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What is life insurance? Do not commit these mistakes while taking life insurance

Friends Life Insurance What is life insurance You all must know this. If you do not know, let me tell you briefly What is life insurance , What is the type of life insurance and what should be kept in mind while giving life insurance.

Life insurance is a type of arrangement under which the insurance company, or insurance company, guarantees you compensation in the event of any type of accident, loss, illness, or death that happens to you. Let’s know What does insurance mean?

What is Life Insurance?

A life insurance policy is a contract between an individual and an insurance company. In which the insurance company provides financial protection to the insurance holder in return for premium payment. In the case of a policyholder’s death or if the policy matures, the insurance company pays the nominee or their family on a contract basis, usually this type of policy is chosen based on your needs.

The insurance company provides a lump sum payment upon the death of the insurance holder, known as death benefit.

Types of Life Insurance

By now you must have realized that Types of Life Insurance Now we will know what kind of life insurance is there and what are the benefits of which insurance policy?

There are mainly five types of life insurance. Below is brief information about all.

1. Term Insurance (Term Insurance plan):

Term insurance is much cheaper than basic and other life insurance, in which only life insurance cover is given. Term Insurance A certain sum insured is given to the beneficiary in the event of death of the insured. However, no payment is made on the survival of the insurance holder even after completion of the term of the policy.

2. Endowment Plan:

The premium term of the endowment insurance plan is relatively higher than that of the insurance plan. If the policy matures at the end of the term of the policy in the endowment plan, the bonus is added to the insurance holder with the sum assured. The bonus is declared every year during the policy term.

3. Unit Linked Insurance Plans:

Unit linked insurance plan is a type of traditional endowment plan. It pays an assured sum assured upon the death of the insured or when the policy matures. Since ULIP is also an insurance and investment scheme offered by insurance companies, which not only provides insurance but also provides investment benefits. Take this policy only if you can afford the investment.

4. Money Back Policy :

Money Back Policy is similar to an Endowment Plan. In this a certain part of the sum assured is paid to the insurance holder at a certain period of time during the insurance period. The remaining sum insured at the end of the period is paid along with the bonus.

5. Whole life insurance:

Whole life insurance is a type of permanent life insurance, designed to provide coverage over the lifetime of the insured. Due to the lifetime coverage period, the whole life usually pays a higher premium than the term life.

Benefits of buying life insurance? Benefits of LIC

Life insurance offers three major benefits protection, Long term savings And Investment.

1.Protection

Life is unpredictable and full of uncertainties. The risk of an unpleasant event like death cannot be eliminated. In such a situation, your family will face financial constraints due to the loss of your regular income. Investing in a life insurance plan provides protection in such times. This way keeps your family safe even in your absence.

2. Long-term savings

If you want to save for long term then it is important to consider life insurance. Such a product helps you systematically save and create a corpus for your future. Accumulated funds can be used for many purposes, such as purchasing a new home, funding for your child’s future education, or meeting the expenses of his or her marriage to many others.

3. Investment

ULIP is an insurance and investment scheme offered by insurance companies. You can also invest along with insurance through this scheme. ULIPs offer significant returns on premiums paid towards insurance policies. Most life insurance plans offer considerable benefits during maturity, thus making it an attractive investment plan.

Do not make these mistakes while taking LIC:

Let us now know what should be kept in mind while giving life insurance.

Tell family while taking Life Insurance Policy

Whenever you have life insurance, tell your family and people near you about it. Because in case of any kind of accident, the family members have to go through the paperwork. If your family members do not know about insurance, then it may be possible to harm your family.

Do not choose less insurance:

Taking a life insurance policy is not mandatory but a duty. If you choose the largest insurance policy, then in the event of completion of the policy or in case of accident, you will get maximum insurance coverage which will be beneficial for you or your family.

Do not buy a policy without sufficient information:

Whenever you want to buy a life insurance policy, you should know the type of policy, level of insurance, duration etc. Several tools, insurance calculators, and literature materials are also available online and offline to become aware of its complexities and guide you.

Do not lapse insurance policy:

Take insurance policy only when you are financially and mentally fully prepared. If you stop paying your premium or decide to exit from the policy before the policy period, this is called policy laps. By policy laps, you deprive your family of the basic right to life.

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