Invest In A Life Insurance Policy To Provide For Your Family Even In Your Absence

Life is full of uncertainties and unpredictable circumstances. This is why a solid life insurance policy is a must for everyone so that they can protect their family members even if they are no longer around to support them financially. This is especially an imperative for sole breadwinners of a household. Life insurance policies are investment cum savings, and protection, offering a plethora of benefits to the policyholder as well as his/her family members. In case the unthinkable happens, you will be assured that your dependents will be able to carry on their lives with the monetary payouts awarded to them via the life insurance policy. While emotions will be running high at such unsavoury times, financial protection will help ease into it and manage it.

What is a Life Insurance Policy?

A life insurance policy is a financial tool that combines protection, savings, and acting like an investment for the policyholder. It offers a monetary payout to the policyholder's dependents in case he/she meets his/her untimely demise, which can be used to manage expenses. While it does take up financial resources, you need to plan ahead and figure out how to manage this. This also helps with wealth management and overall growth. In case the policyholder outlives his/her policy, the payout is given to him. Alternatively, one can also choose to renew their plan based on successful completion of its eligibility criteria at the time.

Types of Life Insurance Policies

In India, a life insurance policy is considered one of the most crucial investments to have. Almost every family has at least one member who has bought a life insurance policy. There are many types of plans you can purchase, depending on your requirements. The different types of policies are;

● Term Life Insurance - This type of insurance provides a full risk cover against any type of eventuality

● Whole Life Insurance – This type of plan provides life insurance coverage until the policyholder is 100 years old.

● Child Insurance Policy – Child insurance plans protect and safeguard your children's future, helping with expenses at important milestones of their lives.

● Unit Linked Insurance Plans (ULIP) – ULIP's provide a dual benefit of life insurance cum investments.

● Retirement Insurance Plans – These plans offer a retirement corpus, allowing a comfortable monetary gain for use in your golden years.

● Money-Back Insurance Policies – Money Back plans will offer periodic monetary returns at timely intervals along with a typical life insurance cover.

● Savings & Investments Insurance Policies – As the name suggests, this type of life insurance policy offers an opportunity to save money and also gain long-term investment returns

● Endowment Life Insurance Policy – You get a dual benefit of life insurance along with savings in a typical endowment policy

Key Benefits of a Life Insurance Policy

The following mentioned key benefits of a life insurance policy will help you decide which one is best for you.

1. Death Benefit

One of the main advantage of a life insurance policy is the death benefit. The death benefit means that in case the policyholder meets his/her untimely demise during the active term of the policy, his/her beneficiaries (spouse, parents, siblings, cousins, etc.) shall be paid a death benefit cover, which they can then use to fund their lives in the same manner they did while the policyholder was alive. This money can also help with children’s education, funeral costs and any other untoward expense that might occur due to the sudden disruption.

2. Life Risk Cover

A life insurance policy will keep you along with your family financially protected by offering high-risk covers in case an unfortunate event such as death occurs. While money might be the last thing on one's mind like this, the high-risk cover assures a good monetary payout that can help deal with unexpected expenses.

3. Tax Benefits

Reducing tax liability is a very lucrative advantage, and investing in a life insurance policy will do that. Section 80C of Income Tax Act states that investments made on several instruments as liable for a tax rebate. Additional tax exemptions are also offered on different policies, information for which can be obtained from the insuring company.

4. Wealth Management

Investing in a life insurance plan means that you will need to create financial liquidity to pay premiums at your selected stages. This will encourage savings and additionally help in a concrete wealth management plan.

5. Add-On Rider Benefits

Most life insurance policies have add-on rider plans, such as accidental rider or disability riders. A small amount of investment can go a long way in helping you cover hospital costs, medication costs, doctor's costs and additional therapy costs in case the policyholder meets with an accident or suffers from an illness.

6. Additional Income Benefits

Many policies allow you to withdraw your final payout in instalments if you don't want it in whole. This amount can be used towards several expenses such as rent payments, utility bills, children's education costs, etc.

7. Loan Options

If you need money, owning a life insurance policy will allow you to take a policy loan. This amount can be taken as a percentage of the policy's cash value or the sum assured. This is a good benefit to have but depends on the terms and conditions of the policy in hand.

While you work hard and enjoy the bustling lifestyles of today's busy routines, do not forget that no one is invincible and planning a secure future for your family should be paramount. A life insurance policy is an affordable yet practically mandatory to purchase so that you enjoy all its benefits both while you are alive and even after your death (family member's protection).