What Is Life Insurance?

Life insurance is a agreement between an insurance company and a policyholder 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.

The policyholder agrees to pay a predefined sum of money on a regular basis or as a lump sum. These are known as premiums. In exchange, your insurer guarantees to pay an assured sum to the nominated beneficiary in the event of death, disability or at a set time.

Some life insurance policies even offer many other benefits if included in the contract such as a critical illness or a terminal illness can also trigger the payment of benefit, a policy may also cover some other costs like funeral expenses as a part of benefits.

Moreover, life insurance schemes also offer several tax benefits under Section 80C of the Income Tax Act, 1961.

Life insurance can help you support your family even after retirement. Depending on what it covers, Life insurance can be classified into various types such as Term Insurance, Whole Life Insurance, Endowment Policy, Money-back Policy, Child Plan and Pension Plans.