In this section, we are about to list and briefly explain characteristics of life insurance plans to develop a complete idea for potential insurance buyers.
1. Life Insurance Policies Provide Long-Term Financial Security
The insurer allows a policyholder to avail life insurance benefits for an extended period ranging from 10 to 30 years. This tenure is referred to as the policy term. The insured person must pay a pre-agreed premium throughout this period to ensure that their beneficiaries receive the assured cover if they pass away.
2. The Policyholder/ Life Insured Must Enlist Beneficiaries or Nominees
When applying for a life insurance policy, you must list the names of beneficiaries. The nominees can be your parents, spouse or children, whomever you choose. If you have not selected any nominee, the legal heir is automatically entitled to be awarded the guaranteed sum after your demise.
3. Premiums Can be Furnished Monthly, Annually or Even Settled Through a One-Time Pay
Depending on your budgetary constraints, you can negotiate with the insurers regarding a favourable payment method. In return, the insurance company will provide insights and guide you through actions likely to reap the maximum benefits at an affordable price.
Nowadays, more premium solutions like bimonthly, quarterly and half-yearly payment structures have also been introduced.
4. Depending on the Type of Life Insurance Policy, It Can Be a Post-Retirement Solution
Specialised annuity plans provide lifelong monthly payouts based on the sum accumulated from paid premiums. For example, suppose you intend to contribute more actively to your retirement fund corpus. In that case, you can buy these insurance policies that generate a regular source of income instead of a lump sum amount.
5. The Sum Assured Is Free of Taxes
The compensation provided in the form of death benefits is fully tax-exempt except in some cases. Moreover, the bonuses accumulated throughout the policy term are tax-free as per Section 10(10D) of the Income Tax Act.
6. Life Insurance Can Provide Protection Against Critical Illness and Permanent/Temporary Disabilities
When combined with a term plan, effective riders can help protect the life insured as well as safeguard their family's financial needs. One of the critical characteristics of permanent life insurance policies is that you get the option of clubbing add-ons like critical illness coverage or disability benefits. Upon adding these particulars, if you, unfortunately, lose your job due to a temporary disability caused by an accident, you or your beneficiaries can file a claim for the sum insured.