Life can be unpredictable. A mishap can occur at any time, and it may have serious consequences and leave the loved ones struggling for daily survival. It is, therefore, important to have sufficient life insurance cover. Read on to know more about what is life insurance and its benefits.
A lot of people tend to ignore the idea of buying a life insurance policy, thinking it is not important. But a sudden mishap makes them realise its importance for protecting the family members against finical hardships. If you are the sole breadwinner in the family, you would surely want your loved ones to live a financially secured life even in your absence. Buying a life insurance policy would help you in this regard. It would provide the dependants with the much-needed financial security in the form of a death benefit and keep them protected from liabilities like rent, loan, child expenses, etc.
What is life insurance?
Life insurance is an agreement between the policyholder and the insurance company where the latter agrees to provide financial compensation to the family members in the event of the death of the policyholder in return of the premium. In life insurance, you must pay a premium at regular interval as decided at the time of purchasing the policy for a specific period. Also, you can appoint a nominee. It could be any of your family members, who you want to receive the insurance benefits. In the event of any casualty that leads to your demise, the insurer will pay the sum assured to the appointed nominee.
Benefits of buying life insurance
One of the most significant benefits of investing in a life insurance policy is that it secures the financial future of your loved ones. In case of any incident, the insurance company pays the sum assured plus the bonus to the family members. Thus, it helps your family to meet any financial obligations that you may have like a loan or credit card bills without having to break the personal savings.
Returns on investment
In India, a majority of the investors look for a financial product that is safe and offers assured returns. Life insurance is one such product. Most insurance plans provide bonuses and yield better returns than other traditional investment schemes. Also, the money you invest is safe and covers you against the risks. The amount you invest is returned either after the end of the policy term of or in the event of your demise. Either way, the money invested is paid back safely.
All the salaried professionals look for ways to reduce their overall tax liability and buying life insurance is a great way to reduce your tax pay-out. The amount you pay towards the premium of a life insurance policy is subject to tax deduction under the Section 80C of the Income Tax Act. However, you must know that the maximum deduction you can get is one lakh Rupees. Also, the death benefits received are exempted from tax.
Availability of Loan
Having a life insurance policy gives you the cushion of availing a loan in the times of emergency. You can get a loan against the policy amount as per the provision of the policy.
Riders are additional coverage options that you can purchase over and above the coverage guaranteed by the original policy. It allows you to increase the coverage for different types of risks. There are different types of riders like the critical illness cover, accidental cover, premium waiver benefit and many more. You can choose any rider as per your requirement.