Life Insurance – All You Need To Know

Last updated on June 28th, 2024 at 11:39 am

Life Insurance – All You Need To Know

This illustrates the fact that life insurance is essentially a contract through which the policy holder of the insurance and the company underwriting the insurance agree to pay an assured amount of money upon the death of the insured party as paid in exchange for previously rendered premium payments.

 

You pay premiums for a fixed period and, in return, your life is insured by us. Therefore, this lump sum of money at least secures the sad event of one’s life, which finally helps in providing assurance about the future of loved ones. You are paid an amount called the maturity benefit at the end of the policy term in some policies.

There are two basic types of life insurance plans:

Only Protection

Defending and Safekeeping

What Is Income Protection?

The Pure Protection Plan is designed to ensure your family’s future by giving a lump sum in your absence.

What is a Protection and Savings Plan?

A protection and savings plan is a financial tool that helps you achieve your long-term goals, such as buying your own house, building a children’s education fund, and much more, with the added benefit of life insurance.

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Factors of the Life Insurance Premiums

LifeNow that you know what life insurance is and why you need it, you should learn more about the factors that determine the life insurance premium

Age:

Age, being a major determining factor of premiums for any package of life insurance, is among the greatest of all factors. Premium for life insurance is low at young ages and increases with advancing age.

Gender:

Scholars have shown that women overtake men. So the cost of insurance is cheaper for women than it is for men.

Human health condition

Premium charges of a life insurance plan are based on your present as well as previous health conditions. If you are discovered with the disease, or you have suffered from it before and it may come back to attack you in the future, then that becomes one reason for you to be charged higher premiums.

A history of family health:

There will be fairly high chances of your getting infected with some disease that runs through your bloodline, so in that case, you may have to pay a higher premium.

Smoking and drinking

Your lifestyle practices, such as smoking and alcohol consumption, affect your health and contribute to various health issues. Therefore, by charging higher premiums for smokers or people who drink alcohol, insurance companies show this.

Type of coverage:

A more expensive loss of an insurance plan to purchase would be the life insurance plan. One could increase or decrease their premium depending on the type of coverage one opts for. A premium would go up with any additional rider that is bought along with a plan. An increase in the policy term may cost more because the premium could be lower with a shorter policy term. Other than that, the type of life insurance plan chosen has an effect on the premium too. Inexpensive percentages include the term life insurance plan.

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Amount of coverage:

The premium of your life insurance plan will be high in relation to others if you are working in a high-risk job. For instance, if you are engaged in any construction work or any other kind of occupation that can expose you to chemicals on a regular basis, premiums for such a nature of employment will always be higher.

What are the benefits of life insurance?

Life insurance is a means to prepare the way for the lives of you and your family to be safe, tranquil, and fruitful. Here are some ways that life insurance benefits policyholders:

This would make your loved ones achieve the life goals which you’ve set for them, even if you are not around.

Child Insurance Policies may help in the realization of your child’s financial future even in your absence. This helps you in increasing wealth for clear reasons—realizing your dream of buying real estate, a house, going on a world tour, etc. If you purchase life insurance with additional riders for critical illnesses, for example, you may be able to use the amount received through the rider to pay for relevant medical expenses.

Retirement plans could be your financial security even after retirement—a guarantee of the enjoyment of some interests or hobbies after retirement. You can avail tax benefits under relevant sections on the premiums you pay, as well as the proceeds you receive from this policy, subject to provisions of the Income Tax Act, 1961.

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