Why should we take life insurance? What are it’s benefits ?

Kathmandu: Life insurance is both a type of savings and an investment. A financial instrument that carries risks. Those people who are insured in the insurance company pay the specified amount every year. If those people are at risk, i.e. if any incident happens, then the insurance companies will pay the compensation.

If there is no incident in the life of the insured persons until the specified period of time, the companies will return the amount along with the bonus and interest. Life insurance helps it’s insured by freeing them from fear.

There are many benefits of life insurance. Bonus is received from insurance. People have life insurance. After the expiry of the insurance period, if no incident has occurred in the insured, the bonus is added to the total sum insured. Due to natural disasters that occur from time to time, there has been some changes in the way Nepalese think about insurance in these days.

Natural disasters like earthquakes, floods, landslides, fires and droughts have increased the interest of Nepalese towards insurance and there has been a change in thinking. Still, the insurance business has not flourished due to the fact that many citizens do not have enough information about insurance. Insurance is a means of securing the future of oneself and the family, as it helps to minimize every risk in people’s life.

Also, insurance companies are regulated by Nepal Insurance Authority. In some cases, if the life insurance company insured by us does not provide claim payment, there is a provision that the insured can file an application with the insurance authority.

Benefits of Life Insurance:    

Transfer of financial risk:

A person spends the money he earns on his family’s upbringing, education, and health. The situation cannot always remain the same. Therefore, taking into consideration the future risk, life insurance should be taken to reduce it to some extent. In terms of getting some relief from major problems in life, the transfer of financial risk can be benefited from insurance.

Long term capital formation:

Even if people want their high economic level and quality of life, they cannot easily achieve it. For that, you have to save by making efforts, patience and planning. As insurance has to be paid at a certain time, savings are made on that basis. If the capital created in this way can be directed towards insurance, then they can secure their risk in the future in one side and also if there is not any incident then they can get those money back with bonus after the period of insurance is completed.

Children’s Education:

Children’s education can be insured as desired. Insurance can also play an important role in providing high quality education to children. The problems that arise during studies can be solved to a great extent through life insurance. It can be said as the saving done now for their future studies in higher level.

Secures the future:

Human needs are unlimited. This is the law of economics. People’s needs are increasing one after the other. That is also true. Therefore, insurance is indispensable to fulfill various future plans. Planning to meet any need requires saving money. If the savings are made in the insurance sector rather than in the bank, on the one hand there is no risk of wasteful spending, on the other hand, the problem that occurs in future becomes easy to solve through the help of insurance claim amount. Because of that, you can make future plans through life insurance so that your plans do not fail.

Freedom from loan and Debt problems:

Most of the people in Nepal are dependent on borrowing money or loans, and there is no plan for emergencies. Because of that, the problem that might occur in future in the form of emergency case can also cause tension in the family. Whereas if the person has taken insurance then his upcoming risk will be covered by the insurance due to which the tension that the person will take in future will be reduced in present. Similarly, one who has taken insurance, he/she won’t have to take tension if they face any incident in future. Insurance company will pay the claim amount to the relatives of the insured if he/she died unnaturally or due to any incident.