Simplifying Life Insurance in India

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Advantages & Key Benefits of Life Insurance in India

Life insurance policies ensure that your family stays financially protected in case of your unfortunate demise. In such a scenario, your nominees get a substantial death benefit so your family members can meet their needs.

Besides this, there are also several other benefits of a life insurance plan that you must be aware of if you have not yet gotten yourself covered.

What Are the Benefits of a Life Insurance Policy?

Here are 6 major advantages you can secure by purchasing a life insurance plan:

1. Financial Security of Family

The major benefit of a life insurance plan is the sum assured that nominees can claim after the unfortunate demise of a policyholder. It is a predetermined amount that one can choose while purchasing the plan. Therefore, by purchasing this policy, individuals can get an assurance that their families will get significant financial assistance to cope with regular expenses or to repay any of their pending debt obligations.

2. Maturity Benefit

In a life insurance plan, the maturity benefit is a fixed amount of money you can claim if you survive until its term ends. Therefore, it can serve as your savings for the future. You can also deem it as your post-retirement fund if you plan your policy’s maturity period accordingly. Furthermore, since this amount is predetermined, the return does not depend on the risk of market fluctuations like other investment options.

3. Opportunity to Borrow against a Life insurance plan

Another major advantage of a life insurance plan is its applicability in fetching a sizable loan amount in case of financial emergencies. You can find multiple lenders who extend a certain percentage of the maturity or sum assured value of your life insurance plan as a loan. This way, you can satisfy your financial requirements in emergencies without collateralising your assets.

4. Tax Deductions

According to Section 80(C) of the Income Tax Act of India, you can reduce the total paid premium amount of your life insurance plan from your gross taxable income in a financial year. The maximum limit of this benefit is ₹1.5 Lakhs. Furthermore, the death benefit of a life insurance plan is also exempted from tax obligations according to Section 10(10D). So, you can stay assured that your nominee will get the complete value of the sum assured amount in case of any unfortunate event.

5. Possibility to Enhance Policy Coverage

By adding riders or add-on covers on top of your life insurance plan, you can significantly enhance the total coverage of your policy. You can customise the financial protection of your policy according to your specific requirements. For example, if you need financial protection against critical illnesses, you will get add-on cover for that specific need. There are also various other riders like premium waiver cover, surgical care cover, hospital cash cover, accidental death cover, etc.

6. Financial Planning

With the financial backup of your life insurance maturity amount, you can plan larger expenses that will come after the policy term ends. This way, you do not need to apply for any loan for funding requirements. For example, the lump sum can help you meet your goal of travelling to different countries or bear the expenses of your children’s higher education or marriage ceremony, etc.

Although financial security in the long term is the major benefit of a life insurance plan, it also lets policyholders enjoy tax deductions, requests for loans, etc. In addition, it helps individuals to stay assured that their families will not have to face financial adversities after their sudden demise.

FAQs About Life Insurance Benefits

What will happen if I fail to pay the life insurance premium on time?

If you miss one premium of your life insurance plan, the insurer may notify you about the same. Nevertheless, insurance companies provide a grace period for up to a certain number of days. You can pay the premium within this period without the burden of penalties.

What is the claim settlement process for maturity benefits?

The policyholders must collect a maturity claiming or discharging form from the insurance company on or after the maturity date. They will have to submit the filled-in form along with the original policy bond and other basic identity proofs.

Which documents do I need to provide while placing a claim for the maturity amount?

Following are some of the important documents that you need to provide while raising your claim for the maturity amount:

Original policy document
Your policy discharge form
Government-issued ID card
Age proof
Bank account details (copy of your bank passbook)

What are the different types of life insurance policies available in India?

There are various types of life insurance policies in India, having different features and benefits. These are as follows:

Do Life insurance and health insurance offer the same type of benefit?

No, life and health insurance do not offer the same type of benefit; they serve very different purposes in financial planning. Life insurance provides financial support to your family in case of your sudden death, whereas health insurance covers the medical expenses included in treatment due to illness, injury, or hospitalisation.

Other Important Features of Life Insurance

Assignment in Life Insurance

Benefits of Life Insurance

Types of Riders in Life Insurance

GST on Life Insurance Premiums

Beneficiary in Life Insurance

Terminal Illness Rider in Insurance

How To Choose Life Insurance

Critical Illness vs Disability Insurance

Nominee in Life Insurance Policy

Life Insurance Beneficiary Vs Will

Features Of Life Insurance

Importance of Life Insurance

Surrender Value of Life Insurance

Term Plan vs Term Insurance with Return of Premium

Nomination vs Assignment

Policyholder in Life Insurance

Life Insurance vs Annuity

Disclaimer

This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.