Need and Benefits of Buying Life Insurance

Life is full of uncertainties, and misfortunes mostly come unannounced. Certain events can have an irreversible impact on your life and leave your loved ones bereaved. To lessen the financial burden on your loved ones in your absence, taking a suitable life insurance policy is highly recommended.

Life insurance is a crucial form of investment that will help your family meet their essential needs even when you are not around. At the time of claim dispersal of a  Life insurance policy, the sum assured is passed on to  the beneficiary or nominee on the death of the policy-holder. In addition, some life insurance policies also offer investment benefits on maturity of the policy tenure. In this way, the benefits are two-fold.

In the Indian market, there is limited awareness about life insurance products. This is mainly because people are not entirely aware of the purpose for which this policy is purchased. The most basic need for buying a life insurance policy is to provide financial support to the immediate family in the event of demise of the life insured. For instance, if a person passes away during his earning years, then his family will have to bear the brunt of economic losses caused by the loss of his steady income. His family will still have to continue with payment of regular bills, EMIs of outstanding loans, mortgages, and other financial goals, such as savings for children’s education and retirement. To avoid this burden on the family, leading insurance companies, have launched attractive life insurance plans in the market. These plans offer sufficient amount of reimbursement to the beneficiaries of the insured in case he passes away.

Apart from the aforementioned basic need of income replacement, few are aware of several benefits that come with buying life insurance plans. Some of them are as follows:

Steady Investment Option
A life insurance plan is not just a plain instrument that offers replacement for the loss of income, but it is also an investment instrument that offers significant returns on the amount of premium paid during the tenure of the policy. Several life insurance plans offer considerable returns at the time of maturity, thereby helping you meet your dual needs of achieving investment goal and protecting your loved ones against sudden income loss.

Low cost, High benefits*
For a small amount of premium, insurance companies offer significant payouts,. For instance, a term insurance plan offers extensive coverage, which is also more than 10 times the amount of premium paid, for a small amount of premium. No other financial instrument in the market is priced this low.

Assured Income through Annuities
When it comes to retirement planning, life insurance is one of the best instruments that offer steady pay-outs in the form of annuities. Thus, it will act as a source of pension when you retire.

Tax Benefits
Life insurance policy can be used as an important tax planning tool, as the policy holder is eligible to avail tax benefits under the Income Tax Act of 1961. Deductions towards policy premium qualify for tax benefits under section 10, 80C and 80 CCC of the Income Tax Act.
Thus, with such a wide range of telling benefits that come with a simple life insurance plan, why not secure the future of both you and your family at once?

Tax benefits are subject to changes in tax laws. The benefits mentioned in the article vary, depending on the type of the product purchased, age of the customer etc. You are requested to thoroughly read the detailed sales brochure of the life insurance plan intended to be purchased carefully before concluding a sale.

*This is true only in case of term plan and not in all savings and growth plans. And coverage may change with higher age.


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