Life Insurance: Overview

Although it is not immediately obvious, insurance forms a critical part of your investment portfolio. It is not just important, it is necessary. Paying towards your insurance policy is a sacrifice done today to provide for needs in the future.

Life Insurance provides protection to your family. Your family gets a specified sum in a lump sum when they need it the most i.e., when you are not around. While the emotional loss cannot be mitigated, the lump sum received from an insurance company can help take care of your family's financial future. Life insurance thus helps:
 

8 Reasons for Life Insurance

1.Replace income for dependents
If people depend on your income, life insurance can replace that income for them if you pass away. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially.

2. Create an inheritance for your heirs
Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries.

3. Create a source of savings
Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of “forced” savings plan. This helps meet the future financial obligations of the person.

4. Sustain a Business
Key man Insurance or key person insurance is coverage that will protect the company in case of an untimely death or disability of a top salesperson, partner, executive, or business owner. Key man insurance provides peace of mind to business owners and shareholders alike knowing that the business can continue operations without any major disruptions in the event of a loss of a key employee.

5. Receive Tax benefit of up to NPR 20,000 per year.

6. Build the habit of thrift
Life Insurance is a long-term contract where, as a policyholder, you have to pay a fixed amount at a defined periodicity. This builds the habit of long-term savings. Regular savings over a long period ensures that a decent corpus is built to meet financial needs at various life stages.

7. Assure income through annuities
Life Insurance is one of the best instruments for retirement planning. The money saved during the earning life span is utilized to provide a steady source of income during the retired phase of life.

8. Mortgage Redemption
Insurance acts as an effective tool to cover mortgages and loans taken by the policyholders so that, in case of any unforeseen event, the burden of repayment does not fall on the bereaved family.
 

Types of Life Insurance:

1. Endowment Insurance Plans:
Endowment plans provide life insurance cover for a specified period. The important aspect is that on maturity i.e. if the insured survives the term of the insurance, he/she receives the sum assured at the end of the term.

2. Whole Life Insurance Plans:
A whole life insurance plan covers the entire life of the policy holder, not just for a specific period as in term insurance.

3. Term Life Insurance Plans:
These are plans that provide coverage at fixed rate of payments for a limited period of time, for a relevant term. There is no savings component in this type of a plan and is essentially considered an expense.

4. Money Back Insurance Plans:
Unlike ordinary endowment plans where survival benefits are payable only at the end of the endowment period, this type of a plan provides for periodic payments of partial survival benefits as follows during the term of the policy as long as the holder of the policy is alive.

5. Pension Plans:
A pension plan provides provide regular amounts of money (in annuities) during retirement.This plan starts with a regular premium contribution from the holder of the policy up until a specified age whereupon he/she starts receiving the pension amount.

The following plans are available to our customers:

  • Endowment Policy with Profits
  • Money Back Policy with Profits
  • Child Endowment Policy
  • Whole Life Endowment Policy
  • Policy for Women
  • Pension Plan


To know more about life insurance and discount offered to our customers, please contact any of our branches or call the Main Branch at 416 9030/40 x503. Or email us at: insurance@civilbank.com.np.