Why Life Insurance
Life insurance is a financial product that provides a payout to beneficiaries upon the policyholder’s death or after a specified period. It is designed to offer financial protection to the insured’s family, dependents, or other loved ones in case the policyholder passes away unexpectedly or reaches the end of the policy term. Here’s a detailed breakdown of why life insurance is important and the typical features of websites that offer it:
Types Of Insurance
Term Life Insurance
The most affordable form of life insurance,
Premiums of plans under this category are cheap
compared to other life insurance products.
In the event of an unfortunate demise
During the policy term, nominees will
receive the ‘Sum Assured’.
Whole Life Policy
As in the name, this type of policy covers an individual
for his/her entire life.
This type of insurance covers insurance and investment components.
The insurance part covers the nominee in the event of death
of the policyholder, and the investment component
helps the holder to borrow or withdraw against.
Endowment Plan
One main difference that endowment plans offer
from term plans is the Maturity Benefit.
This type of plan pays out sum assured along with profits under both scenarios (death & survival.
The profits that are availed in such plans are the result of investment in equities & debt.
Unit-Linked Insurance Plans (ULIPs)
As the name suggests, this plan is linked to the markets.
This type of plan are a variant of traditional endowment plan
and pay out a certain sum assured on death or maturity, whichever is earlier.
Money Back Policy
This type of policy gives out periodic payments over the policy term.
In case of the death of the policyholder, the beneficiaries get the full
sum assured, and if the holder survives the policy term, he/she gets the balance amount (sum assured).
Benefits Of Insurance
Most of us often tend to ignore the importance of sound policy as we think it is not required and what could possibly happen to us.
This leads us to believe that life insurance is not worth the money for but a sudden mishap/accident leaves us feeling fearful of the future-for us & our family.
There are no two ways about what an individual wants—financial security & protection—for which life insurance is the best option available. There are multiple advantages to availing a life insurance plan; let us glance at
them:
Offers Risk Cover
In case of an unfortunate event, you and your family are protected with a high-risk cover with low premium
Death Benefits
The sudden demise of a family member leaves the dependents grief-stricken, and during such situations, financial worries should be the least they should think of. An adequate life cover ensures that one's family is well taken care of in case of such incidents. The insurer pays up the bereaved family the sum assured along with any bonus or profits, as applicable.
Tax Benefits
Under Section 80C of the Income Tax Act, investments made in certain specified instruments are subject to tax rebates. Moreover, Section 80C is an effective way by which a salaried person can reduce his/her tax liability. Since life insurance premiums are taken into consideration, it can be a way that will help you reduce your tax burden.
Loan Facility
As per policy provisions, you can avail loan facility to meet any emergencies. The loan amount can be taken in a percentage of the sum assured of your life insurance.
Assured Returns and Income Benefits
Certain policies that offer money-back benefits help keep your family secure with regular & timely payouts. This income helps in meeting certain regular expenses like rent, bills, loans, etc.
Life Stage Planning
Insurance enables you to effectively plan for every life stage and needs during that stage. Life insurance can be viewed as a long-term investment instrument that provides solid financial support.
As per your life stage and risk appetite, you can fix and meet all your financial goals whether it is your child's education, wedding expenses, buying a dream home, or your retirement- all taken care of.
Safe Investment
Your money is invested in life insurance, which is safe, and returns are paid back on time. It also fetches good returns as the money is returned to the policyholder/beneficiaries as sum assured either on completion of the policy term or death, whichever is earlier.
Why Is It Important?
Life insurance is of significant importance if you wish to protect your family or dependents from any economic hardship in your absence.
It's not an expense—many people think of it as one & choose to completely even consider its importance. It's an very essential tool that will help you build wealth and, at the same time, offer complete protection to you and your family.
Single Individual
Even if you have no immediate dependents relying on you financially, it doesn't mean that you don’t need a life insurance. There are many costs that you need to factor in and which needs additional income to fulfill them. Life insurance helps you meet such expenses while safeguarding your current income
With Family
Unexpected passing of an individual leaves a lot of void, and the surviving members are left to cope with a lot of stress and trauma. And no matter what, expenses never cease to exist; it just piles on—be it rent, childcare expenses, loans, etc. In such a scenario, a loss of income would cause an immediate financial hardship, and your loved ones are left struggling. Nobody wishes this upon their family; hence, life insurance needs to be seriously considered.
What To Buy
There are many categories of insurance policies available in the market today. Depending upon your needs and requirements, your financial advisor will help you pick out the right one. You need to give complete details on your current financial status, along with your short-term and long-term goals, so that your advisor is well-equipped to make a prudent choice for you.
There are many categories, like retirement plans, money-back plans, child protection plans, endowment plans, and much more.
Remember, life insurance is a great tool for both protection and helping you save in a disciplined manner, which eventually leads to the creation of good corpus. With the help of your advisor, fix your goals, align them with your financial objectives, and lead a stress-free life with a financially secured future.
