Why Insurance?

If you go through a situation where you are financially constrained to surrender your life policy, you will lose the cover for the entire policy even if you do not need the entire surrender value of the policy. For instance if your policy's surrender value is $ 1 Million and you need $ 4 hundred thousand cash, you will have to cancel the entire policy and lose life over completely. had this policy of $ 1 million been taken as 2 policies of $ 5 hundred thoudand each, you could have surrendered just one policy. You would still remain covered for $ 5 hundres thoudand!

Breaking up your life policy help in this count too. Taking the same example, instead of having one $ 1 Million policy, having $ 200,000 to $ 500,000 policies helps allocate your estate among your children ( this is an ideal situiation if you have 2 children - each child gets proceeds from one policy).

You can use your life policy as a pledgeable security while taking a loan. Lenders as well as the insurer usually offers loans up to a specified percentage of the surrender value of the policy. If you dont need a loan to the extent of the amount you are eligible for, you will still have to offer the entire policy as security to the lender till the repayment of the loan. During the period the policy remains with the lender, he is eligible for all the rights to the policy. However if you break up your policies, you need to pledge only just that many policies to raise the necessary loan.

Section 88 of the Income Tax Act states that premium paid on a life policy is eligible for tax rebate. The beneficiary may be different from the premium paying person. For instance your wife can pay premium for your policy and claim the tax benefit. Breaking up for life policy helps in this case too. If the premium paid on a consolidated policy is higher than the amount of rebate you need, you can break the policy to claim the entire tax rebate. This can be done by another tax paying family member paying the premium for one policy and claiming the rebate.

You can divide your life insurance portfolio into a number of policies spread over different tenors to give you a stream of steady income to take care of your life's financial commitments like children's education and marriage, buying property, asving up for your old age etc. Check out specific plans structured by insurers specifically for these purposes.

Life insurance is an insurance coverage that pays out a certain amount of money to the insured or their specified beneficiaries upon a certain event such as death of the individual who is insured. This protection is also offered in a Family takaful plan, a Shariah-based approach to protecting you and your family.

The coverage period for life insurance is usually more than a year. So this requires periodic premium payments, either monthly, quarterly or annually.

The risks that are covered by life insurance are:

Premature death
Income during retirement
Illness


The main products of life insurance include:

Whole life
Endowment
Term
Investment-linked
Life annuity plan
Medical and health

General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance. For more comprehensive coverage, it is vital for you to know about the risks covered to ensure that you and your family are protected from unforeseen losses.

The coverage period for most general insurance policies and plans is usually one year, whereby premiums are normally paid on a one-time basis.

The risks that are covered by general insurance are:

Property loss, for example, stolen car or burnt house

Liability arising from damage caused by yourself to a third party
Accidental death or injury

The main products of general insurance includes:

Motor insurance
Fire/ Houseowners/ Householders insurance
Personal accident insurance
Medical and health insurance
Travel insurance

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