MAJJI KANTHA RAO
LIC Agent
Purushottam Nagar
RAJAM - 532 127
Srikakulam Dist., A.P, India.
Phone: 08941 252345
Mobile: 94401 95366
Life insurance in India made its debut well over 100 years ago.
In our country, which is one of the
most populated in the world, the prominence of insurance is not as widely understood, as it ought to be. What follows is an
attempt to acquaint readers with some of the concepts of life insurance, with special reference to LIC.
It should,
however, be clearly understood that the following content is by no means an exhaustive description of the terms and conditions
of an LIC policy or its benefits or privileges.
For more details, please contact our branch or divisional office. Any
LIC Agent will be glad to help you choose the life insurance plan to meet your needs and render policy servicing.
Life insurance is a contract that pledges payment of
an amount to the person assured (or his nominee) on the happening of the event insured against.
The contract is valid
for payment of the insured amount during:
- The date of maturity, or
- Specified dates at periodic intervals, or
- Unfortunate death, if it occurs earlier.
Among other things, the contract also provides for the payment of premium periodically to the Corporation
by the policyholder. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting
certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner.
By and large, life insurance is civilisation's partial solution to the problems caused by death. Life insurance, in short,
is concerned with two hazards that stand across the life-path of every person:
- That of dying prematurely leaving a dependent family to fend for itself.
- That of living till old age without visible means of support.
A contract of insurance is a contract of utmost good faith technically known as uberrima fides. The
doctrine of disclosing all material facts is embodied in this important principle, which applies to all forms of insurance.
At
the time of taking a policy, policyholder should ensure that all questions in the proposal form are correctly answered. Any
misrepresentation, non-disclosure or fraud in any document leading to the acceptance of the risk would render the insurance
contract null and void.
Protection: Savings through life insurance guarantee full protection against risk of
death of the saver. Also, in case of demise, life insurance assures payment of the entire amount assured (with bonuses wherever
applicable) whereas in other savings schemes, only the amount saved (with interest) is payable.
Aid To Thrift:
Life insurance encourages 'thrift'. It allows long-term savings since payments can be made effortlessly because
of the 'easy instalment' facility built into the scheme. (Premium payment for insurance is either monthly, quarterly, half
yearly or yearly). For example: The Salary Saving Scheme popularly known as SSS, provides a convenient method of paying
premium each month by deduction from one's salary. In this case the employer directly pays the deducted premium to LIC.
The Salary Saving Scheme is ideal for any institution or establishment subject to specified terms and conditions.
Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that has acquired loan value. Besides,
a life insurance policy is also generally accepted as security, even for a commercial loan.
Tax Relief: Life
Insurance is the best way to enjoy tax deductions on income tax and wealth tax. This is available for amounts paid by way
of premium for life insurance subject to income tax rates in force. Assessees can also avail of provisions in the law
for tax relief. In such cases the assured in effect pays a lower premium for insurance than otherwise.
Money
When You Need It: A policy that has a suitable insurance plan or a combination of different plans can be effectively
used to meet certain monetary needs that may arise from time-to-time. Children's education, start-in-life or marriage
provision or even periodical needs for cash over a stretch of time can be less stressful with the help of these policies.
Alternatively, policy money can be made available at the time of one's retirement from service and used for any specific
purpose, such as, purchase of a house or for other investments. Also, loans are granted to policyholders for house building
or for purchase of flats (subject to certain conditions).
Any person who has attained majority and is eligible to enter into a valid contract can
insure himself/herself and those in whom he/she has insurable interest.
Policies can also be taken, subject to certain
conditions, on the life of one's spouse or children. While underwriting proposals, certain factors such as the policyholder’s
state of health, the proponent's income and other relevant factors are considered by the Corporation.
Prior to nationalisation (1956), many private insurance companies would offer insurance to female
lives with some extra premium or on restrictive conditions. However, after nationalisation of life insurance, the terms under
which life insurance is granted to female lives have been reviewed from time-to-time.
At present, women who work and
earn an income are treated at par with men. In other cases, a restrictive clause is imposed, only if the age of the female
is up to 30 years and if she does not have an income attracting Income Tax.
Life insurance is normally offered after a medical examination of the life to be assured.
However, to facilitate greater spread of insurance and also to avoid inconvenience, LIC has been extending insurance cover
without any medical examination, subject to certain conditions.
An insurance policy can be 'with' or 'without' profit. In the former, bonuses disclosed,
if any, after periodical valuations are allotted to the policy and are payable along with the contracted amount.
In
'without' profit plan the contracted amount is paid without any addition. The premium rate charged for a 'with' profit policy
is therefore higher than for a 'without' profit policy.
Keyman
insurance is taken by a business firm on the life of key employee(s) to protect the firm against financial losses, which may
occur due to the premature demise of the Keyman.
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