Life
Insurance is the contract between the insurer
and the person who is insured against the risks to his life. Under this, the
insured person pays the premium regularly to insurance company,once a policy is
taken, and in lieu of this, the insurer promises to pay a fixed sum of money at
the time of the death of insured or on the expiry of a specified period of
time,whichever is earlier.The payment for life insurance is certain but the
event for which insurance is taken is not very certain.
Life insurance is of utmost
importance for all individuals, businesses, communities, society and general
public at large. It offers protection against loss of income and compensate the
titleholders of the policy. It provides many benefits, some of which are as
follows:-
- It provides protection to the family members or
dependents against untimely death of an insured person.
- It facilitates savings for old age to enjoy secured and
peaceful life as the earning capacity of a person is reduced after
retirement.
- It encourages people to save money by making them
obliged to pay premium regularly when a life policy is taken.
- It helps to mobilise savings of the public to
channelise it for investment and thus promote economic development of the
country.
- It (policy) can be used as a security to raise loans
and thus improves credit worthiness of an individual or a business.
- It also has tax benefits as under Income Tax Act, premium
paid is allowed as a deduction from the total income.
Source : http://business.gov.in/