We often overlook the idea of taking out insurance thinking that we don’t need it. But a sudden accident or mishap brings us to the realization that life may end for us without ever giving any signs or clues. What happens then? Our dependents have to face liabilities like rent, loan, EMI, child expenses etc apart from grief. We never imagine a worst-case scenario like this for ourselves. The “I don’t need to buy life insurance” mentality should be dropped as calamities can strike us at any time and at any age without any discrimination. Financial security and security is a yearning for a person and life insurance is the perfect answer.
Following are the benefits of getting life insurance-
1. Life Risk Cover
Life insurance offers you a high life risk cover that keeps you and your family safe in the event of an unfortunate event.
2. Death Benefit
Investing in life insurance gives you and your family a secure future. In case of any untoward incident to the insured, the insurer pays the entire sum insured plus bonus to the bereaved family. Life insurance also protects the interests of people who have low income with increasing age, people who meet with accidents or retirees. There are many policies available and you can choose the one that best suits your needs.
3. Return on Investment
Life insurance plans offer better returns as compared to other investment options. Most of the life insurance plans offer bonuses which no other investment plan can offer. The money invested in life insurance is safe and covers the risk. The money invested will fetch good returns and will be fully refunded as Sum Assured either after the completion of the term or after the death of the Life Assured. In both the ways the money invested and the returns are paid back securely.
4. Tax Benefits
Section 80C of the Income Tax Act is an effective way to reduce the tax liability for a salaried person. Under this section, investments made in specified instruments are exempted. At present, the amount available for exemption under section 80C is Rs. 100,000 which can be invested in Life Insurance Premium, Pension Retirement Fund, Employees Provident Fund, Equity Linked Mutual Fund schemes, National Savings Certificate and Public Provident Fund (maximum Rs.70,000). The amount invested in these instruments is eligible for exemption by way of deduction of the amount from the gross taxable income.
5. Loan Options
Life insurance offers you the benefit of taking a policy loan when you are in dire need of money. The loan amount that can be availed under the policy as a percentage of the cash value or sum assured, depending on the provisions of the policy.
6. Life Stage Planning
Life insurance helps you plan a life stage where you can plan your life financial goals as per your convenience. It helps you to plan for your standard of living needs. Life insurance not only provides financial support in case of untimely death but also acts as a long term investment. You can accomplish your goals, whether it is the education of your children, their marriage, building your dream home or planning a comfortable retirement life, as per your standard of living and risk appetite.
7. Assured Income Benefit
Your family remains secure because of the assured income they receive at regular intervals. This income helps in paying all rent, loans and other expenses like house rent, telephone and electricity bills, child education etc. This income offsets the income that ceases after the loss of the earning member.
Riders are additional benefits that can be purchased and added to a basic insurance policy. These options allow you to increase your insurance coverage. Riders cover risks that are outside the purview of the main life policy, resulting in more comprehensive protection. Riders can cover critical illness, personal accident, family income benefit and waiver of premium benefit).
This additional cover comes during situations where the main life insurance policy may not come into force. They also provide tax benefits and make you eligible for deductions commensurate with life and health cover. For example, if you opt for an accidental death rider, you can claim a deduction under section 80C on the premiums paid; For critical illness, the relevant section would be 80D.