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Life insurance is a financial contract between an individual (the policyholder) and an insurance company, where the insurance company agrees to pay a predetermined sum of money (the death benefit) to the designated beneficiaries upon the death of the insured person. Life insurance provides financial protection to the family and dependents of the insured individual in the event of their death.
Here are the key aspects of life insurance:
This type of insurance provides coverage for a specific period (term) of time. If the insured person passes away during the term, the beneficiaries receive the death benefit. Term life insurance is often chosen for its affordability and simplicity.
This is a permanent life insurance policy that covers the insured person for their entire life. It includes both a death benefit and a cash value component that accumulates over time. Whole life insurance offers lifelong coverage and can also serve as an investment vehicle.
Similar to whole life insurance, universal life insurance provides both a death benefit and a cash value component. However, it offers more flexibility in premium payments and death benefit amounts.
This policy combines life insurance coverage with a savings component. It pays out the sum assured (death benefit) to the beneficiaries in case of the insured's death or to the insured if they survive the policy term.
Life insurance provides financial security to the family and dependents of the insured person. The death benefit can cover funeral expenses, outstanding debts, mortgage payments, and other financial obligations.
Life insurance ensures that the beneficiaries have a source of income to replace the earnings of the deceased individual, helping them maintain their standard of living.
Life insurance can be used to fund education expenses for the insured person's children or dependents.
Life insurance can play a role in estate planning, helping to cover estate taxes and ensuring a smooth transfer of assets to beneficiaries.
Life insurance can help pay off loans, such as mortgages or personal loans, preventing the burden of debt from falling on the family.
Policyholders pay premiums, which can be paid monthly, annually, or in other intervals. Premiums are determined based on factors such as the insured person's age, health, lifestyle, and the coverage amount.
The coverage amount, also known as the sum assured, is the amount the beneficiaries will receive upon the insured person's death.
Compute your tax liability by considering income, deductions, and applicable tax slabs.
Use the Income Tax Department's efiling portal to file your returns electronically.
After filing, verify your return using methods like Aadhaar OTP, Electronic Verification Code (EVC), or sending a signed physical copy to the Centralized Processing Centre (CPC). Respond to Notices: If you receive an income tax notice, address it promptly by providing necessary documents and explanations.
Insurance companies assess the risk associated with insuring an individual. This process involves evaluating the person's health, medical history, lifestyle, and other relevant factors.
Policyholders specify the beneficiaries who will receive the death benefit. Beneficiaries can be family members, dependents, friends, or any person or entity designated by the policyholder.
Life insurance provides peace of mind by offering financial protection to loved ones in times of need. It’s important to consider your financial situation, goals carefully, and needs before choosing the type and amount of life insurance that suits you best. Consulting with insurance professionals or financial advisors can help you make informed decisions.
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