Key Benefits of Life Insurance

Many of us buy life insurance policies to protect our family from sudden death. It is the main reason for buying life insurance policies. However, apart from above mentioned benefit, there are various benefit of life insurance.

  1. Death benefit : The primary benefit of each and every life insurance policy is providing death benefit. Term plans only provide death benefit. Bonus is also provided along with Death benefit in case of Endowment plans.
  2. Maturity benefit : If Policyholder survives throughout the policy term, Maturity benefit comes into picture. Only term plan does not provide maturity benefit. In unit linked plans, a policyholder can opt for settlement option, where a maturity amount is given to him in installment rather than lump-sum payout i.e a policyholder needs to selects Frequency and tenure of payout For ex, frequency is monthly and tenure is 2 years.An insured must inform an insurer in advance if he want to opt for settlement
  3. Rider : Riders are additional benefit provided on policy. For opting rider benefit, policyholder has to pay additional premium. Some life insurance plan, consist of inbuilt rider, for which a policyholder does not have to pay any premium. There are various type of rider such as Accidental death benefit, Accidental death and disability, Waiver of Premium , Income Benefit rider and Critical illness.
  4. Loan : A policyholder has to check whether loan is applicable or not. on term plans, insured cannot avail benefit of loan. Loan benefit can be availed on Endowment , money-back or whole life plans. In short, Loans are applicable on policy where cash value or surrender value is generated. a policyholder has to pay premium regularly for minimum 3 years for getting benefit of loan.
  5. Bonus : When life insurance policy gets profit, it shares with an insured in the form of bonus. Also, in various plans Cash bonus is provided if policy is in in-force status. cash bonus are certain percentage of sum assured given to an insured annually. Some plans consist of loyalty addition and Guaranteed addition benefits provided the policy is in-force.
  6. Tax benefit : A policyholder can save tax by investing in life insurance plans. under section 80C of Income Tax Act(ITA), a person can deduct maximum tax of 1.5 lac on life insurance policies.
  7. Insurance and investment both : Insurance policy has feature in which a policyholder gets opportunity of getting insured as well as being invested. This plans are known as ULIP plans.It means a part of premium is invested and other part is for providing protection. A policyholder decides whether he has to invest in Equity, debt. hybrid fund etc. Sum assured or Fund value whichever is higher is given to insured in case of death or maturity of a policy. A policyholder can switch his money from one fund to another if required. Top Up option is also available in such plans.
  8. Relaxation of mind : In today’s world, there has been an uncertainty in life, where a person secures his family buy opting a life insurance plans. Apart from just protecting his family, he also saves for his future needs. He can use this money for child education or post retirement. he can also take a loan against policy in case of important events in his family. Due to certain needs, a policyholder sometimes opt to surrender a policy, which he should avoid. in such cases, Guaranteed surrender value or special surrender value whichever is higher is given to a policyholder in-case of surrender.

Disclaimer :

This article is not sponsored and not meant for endorsing any particular insurance company. Please Check Terms and Condition of respective organization along with inclusion and exclusion before buying insurance policy.

Leave a Comment