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What is Life Insurance and What are its Benefits

Know the life insurance and its benefits also

We usually avoid the thought of purchasing life insurance because we believe we do not require it. An unexpected incident or misfortune, on the other hand, makes us realize that life can end at any time, with no warning or forewarning. So, what transpires next?

Apart from being devastated, our dependents are faced with a burden of debts such as EMIs, rent, loans, child expenses and much more. Moreover, there is no other source of revenue now as the income flow has also stopped because we never consider the worst-case possibilities.

According to Livemint, the average penetration & density of life insurance in 2019 was 2.82% in India. Although there has been a progress in this area, India's overall growth has been modest. As a result, many people are unaware of the advantages of life insurance, as seen by the low penetration rates.

Life insurance is crucial for families to feel secure and confidently live their life without losing their stable lifestyle.

This is why the idea of ‘I don't need to purchase life insurance’ must be abandoned because adversity can hit us at any time and any age. Every individual needs financial security & protection, and life insurance is the ideal solution.

Here’s a quick guide to help you understand what is life insurance, the benefits of life insurance, and its key features:

What is Life Insurance?

Life insurance is defined as an agreement between the policyholder and the insurance provider in which the insurance company pays a guaranteed sum to the insured's family upon his demise.

Benefits of Life Insurance

Life insurance can not only help cover your final needs, but it can also provide a financial safety net for your family by replacing your income or serving as an inheritance for a loved one. Here some of the benefits of life insurance :

Life Risk Coverage

Life insurance offers you risk coverage in the form of monetary compensation that protects you and your family in the case of adversity.

Maturity Benefit

Life insurance policies can also be leveraged as a savings tool because they provide maturity benefits. If the policyholder survives till the end of the policy term with no claims, the total premiums paid are refunded at the policy's maturity. However, not all life insurance provides maturity benefits. In this way, your life insurance policy can provide both a savings component and a protective cover.

Death Benefit

Individuals can safeguard themselves and their family with life insurance. If something goes wrong with the insured, the insurer pays an amount equal to the sum assured as indicated in the agreement, plus the bonus to the bereaved family.

Life insurance also protects the interests of individuals with decreasing earnings as they become older or those who have met with accidents or are retired individuals. There is a range of policies to choose from, and you may pick the one that best fits your requirements.

Tax Benefits

Currently, section 80C of the Income Tax Act is a useful tool for salaried individuals to lower their tax liability. Investing in the specified assets is subject to exemptions under this provision.

Return on Investment

When compared to other investment options, life insurance schemes provide a superior return. The majority of life insurance plans include added bonus as well.

In addition, life insurance money is secure and protects against risks. The money invested will earn a fair return and be reimbursed in full as the sum assured either at the end of the period or when the insured passes away.

Guaranteed Income

This revenue is used to cover all rentals, loans, and other expenses such as house rent, phone and energy bills, child education, and so on. This aspect of life insurance compensates for the income that would have been lost if the earning member had departed.

Financial Facility

You may have needed financial assistance in the form of loans, mortgages, and other forms of debt to realize your aspirations and achieve your goals. Whether it's student loans or credit card debt, coping with such obligations can be a major financial drain if you don't have a stable source of income.

Though you may have the cash to pay off a portion of your debts now, your family may struggle to manage such obligations in the event of your untimely death, due to the loss of income. As a result, purchasing a life insurance policy ensures that your family will be able to meet your loan and mortgage obligations even if you are no longer alive.

Rider Benefit

Riders can be added to your life insurance policy to increase its coverage. A variety of riders are available, ranging from Critical Illness to Accidental Total Permanent Disability, to protect you and your loved ones in case of an emergency. Riders are not mandatory and available at an additional cost.

The Way Forward

It should go without mentioning that life insurance is a must-have. It's a risk-mitigation and protection tool that needs to be bought without hesitation. Besides, it is a matter of life that sustains a significant proportion of individuals.

So, in a nutshell, understand what is life insurance, why it is the need of the hour and sign up with top rated life insurance companies to buy life insurance online without delay.


*Tax benefits are as per the Income Tax Act, 1961, and are subject to any amendments made thereto from time to time
The article is meant to be general and informative in nature and should not be construed as solicitation material. Please read the related product brochures for exclusions, terms and conditions, warranties, etc. carefully before concluding a sale.
Make responsible financial decisions. Consult with your financial advisor before making any decisions on insurance purchase.