Why get Life Insurance?
- Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is loss of income to the household.
- Though human life cannot be valued, a monetary sum could be determined based on the loss of income in future years. Hence, in life insurance, the Sum Assured ( or the amount guaranteed to be paid in the event of a loss) is by way of a ‘benefit’. Life Insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.
Benefits of Life Insurance
- Protection- Life is unpredictable and full of uncertainties. The risk of an untoward incident such as death cannot be eliminated. In such a situation, your family will have to face financial constraints caused by the loss of your regular income. life insurance plan provides the safety net during such times. Your insurance provider is liable to pay the beneficiary or nominee the pre-determined death benefit, thus keeping your family protected even in your absence.
- Long-term savings- It is important to consider life insurance if you are seeking to make long-term savings. Such a product helps you to save systematically and build a corpus for your future. The accumulated amount may be used for multiple purposes, such as purchasing a new home, funding your child's future education or meeting his marriage expenses, among many others. What's more, life insurance plans also offer regular pay-outs in the form of annuities, and is therefore, an excellent method to meet your retirement goals.
- Investment- Unit-Linked Investment Plans (ULIPs) offered by life insurance providers are primarily investment instruments. This market-linked product acts as a tool to create wealth. ULIPs offer significant returns on the premiums paid towards the insurance policy. Most life insurance plans provide considerable returns during maturity, thus making it an attractive investment vehicle. Buying life insurance plan is a necessity. While many invest in such a plan, not all are aware of the numerous benefits it offers. Life insurance plans help your family tide over difficult times and provide them with financial support in your absence. Besides, availing of an insurance policy inculcates the habit of disciplined savings, thereby enabling you to build a good corpus. You may, therefore, opt to invest in a life insurance plan and fulfill your obligations in the best possible way.
- Financial Security- The most important benefit of life insurance is the financial security it offers to your loved ones. Upon the insured person’s death, a pre-specified sum assured is paid to the bereaved family to support them through the sudden financial struggles.
- Tax benefits- Your life insurance policy entitles you to certain tax savings. Annual premium payment up to Rs 1.5 lakh is exempted from tax, under section 80C of the Income Tax Act, 1961. In addition, while the death benefit is tax-free, the maturity benefit of policies with total premiums not exceeding Rs 5 lakh also enjoys tax exemption under section 10 (10D).
Types of Life Insurance
- Term Life Insurance: Provides a death benefit to beneficiaries if the policyholder dies during the policy term. It’s cost-effective and offers substantial coverage.
- Whole Life Insurance: Insures your entire life, with fixed premiums and a guaranteed death benefit. It also builds a cash value component over time.
- Child Insurance Policy: A secure investment for your child’s future, covering education, marriage, and other financial goals.
- Money Back Policy: Offers survival benefits at regular intervals during the policy term.
- Unit-Linked Insurance Plans (ULIPs): Combines life insurance with investment options, allowing you to invest in equity or debt funds
Buying life insurance plan is a necessity. Life insurance plans help your family tide over difficult times and provide them with financial support in your absence. Besides, availing of an insurance policy inculcates the habit of disciplined savings, thereby enabling you to build a good corpus. You may, therefore, opt to invest in a life insurance plan and fulfill your obligations in the best possible way.
