Which type of insurance policy would someone get to protect others only?
A) health insurance
B) life insurance
C) property insurance
D) disability insurance
Life insurance is a contract between an insurance company and a policyholder, in which the insurer guarantees to pay a sum of money in exchange for a premium, if the policyholder dies prematurely. It is the promise of an insurance company to give the policy holder a sum of money upon the death of the insured person or after a specified period, in exchange for the payment of a premium.
Benefits of Life Insurance
The following are three main advantages of choosing the best life insurance policy that you should know about once you understand what is life insurance meaning and the types available.
Life can be unpredictable and full of uncertainties. Reducing the possibility of an unfortunate event like death is difficult. Due to the lack of a steady income, such a family faces financial difficulties. A life insurance policy will serve as a safety net in such a situation. The insurance provider is required to pay the stipulated sum assured to the nominee or beneficiary under the life insurance definition. This means that even if the policyholder is absent, his family remains protected.
Life insurance meaning is important to consider when making long-term investments. You can use these kinds of insurance plans to make systematic savings and create a corpus that can be used for various purposes, including building a new home, paying for quality education for your child, or funding a child’s wedding expenses. You will also find that some types of life insurance policies offer monthly payments in the form of annuities, which can be a great way of reaching your retirement goals.
In addition to planning your investments effectively, you will also be better able to understand the essence of life insurance within your financial context. The life insurance sector offers unit-linked investment plans (ULIPs) that combine investment and life insurance. A single financial product can provide you with both benefits. Market-linked life insurance products provide significant gains during maturity, making them a reliable investment tool.
Keeping the policy active requires paying regular premiums, according to the definition of life insurance. According to the Income Tax Act, 1961, life insurance plans also provide tax benefits. Section 80C of the Income Tax Act, 1961 allows a deduction for life insurance premiums paid. Approximately Rs.1.5 lakh can be deducted under Section 80C.