Accidents, sudden death due to illness are strong indicators of how susceptible our lives can be. It also stresses the importance of systematically insuring your life against such uncertainties. It is a vital tool for providing your family with financial security as it acts as a protective cover in the event of any unfortunate incident.
Life insurance is vital for families to feel secure and continue their lives with confidence even in the breadwinner’s absence. More importantly, it helps them to avoid facing any financial hardship and lose stability. If you are looking to purchase a life insurance policy, you must know about the features and benefits.
When you buy life insurance, the insurance company issues a policy. It is essentially a legal contract between you and the insurer wherein you agree to pay the premium at specific intervals. In return, the insurance company will pay a lump sum amount to the nominee in the event of your demise.
The premium is the amount you pay periodically; it can be monthly, quarterly, half-yearly, or annually to the insurance company to keep the policy active and retain its benefits. You must continue to pay the amount till the end of the policy period as per the term and conditions.
The premium amount varies based on the type of life insurance policy you choose, your age, the policy tenure, health condition, etc. Typically, term insurance policies have the lowest premium.
The primary objective of buying life insurance is to ensure the family’s financial security. In the event of your sudden demise, the insurer will pay the death benefit to the family. The amount can act as an income replacement for the family, and they can use it to meet their regular expenses and repay the debts (if any) you may have.
Life insurance not only provides financial protection to your family, but it also gives you the assurance and peace of mind that they will be looked after even after you are gone.
- Easy to buy
Today, with insurance companies offering online services, it is easy to buy a life insurance policy. You can visit the insurance companies’ website or any comparison website to compare the various plans from different insurers and choose the right plan to suit your specific needs.
Remember, buying a life insurance policy online is much cheaper than buying offline from your insurance agent or advisor. You can save a significant amount on the middle-men fees. Also, you will be able to make a more informed buying decision; you can refer to the FAQs, brochures, etc., to know about the different plans.
- Tax benefits
Apart from offering financial protection to your family, a life insurance policy is an excellent tax-saving instrument. The premium you pay for the policy is eligible for tax benefit under Section 80C of the Indian Income Tax Act. You can claim a deduction of up to Rs. 1.5 lakhs in a financial year.
Also, the death benefit that the insurance company pays is entirely tax-free in the nominee’s hands under Section 10(10D) of the IT Act.
Another significant benefit of a life insurance policy is that you can purchase various riders or add-ons to extend the coverage scope. You can buy riders like critical illness cover, accidental cover, etc. and get additional protection.
With so many benefits, it is safe to say, life insurance plans are critical for everyone.