Life insurance is a financial tool that has been made to protect you from any risk of uncertain events that can result into losses for you. This loss may be loss of life or loss of health or opportunity to earn money or loss of salary. A life insurance product cannot protect you from risks such as accidents or any kind of events but it can help you to come out of the problem by extending some financial helps.
Life insurance compensates you or your family in case any economic loss because of the accident. In true sense it is a product that helps you in times crises irrespective of how much you have saved or invested in this product. In case of claim you get the life insurance cover money. But to get the claim you need to be covered under the life insurance cover. It means you need to keep paying your insurance premium timely and regularly.
Why do you need it?
Surprisingly this is a product that benefits in case of unpleasant events. You need it because you need to make it sure that what you lose because of the unpleasant events, you or your family are being compensated for that loss in this way. Not only you but everyone needs a life insurance cover.
Apart from the risk mitigation that is protection from unseen losses, it provides options of savings and investments as well as it provide tax benefits too. This makes life insurance products very attractive tool for everyone.
There are different kinds of life insurance products that one can buy. Some of these life insurance products are basically investment products.
There are many types of insurance products. These are term plans, endowment plans and the unit linked plans.
Term plans just covers the life cover only and in case of survival the insured person gets nothing.
Endowment plans are the plans that offer a term plan and investment opportunities in fixed income assets at the same time.
Unit linked plans that are famous by the name ULIP. It provides facilities of term plans and an investment opportunity in equities.
There is no return for term plan, from endowment plan it is moderate but the returns from the ULIPs are very high depending on stock market.
Benefits of Life Insurance
There are mainly three types of benefits of life insurance. These benefits are as below:
Protection: Life insurance protects you and your family from accidental losses by compensating for the losses.
Savings and Investment: By the way of buying, you save some money and invest in some assets classes. In India normally insurance policies have investment portion as well.
Tax Benefits: Under Indian income tax laws, you can enjoy huge tax benefits up to Rs. 1 lakhs.