Family and Parenting

Life Insurance-Importance Benefits Types

Life Insurance Benefits
Written by Banani Chakraborty

To know all about the importance and benefits and types of life insurance policies as it serves dual purposes of both savings and insurance.

Know All About Life Insurance:

Most importantly, when we start to earn, we have to think for our self as well as parent’s future security.

life insurance gives true happiness in life

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Moreover, after marriage, it is our duty to ensure our spouse’s future, particularly if she is a housewife and we must do it as we have love and relation.

When we become parents, we all want to be a good and ideal parent.

Indeed, Role of parents in child development is to secure their future.

Therefore, it is very necessary for us to know all about what is Life Insurance and how does it work?

What is Life Insurance and how does it work?

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Most importantly, we all know the importance of savings in our life and how to grow our savings and how to save money. And get the true happiness of life.

To tell the truth, life insurance policy is actually a contract between an insurer (company) and a person called policyholder.  The company assure to give an amount (sum assure) with bonus (excluding non-profit, term policies)

Generally, the insurance companies will pay the amount to the policyholder if he/she survives at the end of the pre-determined policy term, called maturity.

Before the maturity, if the policyholder dies then his nominee (the person who will receive the death benefit amount) will get the amount.

Actually, in India, around 22000 people die per day (15+per hour) and it is very alarming for the individual as well as for society and also for those victim families.

In all honesty, it is a fantastic example of growing our savings for a better future.

In the first place, life Insurance is gaining speed in India nowadays.

People of India are more or less aware of its importance.

Moreover, savings conscious Indian people know that it is an extremely necessary policy for our family security as well as future savings.

At present, as per the Economic Survey 2018, life insurance accounting to a meagre 2.72% of the Indian population.

Choosing Plans

The following steps are needed to start a life insurance policy.

1. Determine need – Before purchasing a life insurance policy, we have to decide our need. It includes computing sum assured i.e. Insurance amount, type of policy, the premium to be paid, the term, maturity amount.

2. Now we should choose the best or more suitable policy at that time.

If pocket permits we can take more than one policies at a time. Otherwise, we may add new policy according to his requirements at any time.

3. Choose the Company-Choose the insurance company.

Pay the premium –  Now pay the premium and purchase the policy. In the case of regular premium, we have to pay a premium amount after a regular and fixed duration. We must pay the premium on the next due date.

4. Avail the cover– Pay the premium time and continue with the insurance benefit or may miss the insurance benefit in case of a claim.

5. On death – In case of the policyholder dies during the policy period, the company will pay the sum assured plus a bonus if any to the nominee. On survival/maturity -At maturity, a maturity amount is payable to the policyholder.

6. Some policy continues insurance even after maturity and ends with the death of the policyholder.

7. Some policies provide an option of cover to the spouse of the insured person. These policies will terminate after the death of the spouse.


Documents Required to take Life Insurance policies.

Some documents are required by the Insurance providers to process an application. These include:

  • ID proof
  • Passport,
  • driving license,
  • Aadhar,
  • Voter etc.
  • Address proof–A rental agreement, utility bill, Passport, driving license, Aadhar, Voter etc.
  • Age proof–PAN card, Aadhar (printed date of birth), passport driving license, Voter ID, etc.
  • Proof of income– Form 16A, IT return, payslip, bank account summary (required for higher sum assured)
  • Recent photograph–A recent passport size photograph
  • Medical certificate–A medical certificate may be needed in some cases (above 50 years of age.)

Also, read Grow our savings for a better future.


1.Peace of Mind -The Policy-holders feel peace of mind, and Decrease the stress of life. They know in case of any unfortunate event their loved ones will be taken care of by the insurance amount. They fill relaxed. Additionally, peace of mind indirectly helps sound and sufficient sleep, the key to being healthy. (Also read, different phases and benefits of deep sleep).

2. Protects the interests of the family -We all work to deliver the best for our families. A meticulously chosen life insurance plan guarantees that the insurer family will be financially taken care of even after his/her death. One may choose a policy to fund the higher education of child or wedding of a loved one or old age provision etc.

3.Savings -It helps as very good future savings.

4. Tax benefits -One may get tax benefits or tax rebates under section 80D of the Income Tax Act (At present Rs 150000, maximum). The amount received against death benefit is tax-free. The maturity amount is also tax-free in most of the cases.

5.Loan – One may get a loan against the policy at least after 3 years of successful premium payment and against in-force policies (may vary from insurer to insurer).



Life Insurance Plans

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To tell the truth, there are different types of policies and each and every type also provide various plans and tables.

Most importantly, before choosing an insurance policy we have to know clearly different types of insurance policies and then choose which type of policy and which table will be suitable and purposive for us.

Different types of insurance policies:

Generally, different types of insurance policies are

  1. Whole-life: -with the profit or without profit- whole life coverage
  2. Term plan: purely risk coverage.
  3. Endowment: Insurance and savings
  4. Money-back: Insurance and periodic returns and savings
  5. ULIP: Insurance and Investment. Involves some risk, but can grow fast.
  6. Pension: Savings for Retirement and old age pension and insurance
  7. Children Plan Insurance and Savings for children’s future i.e. education or marriage or business or others.
  8. Critical Illness: Insurance life and health and savings.


Life Insurance companies in India

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In fact, LIC is no doubt number 1 in the Indian life insurance industry. They hold more than 60%of total business.  Other companies position is changing almost every year. 

Claim —

On the death of the life assured – In case of death claim the nominee will fill the claim form and submit it with policy bond and death-certificate. He/she must produce his bank details and ID proof. In case of accidental death, the nominee has to produce Post Mortem report and other pieces of evidence according to the requirement.


The signed discharge voucher, original policy Bond, and Bank Account details should be submitted to get the maturity benefit. The insurer will be paid the amount to the policyholder once the process of documentation is complete

Who has seen the future? Future is very uncertain. It is true that we will die one day. But nobody knows that particular date. Mind it, one thing is very sure that if an earning member of a family dies the family may face a financial dilemma.

Also, know The Importance of CHILD INSURANCE PLANS 

It increases if he is the only earning source of the family. In those cases, his beloved ones after his death face a tremendous financial crunch. Surely and certainly nobody wishes that situation. To avoid such unforeseen situation one, undertake life insurance policy/policies.

Life Insurance Policy is your best financial friend—if you are living or non-living. It protects the insured family.

About the author

Banani Chakraborty


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