While many things in life are left to chance, there are ways to ensure that you are prepared for them. Insurance is a crucial financial decision to help deal with life’s uncertainties. When you invest in an insurance policy for yourself and your loved ones, it promises to help you deal with times of crisis.
Many people only have a basic understanding of insurance policies. You pay a certain amount of premium to the insurance provider, and in return, they offer financial compensation in the event of happening of the insured event. There are different kinds of insurance policy that cover various scenarios.
Many might not be aware that there is a difference between life insurance and general insurance. It is essential to understand them thoroughly to make a sound financial decision.
What is Life Insurance?
A life insurance policy is a life cover to put it simply. It is a contract that bounds the insurance provider to offer financial compensation to the beneficiary in case of the unfortunate events covered under the policy, like the insured’s untimely demise. In exchange, the policyholder pays a predetermined amount as regular premiums or single premium.
The life insurance policy covers a certain period, and if the policyholder survives it, they are eligible for a maturity benefit, as per the terms of the contract. People opt for life insurance policies to provide financial protection in case of unprecedented circumstances.