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Life Insurance
Life Insurance
Life insurance is a contract that offers financial compensation in case of death or disability. Some life insurance policies even offer financial compensation after retirement or a certain period of time. Life insurance, thus, helps you secure your family’s financial security even in your absence. You either make a lump-sum payment while purchasing a life insurance policy or make periodic payments to the insurer. These are known as premiums. In exchange, your insurer promises to pay an assured sum to your family in the event of death, disability or at a set time.
Life insurance can help you support your family even after retirement. Depending on what it covers, Life insurance can be classified into various types:
Term Insurance:
It is the most basic type of insurance.
It covers you for a specific period.
Your family gets a lump-sum amount in the case of your death.
If, however, you survive the term, no money will be paid to you or your family.
Whole Life Insurance:
It covers you for a lifetime.
Your family receives a certain sum of money after your death.
They will also be entitled to a bonus that often accrues on such amount.
Endowment Policy:
Like a term policy, it is also valid for a certain period.
A lump-sum amount will be paid to your family in the event of your death.
Unlike a term plan, you get the maturity proceeds after the term period
Money-back Policy:
A certain percentage of the sum assured will be paid to you periodically throughout the term as survival benefit.
After the expiry of the term, you get the balance amount as maturity proceeds.
Your family gets the entire sum assured in case of death during the policy period. This is regardless of the survival benefit payments made.
Unit-linked Insurance Plans (ULIPs):
Such products double up as investment tools.
A part of your premium goes towards your insurance cover.
The remaining amount is invested in Debt and Equity.
A lump-sum amount will be paid to your family in the event of your death.
Child Plan:
This ensures your child’s financial security.
In the event of your death, your child gets a lump-sum amount.
The insurer pays the premium amounts after your death.
Your child will continue to get a certain sum of money at specific intervals.
Pension Plans:
This helps to build retirement fund.
One can get a regular pension amount after retirement.
In the case of death, the family can claim the sum assured.
Tax Benefits
- Life insurance not only ensures the well-being of family, it also brings tax benefits.
- The amount paid as premium can be deducted from total taxable income.
- However, this is subject to a maximum of Rs 1.5 lakh, under Section 80C of the Income Tax Act.
- The premium amount used for tax deduction should not exceed 10% of the sum assured.
***LIC renewal premium payments can also be paid at our bank branches.