The Government of India nationalized Life Insurance in 1956 and Life Insurance Corporation of India was formed. Many Indian and Non-Indian Insurers were absorbed by LIC making it the only Life Insurance Service provider in the country.
In the year 2000, Insurance Regulatory and Development Authority or IRDA was appointed to regulate and issue licenses to Insurance and Reinsurance companies in India. It operates under the Ministry of Finance, Government of India.
What is Life Insurance?
Life insurance is a contract between an individual and an insurance provider wherein the insurer promises to pay a specific amount of money in the event of the insured person's death or after a set period. In return for this financial protection, the insured pays a premium, usually annually.
Why do you need Life Insurance?
The only sure thing about life is death, and one must be fully prepared for it. Though money cannot make up for a person's loss, a life insurance policy ensures that the family does not have to face financial difficulties in the demise of the family's breadwinner. This safety net helps the family meet expenses of the loans you might have taken, your children's education, and other needs.
Besides providing coverage against risk, a life insurance policy also allows building and growing savings for future expenses like children's education or marriage. You can have a saving plan for the future to have a constant source of income even after retirement.
Having a life insurance policy is the best way to secure your future and gain peace of mind.
What are the advantages of Life Insurance?
1. Financial Protection
A life insurance policy enables your family to remain independent and self-reliant even in your absence. A good term plan can help them repay your financial liabilities like a home loan, personal loan.
2. Tax benefits
Premium paid towards a life insurance policy is eligible for tax deduction under Section 80C of the Income Tax Act, 1961. You can avail a deduction of up to Rest. 1.5 lakhs.
3. Long term savings
Certain life insurance products help you make systematic savings and create a corpus that you may need in the future, for, say, buying a home, funding a child's higher education, or meeting other expenses.
What are the types of Life Insurance?
The different types of life insurance policies available are
1. Term Life Insurance
This policy only provides a fixed sum of money to the policyholder's family if the policyholder dies within the specified term. There are no claim benefits if the insured person survives till the end of the policy period. It is the most affordable plan as it provides pure risk coverage with no maturity benefits.
2. Whole life insurance
The plan provides complete life coverage where you pay the premium for a stipulated period. The policy holder’s beneficiaries are entitled to get an insured amount after the death of the policyholder. In addition to the insured amount the beneficiaries also get a bonus amount
3. Money back Policy
This policy pays back a portion of the sum assured directly to the insured at regular intervals as a survival benefit. These can be used to meet short-term financial objectives. In case of death of the insured during the policy period, the entire sum assured is paid to the beneficiary irrespective of the survival benefits paid.
4. Endowment Plan
This policy offers life cover and savings. The insured gets a lump sum amount of money if he survives until the policy period.
5. Retirement Plan
These plans guarantee a fixed income post your retirement.
6. Unit Linked Insurance Plans
These plans provide insurance and an opportunity to invest. The premium paid is partially used as a risk cover and partly invested in different funds depending on the risk tolerance of the policyholder.
7. Child Insurance Plan
These plans can be opted to safeguard your child's future. Along with a life cover, they help build a corpus to funds for your child's education, marriage, and other expenses.