Term Insurance How Does Insurance Work?

By | March 12, 2020

Term Insurance How Does Insurance Work?

Besides providing a safety cushion for your loved ones even when you are not around, the premiums paid on term insurance is exempt from tax under Section 80 C of the IT Act. Even the claim/maturity amount that you receive on outliving the policy is exempt under Section 10 (10D). However, smoking habits may affect the premiums you pay (more reason to quit!).

Child Plan

This is a life insurance product designed to save for your child’s higher education expenses. In case the parachute doesn’t open when you skydive, it takes care of your child’s education. You can begin by making small investments for a short tenure and start receiving regular pay-outs for a fixed period, and by the time your child wants to switch from an engineering to a Djing course, you’ll have the money already ready.

Retirement Plan

An insurance plan that protects your loved ones in case something unfortunate happens to you, and covers your retirement plans when you don’t, what’s no to love? Life insurance can be used as a retirement savings vehicle, a tool to supplement other specific retirement plans to meet your retirement goals, or as an investment option that offers dual benefits of life cover as well as growing your wealth.

Savings and investments

Life insurance can also be considered a great savings and investment tool, especially if you have set some definite goals. Endowment plans are good savings and investment options. Similarly, if you want to improve your financial condition, investment plans offer good returns as they are linked to the market. Compare various plans to see which ones offer maximum returns.

Money back

Instead of getting paid all at once at the end of the term, you have the option of getting returns in interval. The frequency and period of pay-outs differ from company to company and plan to plan. This policy could provide you with money at certain intervals that can help meet various financial goals (buying a house or car, children’s marriage,etc). it has a low risk element and guaranteed returns.

Whole life insurance

This form of insurance has two components- benefits to the loved ones in case something untoward happens to you and a savings portion called the cash value, which grows as interest accumulates. Interestingly, you don’t have to pay any tax on investment gains until the funds are withdrawn (also called ‘investment growth on a tax-deferred basis’). You can emit more payments than the scheduled premium, which will help you build your cash value. Further, you can reinvest dividends into the cash   INSURANCE PLAN   value and earn interest. If you wish, you can make a withdrawal or take a loan on interest. Withdrawals will not impact the death benefits.

How does insurance work?

The insurer and the insured get a legal contract for the insurance, which is called the insurance policy. The insurance policy has details about the conditions and circumstances under which the
insurance company will pay out the insurance amount to either the insured person or the nominees.

ULIP

An acronym for Unit-Linked Insurance Plan, ULIPs provide a life cover that protects your family and lets you invest in the equity market, so you can grow your money. The best ones to choose are those that include benefits such as fund switching options, income tax benefits, high returns in the long term, life cover, and loyalty additions. Note that you , as the investor, will have to bear the risk of the investment.

Insurance is a way of protecting yourself and your family from a financial loss. Generally, the premium for a big insurance cover is much lesser in terms of money paid.

The  insurance company takes this risk of providing a high cover for a small premium because very few insured people actually end up claiming the insurance. This is why you get insurance for a big amount at a low price.

Any individual or company can seek insurance from an insurance company, but the decision to provide insurance is at the discretion of the insurance company. The insurance company will evaluate the claim application to make a decision. Generally, insurance companies refuse to provide insurance to high-risk applications.

Term Insurance How Does Insurance Work?

THANKS MY DEARS & MAM

Leave a Reply

Your email address will not be published. Required fields are marked *