Life Insurance

What is Life Insurance?

Life insurance is a contract between an individual and an insurance company, where the insurer provides a lump sum payment, known as the death benefit, to beneficiaries upon the insured person\'s death. This financial product offers protection and financial security to dependents in case of unforeseen circumstances.

How it Works?

When an individual purchases a life insurance policy, they agree to pay regular premiums to the insurance company. In return, the insurer provides financial coverage to the policyholder\'s beneficiaries in the event of their passing. Life insurance can also serve as an investment tool, offering savings and wealth accumulation benefits through different policy structures.

History of Life Insurance:

The concept of life insurance dates back to ancient civilizations, where groups pooled resources to support families in case of death. Modern life insurance has evolved over centuries, with structured policies emerging in the 18th and 19th centuries. In India, life insurance was formally introduced in 1818 with the establishment of the Oriental Life Insurance Company in Kolkata.

Advantages of Life Insurance:

• Financial Security: Provides a financial safety net for family members in case of the policyholder\'s demise.
• Wealth Creation: Some life insurance policies offer savings and investment options to build wealth over time.
• Tax Benefits: Premiums paid and benefits received may be eligible for tax deductions under applicable laws.
• Loan Facility: Policyholders can avail loans against their life insurance policies.
• Peace of Mind: Ensures that dependents are financially protected in the absence of the breadwinner.

Types of Life Insurance:

• Term Insurance
• Whole Life Insurance
• Endowment Plans
• Unit Linked Insurance Plans (ULIPs)
• Money Back Policies