Taking
a life insurance responsibly can help us live the life we want to and protect our
family after we are not there. Without life insurance many people would be left
destitute in the event of an unexpected disaster. Besides providing for
financial security in the case of one's untimely death, it can be used to
accumulate a kitty for the old age, systematically build assets for funding one’s
child's education and also for saving on taxes.
Let
us look at the roles of life insurance plays in our life –
Life insurance as a “risk cover”
First
and foremost, the primary task of life insurance is to ensure protection
against losses that we are not prepared for, to help outlast life’s
unpredictable losses. Designed to safeguard against losses suffered on account
of any unforeseen event, insurance provides us with that unique sense of
security that no other form of investment provides. By buying life insurance, we
buy peace of mind and are prepared to face any financial demand that would hit
the family in case of an untimely demise.
To
provide such protection, insurance firms collect contributions from many people
who face the same risk. A loss claim is paid out of the total premium collected
by the insurance companies, who act as trustees.
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