In India, several people are not fully aware of the importance of buying an insurance policy. Apart from protecting your family, life insurance offers several other benefits. Read on to know more about these benefits.
Misfortunes often come unannounced, and certain events tend to have an irreversible impact on your life and leave your family bereaved and in a financial turmoil. To help your family cope with the financial burden efficiently, even when you are not around, taking a robust life insurance policy is advisable. Ensuring the protection of the family and providing them financial security are two of the important things that people wish to have and a life insurance cover offers you just that. Apart from protection and financial security, there are other benefits of life insurance, which are:
Investing in a good life insurance cover secures your family’s future finances. In case of any unfortunate event that leads to your demise or leaves you disabled, it would mean that your family will have no steady income. But, if you have life insurance, the insurance company will compensate for the loss of income by paying the sum assured and the bonus to the appointed nominee. There are different types of life insurance policies, and you choose one that best suits your needs.
Life insurance, apart from offering protection and covering risks, is also an excellent investment tool that provides valuable returns. Many life insurance schemes offer bonuses, which no other investment products in the market offer. The money you pay as premium will fetch you returns in the long run, and it will be returned either after your demise or at the end of the policy term. Either way, the money you invest is paid back.
You can use a life insurance policy to reduce your overall tax payment of the year. The amount you pay towards the premium is eligible for deduction under Section 80C of the Indian Income Tax Act, 1961. Also, the death benefit you receive from the insurance company is exempted from tax.
Facility of loan
This is another significant benefit of investing in a life insurance policy. In case of any financial emergency where you may need quick cash, you can avail a loan against the policy amount. The maximum amount you can avail is a certain percentage of the cash value or the sum assured of the policy as per the provisions of the policy.
Accomplish a long-term financial goal
Everyone has a particular long-term financial goal, be it building a retirement corpus, buying a home, or saving money for a child’s marriage. Whatever is your long-term goal, investing in a life insurance policy early on in your career can help you accomplish it. Many life insurance policies provide monthly income post-retirement. Choose a plan carefully to suit your needs as well as the risk appetite.
Riders are the additional benefits that you can buy from the insurer and add it to the basic policy. There are different kinds of riders to suit the varying needs of the people. It can help you increase their risk coverage beyond the scope of the main policy and offer more comprehensive protection. You can buy a rider for accident cover, premium wavier, critical illness and many more. These riders are useful when your main life insurance policy does not cover for the damage you may incur. Additionally, riders provide tax benefits. For instance, if you choose accidental death rider, you can claim deduction under Section 80C, and for critical illness rider, you can claim for deduction under Section 80D.