With uncertainties increasing all around, life insurance is proving to be an ultimate lifeline. Having an insurance cover ensures that the dependents of the bread-winner of the family do not suffer financially in their absence. An increasing number of people in India are realising the importance of having a life insurance policy, especially during the pandemic. COVID-19 has been a real eye-opener for a lot of people as to why and how a life insurance cover is a financial safety net in times of need.
Lack of awareness is one of the major impediments for widespread adoption of life insurance. The availability of different types of insurance products also confuses some people. But most life insurance policies function in a similar manner. Let us understand what is a life insurance policy and how does it work?
A life insurance policy is a contract between the policyholder and the insurance company, with the promise that the insurer will pay a pre-decided amount to the nominee in exchange of premiums. The pre-decided amount could be the maturity amount paid after the policy tenure gets over or the death benefit paid if the unfortunate happens during the policy term. In a nutshell, all the benefits of a life insurance policy are tied to the payment of premiums, which is why one should opt for a premium that can be easily serviced. A life insurance policy works only if the policyholder has paid all premiums regularly. Precisely, life insurance policies are best known for providing life cover to the policyholder.
Fixed Deposit is the most popular investment choice in India. Like Banks, RBI permits selective corporates & NBFCs to accept deposits for a fixed interest rate and tenure. Such deposits are called Company or Corporate Fixed Deposit.
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