Life Insurance

Life insurance is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policyholder). Life policies are legal contracts and the terms of the contract describe the limitations of the insured events. Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policyholder typically pays a premium, either regularly or as one lump sum.

Life-based contracts tend to fall into two major categories:

Protection policies – designed to provide a benefit, typically a lump sum payment, in the event of a specified occurrence.

Investment policies – the main objective of these policies is to insure life and facilitate the growth of capital by regular or single premiums.

Insurance Investments cater to every life stage of the individual, such as

1. For young families, a life insurance policy creates an 'instant estate' before they have enough time to accumulate other assets. And it provides liquidity to the named beneficiary (or beneficiaries) long before the deceased's estate matters (which often call for substantial expense) are settled.

2. Retirement Insurance policies are insurance which would provide benefits for proposer and his/her family while they are still living.

In the event of the life assured passing, life insurance provides money directly to the beneficiaries who have been nominated and the sum of money can be used for:

  • Making up for your lost income
  • Funding a child’s education
  • Paying off household debt etc
MYTH
I can’t afford life insurance.
TRUTH
You’re never too young to get life insurance. The younger and healthier you are, the easier it is to qualify and the lower the cost will be. Plus, if you buy permanent life insurance (which includes whole life insurance), the policy grows in value, creating cash value you can use at any age, for any reason. And the earlier you buy, the more time the cash value has to grow.
MYTH
I can’t afford life insurance.
TRUTH
Most people say they can’t afford life insurance, but 80 percent overestimate the cost—Millennials often by more than 200 percent.1 Actually, life insurance can cost far less than what you may spend on a monthly cellphone plan or daily cup of coffee.2
MYTH
Life insurance is just for paying funeral costs after I die.
TRUTH
Not necessarily. A permanent life insurance policy does provide money upon your death, but it also builds equity (known as cash value) you can use throughout your lifetime.
MYTH
Nobody depends on my income, so I don’t need life insurance.
TRUTH
Someone will be in charge of taking care of things if something happens to you. Life insurance can cover your funeral arrangements and any debt you leave behind, such as credit card bills and student loans.
MYTH
I’ve got all the life insurance I need through my employer.
TRUTH
Life insurance is a great job perk. But if it only covers one or two times your salary, it’s probably not enough, especially if you are your household’s primary earner. Plus, you can’t take it with you if you leave the company.
MYTH
I’m not the sole wage earner, so I don’t need life insurance.
TRUTH
Everything you contribute to your household has value. If you die, your family could use life insurance to cover childcare or other household expenses. Or your partner may choose to take time off to spend with the kids. Life insurance can help provide that flexibility.