Life insurance plans and policies are used to provide increased financial protection for family members and dependents when you will be no longer there. Or as a protection against uncertainty and challenging times. Depending on the specific plans, they can be used for a myriad of purposes such as planned expenses such as mortgages, vacations, and expensive college tuition for a lifetime. So, let’s now know in details about life insurance plans and policies.
What Are Some Specific Terms Related To Life Insurance Plans and Policies?
There are several specific terms associated with life insurance plans and policies. Let’s now know about those terms of life insurance plans and policies below…
The policyholder will get coverage for a certain period under the plan. At the very end of the period, the policy will mature and the person will get maturity benefit and other earned bonus.
A shorter period of time, provided after the introduction of a new policy, allows the policy to be cancelled if the policyholder is dissatisfied with the terms.
Grace Period Of The Plan
The grace period of the plan is an added period of time given to the policyholder in case he is not able to make the payment within the time limit. It is normally 15 days to 30 days.
The policyholder guarantees the policyholder a lump sum of money at the maturity of the policy is to invest the policy period is outlined. In addition, there may be other benefits payable along with the sum assured.
When you don’t pay within the time limit nor after its grace period, the benefit of life insurance stops and the policy is cancelled. A repealed plan is named a lapsed plan.
Bonus amount payable in addition to death benefit during the policy term/death of the insured during the policy term in case of policyholder’s premature death but only in case of death due to accident.
Payment is receivable by the nominee or beneficiary in the case of the insured person during the policyholder’s premature death subsistence of the policy term.
Value payable in case the policy is prematurely cancelled for the policyholder. Cash worth is the expense at which the plan can be sold out at that time. It keeps growing with the premium paid amount.
Riders have additional features that make the policyholder eligible to get bonus payments as well as receive additional advantages on the event of special events. These increase the worth of the plan.
One among all riders the policyholder is denied of the duty to pay subsequent to enduring inability however keeps on getting the endorsed benefits under the arrangement.
The policyholder can have the option to renew the lapsed policy after the grace period by paying a penalty just like given in the Bima Kiran Policy. This is called the reinstatement of the policy.
Why Should You Invest In Life Insurance Plans And Policies?
India presently has a population of more than 1.369 billion people. However, it is estimated to be over 988 million Indians, meaning more than 74% of the population does not have any type of life insurance policy.
Of the 26% of those who have some life insurance, the majority are insured for an average of only 7.8%, who will actually need to cover the financial shock of the insured’s death. Here are five main reasons why you definitely need to buy some form of life insurance.
Many life insurance policies offer attractive tax saving options, where premium payment qualifies for income tax exemption under section 80C of the Income Tax Act, and maturity benefit for tax deduction under section 10 (10D) of the IT Act. May qualify.
Accidents & Illnesses
The uncertainty of life sometimes puts you in an unfortunate situation where you may be injured and severely incapacitated by an accident that you will not be able to provide for your family. Riders in life insurance policies take care of the hospitalization and provide recurring payments to replace their income.
The most basic purpose of life insurance is to provide financial protection for your family in case of your death as the primary breadwinner.
Life insurance helps provide for basic daily expenses, riders can ensure milestone expenses such as education, and ensure that your family’s standard of living will not decline drastically.
It gives you peace of mind to live your life, it is known that if something happens to you, your loved ones will be taken care of.
Debt Repayment & Security
Your family members can use the aftermath benefit from life insurance to pay off major debts that you have received in your lifetime. Some plans also provide for the payment of recurring bonuses during the term of the policy.
Thus, they are used as investment instruments to take care of major expenses such as a mortgage, real estate, and education. Some schemes, such as whole life policies, are also readily accepted as collateral for bank loans.
Life insurance plans are not only used for death benefits but also provide investment returns. Policies like ULIPs and endowment policies use your money to invest in the market and provide returns, and these plans can be purchased with the purpose of investing for additional income or major expenses and luxuries such as car or holiday purchases.
AUTHOR BIO: Lillian Harris is an economist with 10 years of experience in the field. She enjoys analyzing and researching topics related to economic issues as well as their connected data utilizing their ability with statistics and math. She also enjoys designing policies, making forecasts, and suggesting others through her presentations and reports.