All About Life Insurance and How It Works?

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All About Life Insurance and How It Works?

Term Insurance Quote
  • 13th Nov 2021
  • 384

All About Life Insurance and How It Works?

When you think about life and its many phases, all you wish for yourself and your loved ones is a peaceful and secure future. You want them to be safe with or without you, and therefore, you start planning for the same. One of the first few steps in this process is to ensure that they are financially protected. For this, you can look at different types of life insurance plans, read about them online, talk to insurers to understand how life insurance works, what they are and how they work. If you have any such doubts in your mind, let us answer them for you!

Understanding Life Insurance

Though all the life insurance policy information you may have come across may feel overwhelming and confusing, the policy actually involves easy to understand terms and conditions. Put simply, a life insurance plan is a financial cover that will be provided to your family after your demise or given to you at the maturity of the policy. In this, there is an agreement with the insurer to get a certain sum of money, also known as sum assured, for which you must pay premiums at a pre-decided interval - this may be every month, every year, half-yearly or quarterly depending on the payment plan you choose for yourself. It is a simple policy that you can buy from an insurer at an affordable price despite not having a financial background or expertise in the field.

Let’s say, for example, you buy insurance for a term period of 20 years. If anything were to happen to you in that time period, a sum assured amount, pre-decided by you and your insurer together, would be given to your family (also known as the nominee/nominees or beneficiary/beneficiaries). However, outliving this period will lead to you and your beneficiaries not acquiring any payout.

A Pool of Options to Choose from

Now that you know what insurance is and have some life insurance information, let us look at the different types of life insurance plans that you can choose from.

Life insurance plans in India can be categorized into two broad categories - term plans and whole life covers. The former offers coverage for a chosen set period, that is 15 years, 20 years, etc. The latter aims at providing a life cover, as suggested by the name, whole life cover is a plan till the end of life or 99 years.

Why Investing in Life Insurance Will Benefit You?

Investing in different types of life insurance plans has a lot of benefits. However, most importantly, a life insurance plan can help you fulfil various financial goals that you may have set for yourself and your family and pay off the loans for your family’s future, such as:

  • Home loans
  • Education for your children
  • General household expenditure
  • Tax deductions - under section 80c of the Income Tax Act, 1961

Apart from this, you can now also buy online life insurance plans easily. Such online purchases have proven to be very practical with the ongoing shift to a completely online life that we are currently living. Further, life insurance policy information is readily available on websites along with a series of life insurance plans to compare and arrive at the one which is most suited for you! Life insurance is essential, so get yours today!

- A Consumer Education Initiative series by Kotak Life

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