What Is Life Insurance?

Life insurance is an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilization’s partial solution to the problems caused by death. Life insurance, in short, is concerned with two hazards that stand across the life-path of every person:

1. That of dying prematurely leaving a dependent family to fend for itself.
2. That of living till old age without visible means of support.

Life insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against.

The contract is valid for payment of the insured amount during:

• The date of maturity, or
• Specified dates at periodic intervals, or
• Unfortunate death, if it occurs earlier.

Life Insurance compared with other savings:

Protection:
Savings through life insurance guarantee full protection against risk of death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever applicable) whereas in other savings schemes, only the amount saved (with interest) is payable.

Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides, a life insurance policy is also generally accepted as security, even for a commercial loan.

Tax Benefits:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way of premium for life insurance subject to income tax rates in force.

Money when you need it:
A policy that has a suitable insurance plan or a combination of different plans can be effectively used to meet certain monetary needs that may arise from time-to-time for E.g. Children’s Education, Start-in-life, Marriage provision, periodic requirement of money for a longer time, etc…

Recurring Account In Life Insurance:
Having facility of recurring account in Life Insurance, it encourages long term savings as the payments can be made effortlessly because of easy installments. Premium payment of insurance is monthly, quarterly, half yearly or yearly. Apart from above SSS (Salary Saving Scheme) is also available.