8478

FAQ

Question: What is a Life Annuity?

Answer: A life annuity may be defined as a contract whereby the insurance company agrees, in consideration of a certain payment of payments, to pay to the beneficiary, a fixed regular income during a given status. The status may be the duration of one or more than one life. The person, during whose life the annuity is paid, is called the annuitant or nominee. The prince of the annuity paid by the annuitant at the beginning of the contract is called premium, consideration or purchase money. The periodical payment to be made by the insurance company is called the annuity.

Question: What are the main needs that a life insurance policy serves?

Answer: Life Insurance protects against financial losses resulting from pre-matured death. When an insured person dies, the proceeds of the policy are paid to the beneficiary designated in the policy Annuities protect against losses produced by economic death upon reaching retirement age. They p[ay retirement income as long as the annuitant lives.

Life Insurance basically covers life risk. If a youth on the threshold of commencing his career takes a life insurance policy, it fairly covers the following purposes:

Savings: A habit of thrift and savings is introduced to him right from the onset of his earning. A small portion of his income grows to the extent of the sum assured to mature after a long term say, ten, fifteen, twenty or twenty five years. He will get the sum assured along with near like amount as bonus, at the hours of need in the mid or eve of his life. He can even plan a policy tenor to match the specific need that is going to arise in future say, children's education or marriage etc.

Tax Plan: Policyholders enjoy income tax concessions to the extent of the premium paid on their annual income during the currency of the policy.

Security: The paid-up value of a life policy is well accepted as an assuring and sure security for creating a temporary loan or long tenn credit such as Housing or Education Loan.

Life Cover: The dependents of the policyholder get the sum assured in case the policyholder dies during the live tenor of the policy. It helps the dependents who have been enjoying the fruit of his income all along, not to feel left in a lurch, but to consolidate their position until they arrange for an alternative source of income.

So a life policy serves as an avenue for savings, tool for tax planning, and acceptable security for creating a loan and a solace at the time of distress to the dependents of the policy holder in the eventuality of his death.

Thus life insurance is a different and somewhat superior product to general insurance with the following distinct differences:

  1. In general insurance, the insured amount is payable only on the occurrence of an event whereas life insurance has a definite maturity on the expiry of the policy tenor or the death of the insured in between.
  2. The beneficiaries in case of general insurance may even be third parties-suffering damages on account of accident, whereas in case of life insurance only the surviving insured or his surviving nominee gets the benefit.
  3. Occurrence of damage or loss is mandatory for claiming insured amount under general insurance, whereas a life insurance policy mostly self liquidates on maturity of the policy. Life insurance is an improved version of general insurance, in addition to suitable features satisfying the multifaceted needs of modem society. The success of the insurance industry depends upon meeting the rising expectations of the policyholders, who are the real kings in the liberalized insurance market.)


<< Prev   2   3   4   Next >>

Request a call back!!

Customer Speak
Jili Sharma:
"Very useful and interesting site... will surely visit again"

Dib Chaudhuri, 40: I found this site to be the fastest, most accurate in generating a health insurance quote for me. It helped me in identifying the policy which was the best value for money.

Lakshmi Rao Now no agent can fool me anymore
News
Third Party Car Insurance rates...
Mar 31, 2014: The revision of the...
Religare Health Insurance explores...
Oct 24, 2013: The bancassurance...
Insurance for HIV Positive People...
Oct 23, 2013: Insurance for HIV...
Max Life Insurance rewards its...
Dec 28, 2012: For a policyholder...
Private insurer Max Life Insurance...
Nov 16, 2012: The first half of...
Common Third Party Administrator...
Nov 08, 2012: The general...
Healthy Growth Figures for both...
Oct 31, 2012: The first half of...
HDFC Standard Life Launches New...
Oct 30, 2012: The market for...
Car Insurance - Premium calculation...
Oct 18, 2012: Car insurance in...
Postal Life Insurance and Rural...
Oct 16, 2012: While the whole...
General Insurance gets two more...
Oct 12, 2012: The general...
What the Insurers Need ...
Oct 11, 2012: The insurance...
Max Life Insurance disinvests 5%...
Oct 09, 2012: The Insurance...
IRDA to step in over cancellation...
Oct 08, 2012: On July 1st, 2011...
Experts speak on FDI reforms in...
Oct 06, 2012: Sometime back in...
India First Life Insurance Launches...
Oct 05, 2012: The days of...
Government plan to increase FDI cap...
Jul 04, 2012: Normal 0 ...
United India Insurance pays Rs 1.16...
May 18, 2012: United India...
Mitsui Sumitomo Insurance to buy...
Apr 19, 2012: Normal 0 ...
IRDA introduces the declined risk...
Mar 26, 2012: The last fiscal was...
Indian Life Insurance Companies Vs...
Mar 22, 2012: The Insurance...
2012 - The LIC ONGC story so far...
Mar 20, 2012: For this fiscal...
Sahara India Life Insurance...
Mar 20, 2012: Sahara India Life...
LIC joins the Online Term plan...
Oct 17, 2011: Life Insurance...
Sanlam Group invests in Shriram...
Sep 12, 2011: Shriram Group has...
Customer Speak
  • We will help you save money
  • Neutral and unbiased
  • Vast choice of insurers
  • Make insurance less confusing
HDFC Banner

PolicyTiger.com - Hot Topics