EXACTLY WHAT LIFE INSURANCE IS???????
Life Insurance is a contract between an individual and an insurer, where the insurer guarantees to make the payment of certain sum of money, in case of the insured individual’s death and at the end of a pre-determined term policy.
Today about 22,500 people lose their lives every day in India. That means about 940 people die every hour. While Death and Life are the parcels of life, the loss of loved ones can leave a space which can never be filled. So the Life Insurance Policy helps to fill certain aspects of this void, ensuring that the financial health of the insured’s family should be taken care of.
In India Life Insurance has yet to become popular among the masses, with the total insurance penetration in India as per the Economic Survey 2018 which is only 3.49%, with life insurance accounting for 2.72%. Non-life insurance accounts to 0.77%. By this data we can easily able to understand that a majority of our population is not covered, leaving millions of Indians not protected.
WHAT IS LIFE INSURANCE POLICY??????
A life insurance policy is the type of insurance that provides protection against the unexpected death of the policyholder or after a specific period of time when the policy matures. In order to avail this coverage, the insured individual pays a certain amount of money as the premium for maintaining the policy.
It is nothing but a safety net which provides financial coverage against the loss of life. The primary objective of the Life Insurance Policy is to provide security of the financial interests for the insured’s family.
While one may think that this is a new concept, research studies have shown that it has been around for centuries, with various variations of insurance dating back to 1750 BC.
The 3 basic various aspects related to life insurance are mentioned below:
- Premium: An individual is harmonized cover only if he/she pays the specific amount of money for the policy. This is termed as the premium. One can mean it to be the initial investment which offers returns in the near future of the insured individual.
- Death Benefit/Sum Assured– This is the amount that the insurer assures to make the payment to the nominee or the beneficiary of the policyholder after his/her death. This is based on the various numbers of parameters.
- Term or condition: An insurance policy provides security for the specific period of time. This is called as the Term, and it could be different based on the type of the policy being chosen.