Did You Know About Life Insurance
Life insurance policy is a contract of insurance between the insured and the insurer. The insurance policy is taken on the life of the insured. There are many types of policies that come with life insurance and a person can choose any insurance depending on his financial planning and position. The event of execution of the insurance policy is the death of the insured. So, the generalized motive of the policy is that at the event of the death of the insured, the family of the insured receives the amount so mentioned in the contract, also known as the contract value.
The insurer takes into account multiple factors basing upon which the premium amount, the contract value and the time for which the regular premiums have to be paid. The assessment of the health condition of the insurer is the major determinant of the premium value and the time. There may be special clauses also that are attached to the life insurance contract such as suicide clause, which would not consider suicide by the insured as a valid death reason and may lead to the non-payment of contract value.
The benefits which a person can avail by the life insurance contracts are
-The death benefits are totally free of income tax. Though there may be a few life insurance policies the benefits of which may be subject to subdued tax rates, the majority of the life insurance benefits have tax benefits.
-Many life insurance policies are highly flexible in adapting to the requirements of the insured’s needs and hence one can get a tailor-made life insurance policy for himself.
-Creates a financial pillar for those all who are left behind, related to the insured person. This shall avoid any financial problems to arise and make more space for the emotional issues on the event of death, to take over.
-There are hybrid life insurance policies which also have the option of making contributions towards investment. The investment component can be used as recurring income and can be drawn back by the insured to the extent it is not less than the policy premium amount