Answer to Question #255677 in Finance for Kajal

Question

Mr. Manohar is married and have two kids. He has recently undergone a surgery, which made him think about the financial security for his dependents after his death. Hence, he decided to meet his friend who was an insurance advisor to understand the life insurance policy and the various benefits attached to with this policy .Explain Mr .Manohar on life Insurance policy with its need. 

Answer 1

Solution:

A life insurance policy is a legal agreement between an insurer and a policyholder. In exchange for the premiums paid by the policyholder during their lifetime, a life insurance policy guarantees that the insurer will pay a sum of money to named beneficiaries when the insured dies.

The life insurance application must accurately disclose the insured's past and current health conditions, as well as high-risk activities, in order for the contract to be enforceable.

 

If you die, your life insurance benefits can help replace your income. This means that your beneficiaries could use the money to help cover essential expenses like a mortgage or college tuition for your children. It can also be used to pay off debts such as credit card bills or a car loan.

When the insured dies, the policy's named beneficiaries will receive the face value, or death benefit, of the policy.

Term life insurance policies have a set number of years before they expire. Permanent life insurance policies remain in force until the insured dies, ceases to pay premiums, or surrenders the policy.

Your family can reap far more advantages, such as:

·        Income replacement for years of unpaid work.

·        Getting rid of your mortgage.

·        Other debts, such as car loans, credit cards, and student loans, must be paid off.

·        Investing in your children's college education.

·        Assisting with other responsibilities, such as caring for elderly parents.