Life Insurance
7 reasons why life insurance is a must for every individual
Many investment options are readily available in the financial market, but life insurance is the one if opted for at an early age, provides multiple benefits ranging from, providing protection to your family in your absence, planning your retirement, adds financial security, helps in saving tax.
Contingency plans are an important, yet most underestimated part of any project. A family’s contingency plan is mostly financial and has one single objective – “to ensure adequate and timely financial support to the family.” A good contingency plan will help the family sail through most any kind of financial distress without harming their long-term investments. In other words, your contingency plan should enable you to resume your normal course of life as soon as possible after an unfortunate event. While you should include other things, financial support is the most difficult to achieve in your hour of need.
A life insurance coverage is an important contingency tool for people to offer monetary cowl for individuals to provide financial cover to their families in case of any uncertainty. In a pandemic like COVID-19, when hundreds of thousands of lives have been lost, people have become cautious about their health and well-being and the significance of life insurance coverage has become relevant more than ever before. In occasions of such unprecedented times, an insurance cover can lengthen a serving to hand at each stage of life.
Here is why you need life insurance as a contingency tool for a secured future
To Protect Your Family and Loved Ones Financially
Life insurance is a way to express love to your family. It’s about meeting responsibilities and keeping promises, a tool that protects the family from the potentially devastating financial losses that can result in case of uncertainty. If your loved ones depend on your financial support for their livelihood, then life insurance is a must. This is especially important for parents of young children or adults who would find it difficult to sustain their standard of living if they no longer had access to the income provided by the breadwinner.
Life is about moving forward, and as you scale new heights towards success, your income rises. Along with it, your lifestyle changes and so do the needs and expenses of your family. A life insurance plan helps you to create and save, versus any other financial instrument where you save and create.
To simplify, when you buy a life insurance policy of say Rs. 50 lacs, by paying the first premium of Rs. 2 lacs, you have already created an asset worth Rs. 50 lacs. You pay premiums if you live and create a good corpus through the invested premiums. In case of an unfortunate incident anytime during the policy term, your family is financially secured for a minimum of Rs. 50 lacs. Life insurance proves to be a great saving tool as it not only fulfils the need for savings but it also provides protection to our loved ones during uncertainties
To Plan at Right Age
When you’re just out of college, a life insurance policy is probably one of the last things on your mind. You may think it is for parents or middle-aged people. However, buying an insurance policy is cheaper when you are younger. The cost is typically lower than it will be later on. Also, it helps you create an emergency fund. So, buying an insurance policy should be a priority when you begin your career.
To Leave an Inheritance
Even if you don’t have any other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries. This is a great way to set your loved ones up, for a secured financial future especially for kids and provide for any monetary needs that will arise.
To Pay Off Debts and Other Expenses
A life insurance cover will help your family in dealing with any kind of debt or financial liabilities during a crisis. The right life insurance will take care of any outstanding debt like a home loan, personal or car loan.
To Add More Financial Security
Like most parents, you probably want to ensure that your kids will be well taken care of in your absence. You not only want them to get a quality college education but to provide for other life ventures like getting married or starting a business. As parents of young children, you need to factor in the ever-increasing cost of education. Ensuring that the burden of a child’s education and marriage does not fall on your spouse. Ensuring child’s future even in absence of the parent
To Plan Retirement The best time to start planning for retirement is the day you get your first paycheck. Starting your retirement preparation when you’re as young as 25 means you have time on your side to start building good habits and compounding savings.
The longer your money can remain uninterrupted, the more your wealth can grow with the help of compounding.
A life insurance policy is usually long-term. So, the amount accumulated is also usually good enough to help to buy a home or planning retirement. If you invest in an annuity plan, you are assured of a regular income even after you retire from working life.
To Save Tax
All life insurance policies offer income-tax saving provisions. The policy premium is eligible for a maximum tax benefit of ₹ 1.5 lakh under Section 80C and tax-free proceeds on death/maturity under Section 10 (D) of the Income Tax Act, 1961.
Many investment options are readily available in the financial market, but life insurance is the one if opted for at an early age, provides multiple benefits ranging from, providing protection to your family in your absence, planning your retirement, adds financial security, helps in saving tax. The important thing is to choose the right life insurance for your budget and your needs. Over the years, your needs, your family situation and your life goals will evolve. When that happens, it will be time for you to re-evaluate the right type of insurance for you to ensure you are covered properly.
Source : Financial Express
