Introduction to Life Insurance

We see advertisements for it numerous times when watching television and billboards put up across town, urging pedestrians to sign up for life insurance or advertisements for LIC in India. So what is Life Insurance exactly? Through our Introduction to Life Insurance section at BankandFinance.com we will teach you everything you need to know. It is a type of contract between two parties, usually an insurer and an insurance policy holder. An insurer is the individual who insures or protects the future of another in the form of money. He/she will pay the beneficiary (policy holder) a certain amount of money at the time of their death. This is done to protect the beneficiary from future financial worries and problems. When looking at India in particular, insurance is used to increase the individual’s personal finance and to plan for income tax payment. Over the last fourteen years, lifeinsurance has become a popular product among Indians and more individuals continue to purchase it by the day. When it comes to the size and popularity of a lifeinsurance company, LIC in India is definitely the leader. It offers a variety of insurance plans, each having specific attributes and benefits to enjoy. A unit-linked insurance plan (ULIP for short) is the most popular choice and insurance policy chosen by Indians and rightfully so because that policy holder can enjoy the benefits of both insurance and investment under this one plan.

An applicant must choose a policy from a life company if they want life insurance. The applicant must choose the insurer, who will ask about the duration of the policy, the name of the beneficiary and the total amount of money that the beneficiary has in mind. Once all the requirements have been agreed upon by the insurer and the applicant, the applicant signs the terms and conditions of the respective life policy provided by the life assurance company. In case the insurer dies unexpectedly, the beneficiary receives the total amount of money insured by the life company

But why choose a Life Insurance Policy?

Approximately 80% of the Indian population does not have any type of insurance and many of those who able to apply for insurance, do not. In a time of crisis, lifeinsurance will come in need and help one’s family when other options are unavailable. When the income earner or insurer passes away, it can plunge the individual’s family into turmoil. Taking insurance in India will prevent such disasters from occurring and the best company to take insurance from would be LIC in India. They provide an array of LIC insurance policies to their customers and there will be at least one policy that fits the requirements of every individual.

Insurance companies such as MetLife, LIC in India and other general assurance companies provide high quality products and packages. Nonetheless the large number of policies available to choose from does cause confusion and leave someone lost. Below are some of the policies that an individual can choose from when applying for life insurance.

Term Insurance

Term Insurance is a type of life insurance which is meant to protect the beneficiary only during the time of death and at no other time. It is often termed as pure insurance because it does not accumulate wealth and the amount received at the end is often low when compared to other insurance policies. It gives coverage at a fixed rate of payment, i.e. the amount to be paid per year remains constant. The timer periods are often for 5, 10, 15 and 20 years. Care must be taken when choosing the duration of the term and based on the life policy chosen the premium that must be paid will differ. Contact LIC Life Insurance and apply for the terms of the policy that best suit your needs.

Whole Life Insurance

Unlike term insurance which provides coverage for certain time periods, whole life insurance can provide one with financial security and protection till the insurer’s death. By choosing this type of life insurance, the beneficiary would have to pay premiums every year. Because of this yearly payment system, the beneficiary can receive a substantial amount of money if the insurer dies unexpectedly. Advantages of tax benefits can be reaped if an individual chose this life insurance policy because if they want to cancel it, they get the entire amount of money back from the company that they paid in the form of premiums. LIC Life Insurance in India guarantees that the beneficiaries will obtain the full amounts if at all there are any losses on their half.

Universal Life Insurance

This is one life policy which has a large degree of flexibility and it is an increasingly popular life insurance policy choice in India. The amount of premiums, death benefits and investment components can be changed according to the policy holder’s needs and requirements. The amount of money which can be moved from the investment and insurance components is also changeable and hence the policy’s flexibility and popularity.

ULIP

Another popular choice among the Indian population, a unit linked insurance plan offers its policy holders the benefits of both insurance and investment. A certain portion of the premium paid provides cover for the insurance and the remainder of it is invested in equity and debt schemes. This life policy provides complete life coverage of the investments and here the insurer undertakes all the risks. The insurer is the risk taker because they the returns of ULIP are directly linked to market conditions. A ULIP plan allows one to thoroughly assess how much premium they can and have to pay per installment and exactly how much money is provided by the ULIP. The factor of certainty is important and because of this and its flexibility, ULIPs prove to be a big hit. LIC in India has such plans and policies available and one should consider applying for such a policy as there are multiple benefits to be enjoyed.