5 Reasons You Need to Buy Life Insurance
Life insurance provides financial protection to our loved ones during a crisis. At different stages of life, different types of life insurance cater to our needs. During our prime earning years we might want to protect family members from having to compromise on their needs, in the event of our sudden demise. For retirement, we look into life insurance plans which can offer benefits of critical illness cover, monthly pension, and wealth creation.
Regardless of your life stage, it’s wise to reassess your insurance needs yearly to make the right decisions. Here are 5 major reasons why you may want to purchase a policy.
1. Protecting Loved Ones in Your Absence
If you are an earning member for your family, you could consider securing their future in your absence. Whether it’s replacing lost income, supporting your child’s education and marriage, or giving financial security to your aged parents, a life insurance policy is important.
2. Securing Major Life Goals
You can choose to purchase a policy with twin benefits of insurance and market-linked returns; known as ULIP (Unit Linked Insurance Plan). Some ULIPs offer systematic monthly withdrawals after a few years. Such plans can help you fulfil your goals at various life stages. A plan with a regular annuity or pension for life can help fulfil many retirement goals. Sum insured can also act as a security against which banks can offer you loans.
3. Clearing Debt
When you take a home loan, you repay the debt in form of EMIs. The same goes for car loans or any other debt. Imagine someone taking a joint home loan with their spouse and dying untimely. Having insurance will help your family deal with such circumstances. In a child plan, you can have the benefit of life insurance riders such as waiver of premium, which means there will be no payable premiums in case of your untimely demise.
4. Tax Benefits
Under Section 80C of the IT Act of India, this insurance can help you claim a maximum deduction of ₹1.5 lakh. Any bonus or income received under the life insurance policy can provide tax benefits under Section 10(10D).
5. Grow Your Money
ULIPs can help build a decent financial corpus for future plans, along with insurance. At reasonable premiums, you can put your money in different funds and increase return potential. Some plans include automatic rebalancing of the portfolio to deal with market fluctuations.
However, it’s important to understand how life insurance plans work towards wealth creation. Consider your risk tolerance when splitting investments between funds. You can use a life insurance premium calculator to get an idea of your premium amount payable for a particular amount of coverage.
Choose a provider with an option to buy life insurance online, hassle-free, and with minimal documentation. The sooner you start planning for your insurance needs, the better chances of lesser premiums.