Life Insurance What is it and why is it necessary

Life Insurance What is it and why is it necessary

Life can throw you hurdles at any point in time, and without proper financial planning, facing such a situation can be extremely daunting to fulfil the basic requirements. Hence, it becomes crucial to plan properly for such events ahead. You can prepare a contingency plan by buying life insurance and securing your family’s financial future. In this blog, we will discuss everything about life insurance in detail.

What is Life Insurance?

Life insurance is an agreement between you and the insurance company, where the insurer promises to pay your family a specified amount upon your death. In return, you must pay a certain amount to the company, which is called an insurance premium. Furthermore, your family can utilise the insurance amount in your absence to meet their expenditures, such as child education, debts, daily expenses, etc.

Life insurance is available in different types, including term insurance plans, whole life insurance plans, child insurance plans, retirement plans, etc. All these insurance plans have their own benefits and features. In short, you can pay regular premiums to protect your family from financial hardship after your demise. 

How Does Life Insurance Work?

In life insurance, you are referred to as the insured whose life is covered under the plan. You can choose the sum assured, policy term, premium paying term and premium paying frequency. You can use the term insurance calculator to determine the amount according to your financial requirements and budget. 

Furthermore, the insurance company will consider age, gender, medical history, health status, and coverage amount to fix the premium amount. So, when you pass away, your family will receive the sum insured once they make an eligible claim. The insurance company will pay the lump sum to your chosen family members, providing them with financial security after your death. 

Why Do You Require Life Insurance?

One of the primary benefits of opting for life insurance is that it gives you peace of mind, ensuring you have done everything to secure your family’s future. Here are a few reasons why you require life insurance:

?    Protects Your Family Financially
One of your primary goals is to protect your family’s future financially. Even if you have savings, it will not be sufficient to cover their expenses and maintain a standard of living for several years. Hence, life insurance must be your ideal choice to protect your loved ones from life uncertainties.
?    Can Act as Your Lost Income
If you are the sole breadwinner in your family, your salary has a significant value. If you pass away suddenly, there will be a severe impact. Hence, it is when life insurance comes to the rescue, as it can serve as your income replacement and support your family in your absence. The death benefit amount would go to the beneficiaries and is entirely tax-free.
?    Your Family Can Pay Off Existing Debts
If you have an existing loan, such as a home, business, or car loan, and you pass away before the tenure ends, it will affect your family financially. Your family will have to bear the burden of all your financial debts. Hence, life insurance will cover your outstanding debts in your absence, protecting your family from financial hardships. 

How to Buy Life Insurance Online?

Buying life insurance online is an easy process. You can execute it by following this simple step-by-step guide:
Step 1: Visit the official website of your preferred insurance company and create an account by entering your details.
Step 2: Provide your information, such as name, contact information, annual income, date of birth, health issue, medical history, etc., and click the ‘Check Price’ option.
Step 3: Enter the life insurance amount, premium payment term, and other required details according to your preference and click the ‘Proceed’ button.
Step 4: Select the payment method and click the ‘Pay’ option to make payment via your debit card, credit card or UPI.
Step 5: You will receive the life insurance policy in your registered email address after payment. 
However, please note that this is a generic procedure for buying a life insurance policy in India, and the procedure may differ from insurer to insurer. Additionally, the information provided must be accurate to avoid claim denials. 

Final Word

It is difficult to forecast what life holds for you in the future. As such, it is crucial to prepare yourself and your family for unexpected events and make choices accordingly for a better future. Hence, buying life insurance for yourself will mitigate life uncertainties, ensuring you provide your family with the right financial security after your demise.