Question

Discuss the advantages of insurance to the public.

Explain the benefits of taking an insurance policy.

Explain the importance of life insurance.

Answer 1

1. Protection: Insurance protects against several types of risks. Life insurance provides financial assistance to families in the event of the policyholder's untimely death.
2. Financial aid: In case of financial need, the policyholder can take a loan against the policy. The loan can be repaid in easy installments.
3. Provision for old age: People can make financial provision for old age by taking life insurance policies. They can lead their retired lives happily and without depending on their families for money.
4. Tax relief: Under the Income Tax Act, an income taxpayer can reduce his tax liability by taking out a life insurance policy.
5. Savings: Life insurance encourages the habit of thrift and savings. After taking out an insurance policy, a person saves money to pay regular premiums. On the maturity of the life policy, the insured receives a lump sum. This amount can be utilised for higher education/marriage of children or construction of a residential house. Thus, life insurance serves as a means of protection as well as a means of savings.