need and the type of policy you want, it's time to start looking for the best way to buy it. You can view any type of life insurance plan on Okbima & save your valuable time.

  • Consider additional riders: Some life insurance policies offer additional riders that can provide extra coverage or benefits, such as accelerated death benefits, waiver of premium, or accidental death coverage. Consider whether these riders would be beneficial for your situation and budget.

  • Read and understand the policy details: Before finalizing your decision, carefully review the policy details, including the coverage amount, premiums, exclusions, and any limitations or restrictions. Make sure you understand all the terms and conditions before getting any policy.

  • Get professional advice: If you're unsure about which policy is best for you, consider getting advice from a financial advisor. You can also contact “Our Experts” to know the best policy according to your needs.

 

Read More:

Why Life Insurance Is Not A Contract Of Indemnity?

Life Insurance Tax Benefits In India: Eligibility Criteria & How To Save Tax?

What is Life Insurance Policy? Benefits & How Does it Work in India

Difference Between Insurance and Assurance: Meaning & Types

 

Conclusion

In conclusion, life insurance is crucial to protect your family's future in case of your death. Different types of policies in India offer diverse benefits like financial security, debt coverage, business protection, and retirement savings. To select the right policy, assess your requirements, compare quotes, consider additional riders, understand policy details & get professional guidance if necessary.

FAQs

Life insurance provides financial protection for your family in the event of your death, helping to cover expenses such as debts, education costs, etc.

No, life insurance is important for individuals of all ages, as unexpected accidents or illnesses can happen at any time.

Yes, life insurance can help cover the costs of funeral and burial expenses, easing the financial burden on your family during a difficult time.

Without life insurance, your family may struggle financially to cover expenses and maintain their standard of living in the event of your unexpected death.

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