Life insurance is basically a contract between an insurance policy holder and the insurer in which the insurer promises to pay a certain sum of money (depending upon the policy) to a designated beneficiary upon the death of the insured or insurance policy holder. Depending upon the terms in the policy, other events like chronic illness could also trigger payment from the insurer. The policy holder pays a certain amount of money called premium, either regularly or in lump sum. Some miscellaneous expenses (like funeral expenses) may also be sometimes there in the premium amount.
It has been seen that many people feel reluctant towards taking a life insurance policy primarily due to the following reasons:
- Many people don’t like to think about their own death; they associate this insurance with death or something negative, thus they avoid it.
- The policy is not a tangible thing, so people face difficulty in comprehending its value.
- People in general think about financial matters in the perspective of getting or receiving some explicit return like in mutual funds, bonds, fixed deposits, etc.; they do not care to pay somebody a certain amount of money for which they see no direct return.
- Although life insurance has nothing to do with deciding a price for your life, some people relate it with pricing their lives, and thus they feel offended if someone asks them to take a life insurance policy.
- It’s a strange fact that many people do not accept the possibility of being dying untimely, even if they see people dying prematurely in various mishaps regularly. This factor also stops them from taking a life insurance policy.
Despite the above reasons, there are many valid reasons for taking life insurance. This insurance is really beneficial if one thinks carefully. Given under are some primary benefits of life insurance:
- The greatest benefit for the policy holder is “peace of mind” because he/she may rest assured that even in case of their death their family will not face financial hardships.
- If the policy holder is the breadwinner of the family, his/her sudden death could put the family in great trouble. The family members would have to bear financial burden along with emotional distress. Many policies have the provision of providing amount equivalent to the deceased monthly wages, so that his/her family members could meet their expenses as earlier.
- Life Insurance supports the family of the insured after his/her death. The family gets enough money to meet important expenses like those on food and clothing, mortgage, monthly installments, medical treatment, and education of children.
- A policy holder can also designate his/her life insurance policy income as money to settle his/her estate. Normally, settling of estate happens after one’s death. This insurance provides the opportunity to plan for one’s estate while he/she is alive.
- If one takes this policy he/she gets tax rebate on his/her income.
Many people badly plan their insurance matters and sometimes they not get proper guidance if they reach incompetent or inexperienced agents or consultants. You would be able to get maximum output from a life insurance policy if you select it after taking professional advice.