The correct answer is C. Protection and Savings.
A life insurance policy is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the death of an insured person (often the policy holder). Depending on the contract, other events such as terminal illness or critical illness can also trigger payment. The policy holder typically pays a premium, either regularly or as one lump sum. The premium is used to pay for the insurer’s administrative costs and to build up a reserve fund to pay future benefits.
Life insurance can provide financial protection for your loved ones in the event of your death. It can also be used to save for retirement or other financial goals. There are many different types of life insurance policies available, so it is important to choose one that meets your needs.
Here is a brief explanation of each option:
- A. Protection and security: This option is incorrect because life insurance is not a guarantee of protection or security. The insurer may not be able to pay the benefit if the insured person dies, for example, if the insurer goes bankrupt.
- B. Insurance and Assurance: This option is incorrect because life insurance is not the same as insurance. Insurance is a contract that protects you against financial losses caused by events such as fire, theft, or illness. Life insurance is a contract that pays out a sum of money in the event of your death.
- C. Protection and Savings: This option is correct because life insurance can provide both protection and savings. It can protect your loved ones financially in the event of your death, and it can also be used to save for retirement or other financial goals.
- D. Protection and Tax relief: This option is incorrect because life insurance does not provide tax relief in all cases. In some cases, the death benefit may be subject to income tax.