Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is loss of income to the household.
Though human life cannot be valued, a monetary sum could be determined based on the loss of income in future years. Hence, in life insurance, the Sum Assured ( or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’. Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.Insurance and management are closely linked across industries and contexts, and risk management plays a key role in protecting assets, people and operations. This is how insurance and management come together in different areas.
Why you should buy Life Insurance:
All of us face the following risks:
Dying too soon
Living too long
Life Insurance is needed :
To ensure that your immediate family has some financial support in the event of your demise
To finance your children’s education and other needs
To have a savings plan for the future so that you have a constant source of income after retirement
To ensure that you have extra income when your earnings are reduced due to serious illness or accident
To provide for other financial contingencies and life style requirements
Who needs Life Insurance:
Primarily, anyone who has a family to support and is an income earner needs Life Insurance. In view of the economic value of their contribution to the family, housewives too need life insurance cover. Even children can be considered for life insurance in view of their future income potential being at risk.
What Life Insurance to Buy
Kinds of Life Insurance Policies:
Term Insurance
You can choose to have protection for a set period of time with Term Insurance. In the event of death or Total and Permanent Disability (if the benefit is offered), your dependants will be paid a benefit. In Term Insurance, no benefit is normally payable if the life assured survives the term.
Whole Life Insurance
With whole life insurance, you are guaranteed lifelong protection. Whole life insurance pays out a death benefit so you can be assured that your family is protected against financial loss that can happen after your death. It is also an ideal way of creating an estate for your heirs as an inheritance.
Endowment Policy
An Endowment Policy is a savings linked insurance policy with a specific maturity date. Should an unfortunate event by way of death or disability occur to you during the period, the Sum Assured will be paid to your beneficiaries. On your surviving the term, the maturity proceeds on the policy become payable.
Money back plans or cash back plans
Under this plan, certain percent of the sum assured is returned to the insured person periodically as survival benefit. On the expiry of the term, the balance amount is paid as maturity value. The life risk may be covered for the full sum assured during the term of the policy irrespective of the survival benefits paid.
Children Policies
These types of policies are taken on the life of the parent/children for the benefit of the child. By such policy the parent can plan to get funds when the child attains various stages in life. Some insurers offer waiver of premiums in case of unfortunate death of the parent/proposer during the term of the policy.
How much Life Insurance is needed:
The amount of Life Insurance coverage you need will depend on many factors such as:
How many dependants you have<=”” li=””>
What kind of lifestyle you want to provide for your family
How much you need for your children’s education
What your investment needs are
What your affordability is
You should seek the help of an insurance agent or broker to understand your insurance needs and suggest the right type of cover
