Life Insurance is of great importance to individuals, groups, business community and general public. Some of the main benefits of life insurance are given below.
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Protection against untimely death
Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family members get a fixed sum of money in case of death of the assured.
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Saving for old age
After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age.
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Promotion of savings
Life insurance encourages people to save money compulsorily. When a life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums, only surrender value can be returned to him. In case of surrender of policy, the policyholder gets the surrendered value only after the expiry of duration of the policy.
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Initiates investments
Life Insurance Corporation encourages and mobilizes the public savings and channelizes the same in various investments for the economic development of the country. Life insurance is an important tool for the mobilization and investment of small savings.
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Credit worthiness
Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business.
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Social Security
Life insurance is important for the society as a whole also. Life insurance enables a person to provide for education and marriage of children and for construction of house. It helps a person to make financial base for future.
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Tax Benefit
Under the Income Tax Act, premium paid is allowed as a deduction from the total income under section 80C.