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Some life insurance policies offer the facility to avail loans against the deposited money
A life insurance policy is a contingency tool for individuals to provide financial cover to their families if they were to meet an untimely demise or become disabled on account of an accident. In times of a pandemic like COVID-19, where millions of lives have been lost, the importance of life insurance has become all the more apparent. With thousands of businesses being shut, lakhs of people losing their jobs and uncertainty of life looming over, people have started to become more sensitive about health and well-being. In times of such a crisis, an insurance cover can extend a helping hand at every stage of life.
Apart from providing a safety net to your family, it also gives an opportunity to save a decent amount of money for future needs. As a general thumb rule, your life cover must ideally be at least 10 times your current income.
Here are 6 reasons why you need a life insurance cover:
Financial security for your family: Life insurance is an expression of love. It’s about meeting responsibilities and keeping promises, a tool that protects your family from the potentially devastating financial losses that can result if you die prematurely. An insurance cover will support the education of your children and give financial security to your spouse.
Help in paying off debts: A life insurance cover will help your family in dealing with any kind of debt or financial liabilities during a crisis. A right life insurance will take care of any outstanding debt like a home loan, personal or car loan.
Retirement planning: A life insurance policy is usually long-term. So, the amount accumulated is also usually good enough to help you in buying a home or planning your retirement. If you invest in an annuity-linked plan, you are assured of a regular income even after you retire from working life.
Insurance for youngsters: When you’re just out of college, a life insurance policy is probably one of the last things on your mind. You may think it’s for parents or middle-aged people. However, buying an insurance policy is cheaper when you are younger. The cost is typically lower than it will be later on. Also, it helps you create an emergency fund. So, make buying an insurance policy a priority.
Tax benefits: All life insurance policies offer income-tax saving provisions. The policy premium is eligible for a maximum tax benefit of Rs 1.5 lakh under Section 80C, and for tax-free proceeds on death/maturity under Section 10 (D) of the Income Tax Act, 1961.
Ease in getting loans: Some life insurance policies also offer the facility to avail loans against the deposited money after a stipulated time. So, if you need money urgently after a few years of continuing the policy, you can take loans and then repay the insurer in easy instalments.
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