Ever thought about what will happen to your family when you are not alive?
Apart from dealing with the emotional loss, they will also need to manage the funding of their basic necessities and other expenses. You may have some savings in your bank, but will they be adequate to fulfil all their needs, especially in the wake of a continued increase in the cost of living?
It is to secure the financial future of your family in your absence that you need to opt for life insurance. Taking a life insurance policy can also be helpful in your lifetime. Let us look at some reasons for buying a life insurance policy.
Ø For the Financial Security of Your Loved Ones
The primary motive of life insurance is to secure the financial future of your loved ones when you are not there. The death benefit of your policy can help your family members meet their regular expenses without having to borrow or seek the help of others. And all you need to do is save a small amount quarterly or half-yearly or yearly, to pay a premium and build a big corpus for the benefit of your family. Do include life insurance in your financial planning for the sake of your family and use a life insurance premium calculator to finalise the amount of the policy and the premium to be paid.
Ø For Dealing with Debt
Another reason to take life insurance policies is that the maturity amount or the death benefit can be used to pay off any financial liabilities that you may have. This means that any pending amount on your home loan, auto loan, personal loan, or loan against credit cards can be paid off easily by you or your family members (in your absence).
Ø For the Fulfilment of Long-term Goals
You may be planning to buy a home or a car or fund your child’s education or save for retirement, but this requires disciplined saving. And life insurance policies allow you to do that. By paying a regular premium for your life insurance policies, you can build a kitty of funds that can be used to meet your long-term goals. Several life insurance policies come with diverse investment options or products that pay performance-based dividends. Choose a policy that helps you achieve your goals. Money-back and an endowment life insurance allow you to save small amounts every year for building a big corpus for the future. Unit Linked Insurance Plans or ULIPs offer both insurance coverage and an opportunity to create wealth through investment in different instruments like equity and debt.
Ø For Retirement Planning
Life insurance is an excellent method of saving for your retirement. You can use the maturity amount of your life insurance policy to fund your regular expenses after you stop working. You can choose an annuity option wherein you can enjoy a steady monthly income after your retirement.
Ø For Inculcating a Habit of Saving
A life insurance policy involves payment of premiums every month/quarter/six months/year. When youngsters buy a policy, they have to compulsorily keep aside a certain sum for the payment of their life insurance premiums. So, the earlier you start, the better it is. You not only have to pay a lesser premium, but can also save more and build a bigger corpus for use at a later stage.
Ø For Tax-Saving Purpose
You can also save taxes by buying a life insurance policy. The premium paid towards an insurance policy is eligible for deduction from the taxable income under Section 80 C. Similarly, the death or maturity proceeds of a life insurance policy are exempt from tax under Section 10D.
To ensure that you reap the benefits of a life insurance policy, it is best to start at the earliest possible time- when you start earning. Since the premiums for life insurance policies are dependent on the age of the applicant, an early start will ensure that you have to pay a lower premium. Also, as you grow older, health issues may creep in, making it difficult for you to get a life insurance policy or pay a higher premium for the same maturity amount.
Insurance companies allow their existing policyholders to buy additional riders or benefits for policies. Riders like death benefit or critical illness cover or disability cover offer additional protection to the policyholder and their family.
To conclude, life insurance is a must for your peace of mind and for ensuring that your loved ones do not face any financial issues in your absence. These policies also help you save and build a big corpus for meeting your long-term goals while ensuring that your financial liabilities are paid off even when you are not there.