What is life insurance? Why is it necessary?

What is life insurance? Why is this necessary?
Life Insurance is a financial plan that provides financial security related to human life. In simple terms, life insurance is a contract between an individual and an insurance company, in which the individual (insured) regularly saves a premium and the insurance company enters into a legal agreement to give a sum assured and bonus after the death of the insured or a certain period of time.

Why is life insurance necessary?

Life insurance is essential not only for death, but also for family financial security, savings, and future planning.
The main reasons are as follows:-
1. Financial protection of the family
– If the main earning member dies, the sum assured helps the family survive financially.
- Can be used for children's education, household expenses, and to pay off debts.
2. Savings & Investment
- Insurance plan is also a means of saving.
– Endowment or Money Back plans prepare funds for the future.
3. Risk Management
- Insurance helps in case of accident or serious illness.
– Insurance converts risk into “financial security”.
4. Tax Benefit
- You can get income tax rebate by investing in life insurance in Nepal.
5. Retirement Planning
– Long term insurance can be a source of income in old age.
6. Peace of Mind
- The feeling that your family is safe is a great satisfaction.
Note:- The writer is the Finance and Commerce Correspondent of Mediabaaji.com and Senior Business Officer of National Life Insurance Company Limited.