Life is uncertain. No matter what the present holds for an individual, it’s the hope of success and fear of failure in the future that drives us all to make important decisions today. Buying a life insurance plan that is worthy of one’s financial goals is among the most critical decisions to take for the betterment of near and dear ones. For individuals who are the sole breadwinners in their family, having a life insurance policy protects the future of his/her dependents, the absence of which could render them unable to afford their standard of living. On the unfortunate event of the demise or disability of the earning member, life insurance secures the financial future of his/her family to pay for household expenses, clear debts, etc. It is thus important for one to look into the underlying benefits of buying a life insurance policy early on in life. Reasons to buy life insurance
As an earning member of the household, there is an overarching need to protect the future of one’s dependents. In the event of the unfortunate demise of the earning member, a life insurance policy would help them replace lost income, afford educational expenses and other unforeseen events that arise later in life.
Insuring oneself with the right life policy would assist their family in dealing with future financial liabilities and debts. Whether it is an outstanding debt for a home loan, car loan, or any kind of personal loan, such an investment decision would provide them with the financial fuel to live a stress-free life without having to worry about wealth crisis.
Retirement is the phase of life where one wants to sit back and relax, live stress-free, and to take joy in his/her family. Some life insurance plans ensure a steady monthly income to the policyholder post-retirement, making life easy and immune to financial stress.
Being a long term investment instrument, life insurance assists in buying a home, an automobile, or simply providing for retirement. Depending upon individual needs, life insurance policies have diverse investment options to choose from. Some policies come with dividends linked to investment products that provide steady cash flow to the policyholder.
The policyholder can avail tax benefits under Section 10D of The Income Tax Act, 1961, regardless of the type of scheme chosen. Moreover, the premiums paid under any policy are eligible for tax benefits up to Rs. 1.5 lakh under Section 80C of the Act mentioned above.
Apart from covering one’s dependants, some life insurance schemes also provide coverage to the individual’s business. If the policyholder is a business owner, his/her business partner can purchase a part of their business, and the pay-out will be received by the family members of the deceased partner. Under this arrangement, however, the family does not get any stake in the business whatsoever.
Life Insurance, at its primary, covers risk and acts like a protective umbrella for your family in case of unprecedented events. Other market-linked investments may yield good returns, but they are also subject to market risks. Under a life insurance arrangement, the policyholder is precisely aware of the terms, and such terms remain constant throughout the tenure of the policy. Life insurance schemes have come a long way from the traditional notion of a simple life cover. They are financial instruments that offer a wide array of benefits for the policyholder and their family likewise. There is a gamut of life insurance policies available, depending upon custom requirements of policyholders. Whether it is the coverage type, rate of premium, risks covered, or simply tenure, it is always advisable to magnify into the terms & conditions of every policy available. Before buying a policy, it is best to carefully consider individual needs before zeroing down on one and make a well-informed decision.
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February 2022
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