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This is so because, unlike other savings plans, it affords full protection against risk of death. In case of death, the full sum assured is made available under a life assurance policy, whereas under other savings schemes the total accumulated savings alone will be available. The latter will be considerably less than the sum assured, if death occurs during early years.

A savings deposit can be too easily withdrawn. Many may not be able to resist the temptation of using the balance for some less worthy purposes. On the other hand, the payment of life insurance premiums becomes a habit and comes to be viewed with the same seriousness as the payment of interest on a mortgage. Thus insurance, in effect, brings about compulsory savings.

The life Assured can name a person or persons (Nominee/s) to whom the policy moneys would be payable in the event of his death. The proceeds of a Life Insurance policy can be protected against the claims of the creditors of the Life Assured by effecting a valid assignment of the policy. A Married Woman's Property Act policy constitutes a trust in favour of the wife and/or children and no separate assignment is necessary. The beneficiaries are fully protected from creditors except to the extent of any interest in the policy retained by the assured.

It often happens that a provision which a husband or father has made through insurance is quickly lost through speculative or unwise investment or by unnecessary expenditure on luxuries. These contingencies can be provided against in the case of insurance. The policyholder can arrange that in the event of his death the beneficiary should receive instead of a single sum (i) payment of the net claim amount by equal instalments over a specified period of years or (ii) payment of the claim amount by smaller monthly instalments over the selected period followed by a lump sum at the end thereof.

After an initial period, if the policyholder finds himself unable to continue payment of premiums he can surrender the policy for a cash sum. Alternatively, he can tide over a temporary difficulty by taking a loan on a sole security of the policy without delay. Further a life insurance policy is sometimes acceptable as security for a commercial loan.

For computing Income-Tax the Indian Income Tax Act allows deduction of certain portion of the taxable income of individuals or Hindu undivided families, which is diverted to payment of life insurance premiums, from income chargeable to tax in India. When this tax relief is taken into account it will be found that the assured is in effect paying a lower premium for his insurance.