Everything you need to Know about Life Insurance

April 25, 2023

You can move mountains to see your family giggling and thriving, then why step back from buying life insurance? When insurance-related matters strike your mind, the chances are you are planning to keep away your family from financial burden. Before you head out to buy a Life Insurance Policy, you need to understand what exactly it is. It is a contract between an insurance policyholder and an insurer, where the insurer is liable to pay a sum of money in exchange for a premium, upon the death of a policyholder or after a fixed period. It is exclusively crafted to provide your family with much needed financial security in case of your demise.   

Life insurance can help you accomplish various goals, such as pay off your mortgage or debts, help in financially securing your retirement, and more. If you are the sole breadwinner of your family, you should strongly consider getting life insurance. Furthermore, the younger you are, the less expensive life insurance will be because as you age you get more vulnerable to get affected by various diseases.

Types of a Life Insurance plan

Term Insurance plan

It is relevant up to a fixed duration. A policyholder is needed to pay premiums only for that duration. These plans do not offer any maturity benefits, and therefore the premiums you pay towards them are somewhat lesser. It is useful only for a fixed period. It works amazingly for those looking to collect funds for a forthcoming event such as child's education or marriage.

Endowment policy

It is similar to the Term Insurance policy. The only exception is it delivers maturity benefits. You will get a lump sum amount if you survive till the termination of your policy.

Unit Linked Insurance plan

Buying this plan allows you to create wealth along with obtaining the benefits of a life cover. These plans entail an investment feature. The premiums that you pay will be used to invest in a financial tool of your choice. The profits will be determined by the market performance. Furthermore, you can withdraw the amount amassed partially within the policy period.

Money back policy

It is similar to endowment plans, the only difference is that it presents survival benefits that are dispersed proportionately over the policy duration.

Whole life policy

It does not entail a fixed term. It will remain functioning for as long as the insurer is alive. The survival benefits are transferred to the nominees, in case of the insurer's death. You can withdraw the amount partially. Also, you have the option of borrowing against the plan.

Annuity/Pension plan

Annuity plans are primarily work for those who want to save up for retirement. Under this plan, the amount gathered as premium is disbursed to the policyholder either in form of regular payments or as a lump sum as decided by the insurer.

Let’s discuss some benefits of a life insurance plan.  

Assured financial protection:

If you are the only salaried worker in your family, life insurance can benefit you to a substantial extent as it offers a financial safety net. After your demise, your legatees will be eligible to get a lump-sum payment that is insured to be paid in full (only if all premiums are paid, and there are no unsettled loans). It can offer protection even when you are not around to take care of your family.

Income replacement:

Have you ever thought about your earnings after your retirement? Have you ever imagined what would happen to your family if you suddenly lose your job? With a suitable whole life insurance plan, it will be a lot more feasible for you to make sure that your loved ones have financial independence. You will be able to fund your child's higher education or pay off debts or manage medical expenses or accomplish many other tasks swiftly.  

Don't you think it's good to have a steady flow of income even when you are not earning? You will not get regular income but also peace of mind. Its benefits are not just confined to safeguarding your family; it can also help you retire early.

Tax benefits:

Don't you just hate it when you see that you need to pay some portion of your earnings as a tax? If it constantly bothers you, get a perfect life insurance plan. It plays a critical role in tax planning. As per the provisions of the Income Tax Act, 1961, by investing in a life insurance plan, a policyholder can claim deductions from their taxable income. It means that the insurance premiums you pay can lead to a significant reduction in your tax liabilities.

Customizable plan:

Nowadays, many steadfast insurance companies offer customization services to their customers. Every customer is different; this usually implies their unique requirements. Insurance companies can formulate a custom plan for every user to help users reap the maximum benefits.  


There are numerous ways to customize a whole life policy to fulfill your respective needs. By just paying a nominal additional cost, you can buy riders and get additional protection without further underwriting. Your agent can help you determine the best riders.

A List of Factors to Consider Before Buying a Life Insurance Plan

Sum Assured

You will be requested to choose the sum assured before the beginning of the policy. Before specifying a particular amount, make sure to assess all the future needs and expenses of your family members.

Duration of the Policy

Life insurance policies incorporate different terms. They can vary from 10 years to even covering for you till the age of 100. Policies that entail longer duration also entail lower premiums.

Supplemental Benefits

Make sure to review the benefits that are involved in the policy. These can be bonuses, riders, etc. Riders work by making your policy better. Before you settle on any policy, do not forget to check these benefits.


The life insurance policy needs to be flexible. These can be in the form of delivering multiple payment options, the liberty to select the mode and duration of payments, etc. Customization of a policy usually depends on its flexibility.

Terms and Conditions

Do not forget to read all the terms and conditions before buying a life insurance policy. Doing this can save you from a major problem.

Claim Settlement

Make sure that the claim settlement process of the insurer is not complex. Remember to check the claim settlement ratio of the company.


Don't wait for a financial problem to bother you. Buy a suitable life insurance plan today and get ready to fly high.

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