Purchasing a life Insurance policy is one of the best decisions you can ever make. You can secure the family’s financial future with you and without you through it. The other features of a life insurance policy are not seen in standard savings and investment plans. Making life insurance policy a catch. There are several types of life insurance policies from which you can choose the one that suits you the best. Thus, further increasing the benefits of a policy. But if you are still not convinced how a policy is the most important financial decision, you will be after reading the information given here. So, tune in as you go through the key features of various types of life insurance policies and why investing in them is important.
Key Features of a Life Insurance Policy
There are several features in a life insurance policy based on the type of policy chosen and the insurer. But some features remain common in most of the plans. Given below are such common key features seen in a life insurance policy.
Premium is the mandatory feature in every insurance. It is a token of investment into the insurance plan, and the insurer provides returns and coverages based on this premium amount. The premium payment frequency depends upon the plan and can be annually, semi-annually, quarterly or monthly. Some plans even have one-time premium payments for the entire policy term duration.
Policy Term Duration
Policy term duration is the time through which you get life cover from a policy. If anything happens to the policyholder outside this term duration, the insurer does not need to provide any returns.
Mortality returns are the death benefit the nominee of the insurance policy gets in case of the policyholder’s demise. The policyholder can decide the amount at the time of purchasing the policy. The premium amount also increases with the increase in the mortality returns.
Some plans provide a few benefits at the end of the policy term duration in case of survival of the policyholder. These returns, called maturity returns, can be some incentives or a full premium reimbursement.
Interest on Investment
Some plans with a moneyback policy at term-end also have a return on investment in the form of interests gained on the premiums paid. So, at the term end, you get back the entire premium along with a good interest on that premium.
All life insurance policies have tax deductions as per the Income Tax rules in India. You can claim a deduction of up to INR 1,50,000 per year for the premium payments.
Why is Life Insurance the Most Important Personal Finance Decision?
After knowing the key features of a life insurance policy, you must now know about how they help an individual. Only then can you truly understand why life insurance is the most important personal finance decision. Given below are those major assistance you get from an insurance policy.
In moneyback insurance policies, you have capital protection and a life cover. So, you get back your entire investment no matter the market conditions at the term-end. This quality of capital protection is not seen in many investments.
Guaranteed and High Returns
There are several direct and indirect returns from a life insurance policy apart from the nominee’s assured returns. The returns include tax savings on premiums, high interests, tax-free mortality returns, and several other no-claim bonuses. So, an insurance plan proves to be a financial all-rounder helping the policyholder and the nominee.
Peace of Mind
Peace of mind is what you get for investing in such high returns and a reliable investment plans. As there are assured returns, you will never have to worry about what will happen to your family’s finances in your absence.
After reading all the key features and importance of a life insurance policy, you will now understand its supremacy as an investment. So, if you don’t yet have a policy, you will jump on to purchase a good policy at the first chance you get.