Life insurance is a contract signed between a policyholder or insured person and an insurance provider. This contract determines a specific and pre-decided sum (also known as “Cover Amount or “Sum Assured”) to be paid to the policyholder’s family after his/her death. The sum of the insurance policy is paid in lieu of a certain amount of premium.
The plan ensures that you as well as your family members are able to receive the much-needed financial support in case of your untimely demise due to any reason, such as accident, critical illness, and so on. Despite the fact that human life cannot be quantified, a monetary sum can assist the dependents in continuing their lives without abandoning their necessities and requirements.
How Does a Life Insurance Plan Work?
Similar to other insurance policies, a life insurance policy functions in a manner that the policyholder must pay a premium for a set period of time. After the death of the insured person, the insurance company will cover the financial needs of the insured’s family. The amount to be paid by the insurance company will depend upon the premium the insured person paid to the company.
What Are the Benefits of Life Insurance
Individuals can safeguard themselves and their families with life insurance in the event that something bad happens to the insured. The insurer pays an amount equal to the sum assured as indicated in the contract, plus any incentives that may be available.
Double Your Savings with Maturity Benefits
A life insurance plan also acts as a saving instrument by providing maturity benefits. In case the policyholder lives to the end of the policy term without any claims, the total amount of premiums is refunded at the policy’s maturity time. For example, if you pay a yearly premium of Rs. 10,000 for a 30-year term insurance policy, you would receive the premium money back (Rs. 3,00,000) along with the bonus amount. This is only when you survive the policy tenure and you have paid all of your premiums.