Why is it Important for You to Buy a Life Insurance Policy

 

‘It is health that is real wealth and not pieces of gold and silver’ – Mahatma Gandhi echoed these true words of wisdom. In today’s stressful lifestyle, people are prone to many medical conditions, accidents and sicknesses. In case of an unfortunate death, life insurance is a great financial tool that helps your family members when you are not around. The amount received can be used to pay household expenses, premiums, debt, etc. With the right insurance policy, one can secure their family’s financial future. Life insurance policies are also a great investment option which can later be used for future needs like loans, weddings, retirement, etc.

 

Following are some important reasons as to why you should buy life insurance:

 

Family’s financial requirement If you are the sole breadwinner of the family, the income of the family will cease in case of an unfortunate death. In such cases, the family has to be provided for in terms of maintaining their standard of living. Having a life insurance plan comes to your family’s aid during such phases of life.

 

Tax benefits

 

Life insurance aids in saving tax. Under section 80C of the Income Tax Act, 1961, the premium paid on the policy is eligible for a maximum tax benefit of Rs. 1.5 lakhs. Tax benefit is also available on the proceeds on death or maturity of the policy under Section 10(D). 

 

Diverse investment options

 

A good investment portfolio is that which has a proper mix of shares, equities, recurring deposits, fixed deposits, etc. Getting a life insurance policy helps to diversify your investment options. Various insurance policies can be used for different purposes. Retirement plans, child coverage plans, whole life insurance plans, etc. are the various investment options available in life policies. 

 

Protection against expenses

 

Given the increasing incidences of illnesses and escalating medical expenses, life insurance cover protects you against any financial burden. Remember, buying the best life insurance policy provides for financial contingencies and ensures that you have extra income in case your earnings are reduced due to any reason whatsoever.

 

Inculcates saving habits

 

Life insurance is a long-term contract wherein the policy holder has to pay premiums either quarterly, half-yearly or yearly. This builds a long-term saving habit. The period invested over the years can then be used for different purposes at various stages of life. The amount can be used for various purposes like retirement, wedding expenses, and education loan for children, etc. 

 

Improves credit ratings

 

It is important to note that life policies are considered a financial asset. It helps to increase your credit score. This will improve your chances of getting a personal loan, vehicle loan, education loan, etc. Retirement income Life insurance policy is like a pension plan. You invest money till the specified period, and you get a guaranteed stream of income on a monthly basis, till the tenure of the policy ends. It helps individuals to enjoy a comfortable lifestyle, even when they are no longer working. 

 

Can avail loan facilities

 

One of the life insurance benefits is that a policyholder can draw a loan against his/her life insurance as it is a financial asset. Not only this, life insurance policy can also be used to repay your outstanding loans. Ensure that no gaps are left at any unexpected twists and turns in your life. Buying a life insurance plan puts your financial worries to rest. Insurance plans are not only an attractive investment option, but maintains your family’s standard of living during a difficult time. One should therefore consider getting a policy keeping their family’s financial security needs in mind. Talk to your financial avisor who can walk you through the various options and help choose a plan that is best-suited.

 

Know more about the importance to buy a life insurance policy at 5 Paisa Insurance.