When it comes to the question of how you can provide the financial protection that your family deserves in your absence, the almost certain answer is life insurance. This policy offers financial protection to you and your loved ones from different life risks. However, there are still many people who are not exactly aware of what the features and benefits of this policy.
While initiatives are being taken by insurance companies to educate the general masses about these policies, still there are some who are completely unaware of it. If you are someone who is interested in knowing more about the benefits, keep reading to understand more.
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What is a life insurance policy?
Life insurance is a type of policy in which the insurer agrees to compensate the family of the insured. This compensation is given in the event of the policyholder’s untimely demise during the policy term. The compensation paid is known as the sum assured or death benefit. The amount that the insurer will give depends on the type of plan purchased by the policyholder. This compensation amount will help the family of the policyholder remain financially stable and be well protected from life risks.
What are the features of this policy?
Listed below are a few features of a life insurance policy:
1. Term of the policy
The term of the policy basically means the duration of the policy. As there are different types of plans under a life insurance policy, the duration of these plans varies from one another. Plans such as term insurance have a specified duration, whereas whole life is operational as long as the policyholder survives. Other plans such as ULIPs and endowment plans also come with a specified term.
2. Nominating a member
When you purchase a policy, you are required to nominate someone as the beneficiary. The reason for nominating a person is because that nominee will be the one who will receive the compensation from the insurer after your demise. You can nominate either an immediate family member or a relative who is financially dependent on you.
3. Premium of the policy
The premium is the cost of your life insurance meaning it keeps your policy operational. The premium that you pay towards your policy is decided by different factors. Your age, medical history, occupation, and lifestyle are the primary deciding factors. Taking these factors into account, the insurer will levy an appropriate premium.
4. Sum assured of the policy
The sum assured is the compensation that the insurer will pay to your dependents in the event of your sudden demise. The amount of the sum assured is based on the type of plan that you purchase. There are plans in which the sum assured can be increase at any specific life stage. This amount helps your family adjust to the cost of living and keeps the savings protected from inflation, as well.
What are the benefits of this policy?
Listed below are a few benefits of purchasing a life insurance policy:
1. Financial protection to your loved ones.
Life risks are unpredictable and can happen anytime. While it is not easy to be mentally prepared for them, you and your loved ones can be financially prepared for it. The financial coverage that a life insurance policy provides is by helping you manage the cost that be incurred after a life risk. Especially if it happens in your absence.
2. Secure the future for your dependents
If you are the sole earner of your family, it is your responsibility to ensure your loved ones do not face any financial perils in your absence. This policy helps in giving the financial assistance your family requires. It helps them become financially independent and have a secure future without the risk of any instability.
While these are just a handful features and benefits related to a life insurance policy, you can know more by getting in touch with your insurance advisor. Similarly, if you are interested in purchasing this policy online, you should first use the life insurance calculator to see how much the policy would cost you.