Getting life insurance for oneself is one of the most important decisions one can take, but in spite of this, lives of only 10% Indians are insured. Regardless of your current financial situation, one can never see what the future holds. People die premature deaths leaving their families in a lurch. To avoid such devastating consequences, the importance of life insurance still remains on top to secure your family’s financial future.
Here are 10 compelling reasons to gift yourself a life insurance plan:
Financial security for family
This is the most prominent reason why most people opt for life insurance — to make sure their loved ones will be cared for after their demise. Life insurance can replace lost income, pay child’s education fees, or ensure security for your spouse.
Dealing with debt
The last thing one would want is to leave behind a pile of debt and financial liability for their families. An outstanding home loan, car loan, or credit card debt, the right insurance policy will cover it all.
Achieving long-term goals
Life insurance doubles up as an investment and thus is an instrument for long-term investments. It helps one achieve their long term goals such as purchasing property or planning for retirement. Life insurance also comes with different types of policies on offer. If you are opting for an investment linked policy, make sure to go over the fineprint and be aware of the risks involved.
Supplement to retirement goals
A good life insurance plan will ensure that you have a steady flow of income, long after your retirement. Putting money in an annuity is like putting it in a pension plan- put in money regularly for an insurance product and reap the benefits every month after retiring.
Buy insurance when you’re young
Buying insurance in your 20s is much cheaper than buying it later in life. Coverage costs are much lower when you’re single. However, if you’re single there are other factors to consider such as aging dependent parents or a sibling with special needs. When one is young and healthy, your insurability is high, and it enables you to get the best rates on your life insurance policy.
Tax saving purposes
Irrespective of the policy you buy, insurance is a tax saving tool. The premium paid for the insurance is eligible for a tax benefit of Rs 1.5 lakh under Section 80C of the Income Tax Act. The proceeds obtained on maturity/death are tax-free under Section 10 D of the Income Tax Act, 1061.
Tool for forced savings
Opting for a traditional unit-linked policy will result in you having to pay a higher premium than what a life insurance premium would cost. This small extra sum that is invested can go a long way. This sum results in cash value, which can be borrowed against the policy. One can also choose to sell it or draw income from it.
You may not be qualified for it later
One may think that in spite of being hale and hearty, paying life insurance is a burden. But it’s beneficial when one falls ill, as, during a time like that, you are not allowed to obtain a life insurance policy. Therefore, it is imperative to get one early on as a precautionary measure. Some insurance companies allow one to attach certain benefits to existing policies. They enhance the quality of the policy. For example: The death benefit rider allows the insured person to withdraw a part of the policy’s death benefit in case of a critical illness. That sum can be used for treatment or auxiliary expenditure.