People tend to avoid discussing life insurance importance because they associate it with death. This is probably because term insurance, which is the simplest and most popular plan, pays the dependents the sum assured (the amount the person is insured for), in case of the policy holder’s death before plan maturity. However, today, the insurance landscape has evolved and offers a variety of solutions that can benefit you and your family, even if you live up to 99 years.
Irrespective of the type of plan you choose, and there are many with different permutations and combinations to suit your needs, insurance is unarguably the safest option to protect your family’s financial future. This article explains the importance of life insurance, especially in today’s world of uncertainties.
Why life insurance is important
Family, finance, future: These three priorities mandate the need for and importance of life insurance. You want your family to lead the same lifestyle without any compromise, in case of any unfortunate event. The sum assured they receive can ensure this.
Wealth creation: Everyone aspires to grow their wealth, to upgrade their lives while planning for long-term financial security. This underscores the need of life insurance as the premiums you pay are a form of savings that will yield high returns as well as life cover. For example, if you stay invested for a long period in a ULIP (Unit Linked Insurance Plan), your investment multiplies over the years, creating a sizeable corpus for future needs.
Peace of mind: Life is unpredictable. During the pandemic, people lost jobs overnight, which made making ends meet difficult for some. Others lost the only breadwinner and were saddled with debts or high living expenses. At times like these, the smallest outflow can seem incremental. This highlights the importance of life insurance policy as it can secure you financially.
Tax benefits: Everyone wants to save as much money as possible. Most insurance plans allow a tax deduction on the premiums you pay as per applicable tax laws. The death benefit, i.e., the payout you receive in case of the policyholder’s death, is also tax-free as per applicable tax laws.
Why do we need life insurance?
Helps achieve long-term goals: Life is a series of milestones – buying a house, children’s higher education and marriage, aging parents’ healthcare expenses, retirement plans, and so on. Fulfilling these goals requires big budgets. When you take a policy, the premiums you pay go towards building a sizeable cover that can meet future needs and financial protection for your family.
Children’s future: As parents, your children’s dreams and aspirations are your primary concern. Child insurance plans are a good option as they offer the dual benefit of investment and insurance. They offer options for premium payment, timed payouts and even waiver of premium, in case the parent dies prematurely.
Reducing debts: A loan, however big or small, is a financial burden. Whether it is taken to buy a house, to fund business or some other imminent personal requirement, it has to be repaid. In the case of the sudden death of the breadwinner, the onus falls upon the survivor and they may need to use their reserves or sell off other assets for repayment, which will deplete their savings. The death benefit received from the policy can help ease this stress.
A small investment can go such a long way. Life insurance is the answer to your family’s financial security. You can be assured that they will always be in good hands.
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