A life insurance policy is like a shield that protects one’s family against financial calamities by providing them with cover in the unfortunate event of the passing away of the policyholder. This ensures that the family has access to funds to meet their needs such as spending for education, health, EMIs, living expenses, etc.
Moreover, depending on the type of policy that one chooses they may also benefit from the savings/maturity component that is a part of some types of policies in the market. Meaning, that once the policy has reached maturity, the policyholder is entitled to a lump sum amount, monthly payouts, or both depending on the policy type and its terms and conditions.
So, if you are someone who still hasn’t thought about buying a life insurance policy, it’s high time that you compare various life insurance quotes and buy a policy that best aligns with your financial goals. In this article, we will look at 6 of the topmost benefits that a life insurance cover has to offer to help you get a gist of what you can expect from investing in them.
But first, let’s have a brief look at a few types of life insurance cover so that you can dial down to the one that you think is the best one for you before moving on to the benefits that come as part of the cover under life insurance policies!
Types of Insurance Policies
- Term life insurance: It’s a pure life cover that doesn’t feature any savings or maturity component, and only guarantees a lumpsum amount up to the sum insured under the policy to the nominee (s) of the policyholder in the event of the policyholder’s death. However, the premiums are often low and it is one of the best policies for people with dependents.
- Endowment Policy: This policy offers the dual benefits of a life insurance cover along with a savings component. Meaning, that in case of the unfortunate passing of the policyholder, the family members are entitled to the sum assured along with any accrued bonuses.
- Whole Life Insurance: This policy, as the name suggests remains active as long as the policyholder is alive or up to the age of 100 years offering complete life cover.
- ULIP Life Insurance Plans: This is a combination of a life insurance policy and market-linked returns offering the dual benefit of cover and investment.
- Money-Back Insurance Policy: These policies offer life cover along with periodic returns.
Benefits of a Life Insurance Policy
Now that we have briefly covered a few of the most popular life insurance policies available in the market. Let’s have a look at the various benefits that you can expect from investing in a life insurance policy.
Guaranteed Sum Assured
The premium that you pay on your life insurance policy gives one’s family access to a guaranteed lump sum amount in the event of the policyholder’s death. This is the most basic feature across all policies.
Critical Illness Cover
A life insurance policy may come with additional riders that give you protection in case of a critical illness. As critical illnesses often take longer to heal; the policyholder often isn’t in a condition to work and may require extended periods of rest to make a full recovery. With this rider, you can get access to a lump sum amount that can help your family meet the living, education, and health expenses.
Accidental Death Benefit
This is another add-on that is part of some policies that provides the policyholder’s family with an additional amount on top of the sum assured as accidental death benefit cover.
Some life insurance policies like a ULIP life insurance policy give you higher returns on your investment by investing parts of the premiums you pay into market-linked plans. This offers the dual benefit of a life insurance cover along with higher returns over the period of the policy. However, if you do plan to invest in such a policy, always keep your risk appetite in mind before investing.
As mentioned above, some life insurance policy types come with savings/maturity benefit that gets paid out to the policyholder after a set period, or once the policy has matured. So, should you plan it right, you can get access to a lump sum amount, along with the benefit of regular payouts in the form of a pension to lead a comfortable retired life.
A life insurance policy is one of the best investments you can make, as no other investment comes with so many benefits as a life insurance policy. So, should someone ask you, ‘what is investment?’ you can confidently tell them that true investment is one that comes with unmatched benefits—such as a life insurance policy.