What is life insurance?

Life insurance is a financial tool that provides a safety net for your loved ones in case of your untimely demise during the policy term. It allows you to secure the future of your family and ensure they have the financial resources to cover their expenses.

Life insurance offers peace of mind, knowing that your family will not have to worry about their financial security even in your absence.

10 facts about life insurance plan

Here are ten facts about life insurance that can help you understand the scope of their coverage better:

Life insurance plans are cheaper when you are younger

The cost of life insurance is usually much lower when you are younger, making it essential to purchase a plan early in life. At a younger age, you are less likely to have health problems, which is why insurance companies attribute a lower risk and offer cheaper premiums. You can get a substantial sum assured at a fraction of the cost compared to buying life insurance at an older age.

Taking care of your loved ones after your demise

Life insurance provides essential financial support for your loved ones. In the unfortunate event of your demise during the policy term, life insurance offers a death benefit to your family that helps replace your income. This death benefit can be claimed as a lump sum, regular income or both. It allows your family to continue their lives with the same standard of living, even in your absence.

Managing debts effectively

If you have debts like a home loan, car loan, small business loan or credit card dues, life insurance can help protect your family from being burdened by these financial obligations in case something happens to you. Without life insurance, your surviving family members might struggle to make debt repayments. In the case of failure to pay the debt, this can also potentially lead to the seizure of your assets. The death benefit from a life insurance policy can be used to settle outstanding debts and ensure your family can continue living with dignity.

Achieving long-term financial goals

You can integrate a life insurance plan with a savings or investment component to achieve varied financial goals. Certain life insurance policies offer an added maturity benefit that allows you to build wealth over time. Plans like Unit Linked Insurance Plans (ULIPs)^&, endowment policies, and guaranteed income² plans not only provide life coverage but also help you accumulate savings. These policies can be a great way to plan for future life goals, such as your child’s education and marriage, or even purchasing a house for yourself.

Supporting your retirement plans

Life insurance can help with your retirement planning, too. Annuity plans and few life insurance plans like ULIPs^& or guaranteed income plans² can provide either a lump sum amount or a steady income stream that can support you during your retirement.

Life insurance for homemakers

Did you know homemakers can also be covered under a life insurance plan? A life insurance plan for housewives ensures financial security for the family by accounting for their invaluable contributions in managing the household. It helps cover future costs like childcare, household management and child’s education, ensuring peace of mind and stability for the entire family.

Tax-saving benefits

One of the most attractive benefits of life insurance is the tax-saving opportunities it offers. Under Section 80C^* of The Income Tax Act, 1961, you can claim tax deductions of up to ₹ 1.5 lakh per year on premiums paid for qualifying life insurance policies, such as term insurance, whole life insurance, ULIPs^& and endowment plans. Moreover, the death benefits paid out under a life insurance policy are tax-free under Section 10(10D)^*.

Encourages consistent savings

Many life insurance policies require regular premium payments, particularly those with a savings or investment component. These regular payments can be made monthly, quarterly or annually as per your needs. Irrespective of the option you select, these scheduled payments help inculcate the habit of disciplined savings. This consistent habit can be helpful in building a secure future and ensuring that you stay committed to saving, which can benefit you both in the short and long term.

Possible future ineligibility

While life insurance can be bought at a later age, in some cases, it is important to purchase a policy while you are still young and in good health. As you age, you may develop health conditions that could make you ineligible for life insurance or result in much higher premiums. The longer you delay, the harder it can get to purchase your desired plan. So, buy one at the earliest and ensure your loved one’s financial protection.

Peace of mind

Life insurance offers many emotional and psychological benefits, too. Knowing that your family is financially secure in your absence can bring you peace of mind. With life insurance, you can rest easy knowing that your near and dear ones will not be left struggling financially. This sense of security can allow you to focus on the important aspects of life and help you excel in your personal and professional life.

Conclusion

Protecting your future begins with the essential step of buying life insurance. The earlier you purchase a policy, the better. By starting sooner, you can get a lower premium and enjoy long-term peace of mind, knowing your loved ones will have financial stability after you. Additionally, life insurance is not just about protection. It can also help you achieve other financial goals like retirement planning, funding your children's education and so much more. Now that you know more about life insurance do not delay buying it.