Life insurance is a necessity to keep your family financially protected, even when you are not around to take care of them. But apart from the financial protections, life insurance has many other benefits. Read on to know more.
Buying a life insurance policy is a necessity for all. However, it is quite astonishing that only a small percentage of Indians have an insurance cover. But why is life insurance cover so important? No matter how much you earn, a financial contingency can occur at any time. Be it a sudden illness that an accident that leads to a fatal consequence, it would have a devastating effect on your family. Not only will they feel the void of your presence, but they may also struggle to pay for the usual household expenses.
This is wherelife insurance is such an important financial tool that assures to keep your family protected even in your absence. When you invest in an insurance cover, the lender pays your family or the appointed nominee a death benefit in return of the premium you pay over the years. Here are other important reasons why life insurance is required:
Pay off the debts
You would surely not want to leave your family struggling to pay off the debts while striving to make end meets. If you have any debt like a home loan, a car loan or credit card bills, if you have an appropriate insurance cover, you can use the payout to repay the debts.
Accomplish long-term financial goals
Since insurance is a long-term financial instrument, it can help you accomplish your long-term financial goals like building a corpus for retirement, home purchase or paying for your children’s wedding. Many insurance schemes invest a part of your premium in various investment products and provide you with valuable returns. However, while investing in any such policy, make sure that you carefully read the fine print to be aware of risks and returns.
Support your retirement goals
It is the innate desire of everyone that their retirement funds would last for as long as they live. By investing in an annuity-based insurance plan, you can get a regular stream of income and supplement your retirement goals.
If you buy a unit-linked life insurance policy or a traditional policy, you must pay a premium every month. The amount you pay is higher than the cost of insurance. The balance amount is invested in other products, which accrues interest. Thus, insurance is a great way to inculcate the habit of monthly savings and earn valuable returns in the long run.
Apart from the protection and the long-term benefits, investing in insurance also allows you to enjoy tax benefits. No matter what type of insurance plan you buy, you can claim tax deduction on the amount you pay towards premium to a maximum limit up to 1.5 lakhs under Section 80C of the Indian Income Tax Act. Also, the death benefit or the payout you receive is tax-free under Section 10 (D).
Peace of mind
Death is inevitable. However, with an insurance policy, you can keep your family protected even in the face of the tragedy. Knowing that your family members’ future financial needs are secured, you can have the peace of mind.
Thus, with so many amazingbenefits of life insurance, make sure that you too invest in the right policy to suit your needs. Also, do your research well about the insurance company and choose the one that has a good payout rate and offers the flexibility to choose your own mode of premium payment and receiving the death benefit.