Life Insurance & Its Importance – Explained in Simple Terms

Accessibility to personal transport has been increasing at a very fast pace over the last few decades in India. If we look at the 70’s and the early 80’s, majority of the population did not have a motor vehicle. Even if somebody owned one, it was a two-wheeler. Cars were only for the super-rich and high flyers of the society. Not just this, vehicles were not available easily and people had to wait months before they got their hands on one. Because of this, traffic and traffic related accidents were comparatively very less.

If we come to the nineties, the scene started changing with the opening up of the economy. Market expanded, people got new opportunities, started making more money and had more to spend. The supply scenario of automobiles also improved as many existing players increased production and lot of new ones entered the market. And this is precisely what led to a sudden and tremendous increase in traffic on our roads.

Unfortunately, the infrastructure has not been able to cope with this sudden influx. The vehicles on our roads are increasing rapidly but our roads are not being maintained and developed to support such a magnitude. And as a byproduct of this development, it has led to an increase in the number of accidents in our country. Additionally, the lack of respect for traffic rules among people and inefficiency of authorities to strictly implement them is also further aggravating the issue.

If we look at some statistics, 450,000 accidents occur in India every year. In these accidents, around 150,000 people die. So, you know how scary the situation is! Nobody is safe and if someone believes otherwise, he is fooling himself. Death is a reality which nobody can ignore. If it happens untimely, it not just causes grief to the loved ones but, can also throw many lives in the darkness of uncertainty.

But if the departed was covered by life insurance like term insurance, the situation could be different. In such cases, the family or the nominee of the deceased gets a certain sum of money. No doubt that this cannot take the grief away but, it definitely can relieve the family of the tension of not having resources to survive. Thus, in times and situations such as ours, financial instruments like life insurance are of immense importance.

Types of Life Insurance

Let’s have a look at the different types of life insurance options available in the market:

  1. Term insurance: Term insurance is a type of risk cover in which the sum assured is only paid in case if the insured person passes away.
  2. ULIP: It stands for unit linked insurance plan and is an insurance plus savings scheme. In this scheme, a portion of the premium paid goes as a fee to life cover and the remaining is invested like a mutual fund.
  3. Endowment plans: In such plans, a certain assured amount is either paid at the time of maturity of the policy or in case of death of the insured person (if it happens before the policy maturity).
  4. Money back plan: In this type of policy, the sum assured is paid in certain percentages at regular intervals to the insured person.
  5. Whole life insurance: This type of insurance policy remains in force for the whole life of the insured person.

It has become extremely easy these days to buy any of the above insurance types. All major insurance providers have set up their websites where all the information about different plans and their benefits are easily accessible. Not just this, it is now also possible to initiate the buying process from these websites very easily. Additionally, the other channel of interactions with the companies like their call centres or offices are also easily reachable. Looking at how important it is for one to secure oneself and one’s family from the risk of financial difficulties in a situations like the ones discussed above and how easy it has become to purchase insurance, it has turned out to be a must buy financial instrument in our times.

About AEGON Life:

Launched in July 2008 with pan-India operations, AEGON Life Insurance Company Limited has a vision to be the most recommended new age life insurance Company. As a joint venture between AEGON – world’s leading financial services and Bennett, Coleman & Company – India’s leading media house, AEGON Life Insurance adopts the power of global expertise to facilitate a direct to customer approach, leveraging digital platforms to bring transparent solutions, and to prioritize customer’s needs. Our product portfolio includes term life insurance plan, pension plans, unit-linked insurance plans (ULIPs), health insurance plans, child education plans, and more.