Life insurance is the most popular insurance product, which is offered by almost all kinds of insurance companies in India today. Here the insurance provider gives financial coverage to the person in exchange of premium paid over a regular period. At the maturity of the policy, if the insured is still alive, he/she will get a lump-sum amount, which is much more than collected amount paid as premium through the years.
The payment received at the end of policy is called as the sum assured at maturity, which is same as the cost of the policy. This minimum amount is almost doubled when the company adds on different bonuses, thus making life insurance policies a feasible protection and even savings plan that can be used in future as financial backing.
The insured also receives tax benefits on life insurance under the Section 80C of Income Tax Act, 1961. The insurance provider decides how much premium must be made, as there are several eligibility factors that come in play to decide that. If the financial condition is great of the insured, then he/she can take any plan that suits the requirements. The sum assured is higher if the premium paid is higher and vice versa. The longer the tenure, sometimes greater are the returns.
A life insurance policy is best for people who are unable to earn huge income during employment years and search for a safe place to keep monetary savings. It is not a short-term plan to be looked in as an investment option for instant returns like that happening in share, and bonds purchase etc. The policy is specifically taken for death cover or getting a lump-sum amount after many years.
Main benefit of life insurance policy is the death benefit, which is different from maturity benefit explained above. In death cover, the nominee of the insured receive entire policy sum assured as well as the bonus amount (if any) immediately. Thus, as a family person or others, you can leave back economical security for loved ones even after your death.