A life insurance policy can be an essential financial instrument for several people. This usually includes entrepreneurs, retired people, working parents, etc.
9 Reasons Why Life Insurance is Important for You
9 Reasons to Understand the Importance of Life Insurance
1. Secures the Future of Your FamilyA life insurance policy bestows your near and dear ones with substantial finances in case of your premature death. Thus, they can easily fulfil their future goals without compromising on their current lifestyle. It also ensures they do not have to seek financial assistance or go through any monetary crisis in your absence.
2. Serves Your Financial GoalsSince a life insurance plan offers maturity benefits, you can raise a claim on outliving the policy duration. This will leave you with sufficient money that you can use to finance your goals. For instance, you can use this money to tick off plans from your bucket list, like going on a foreign trip, purchasing a flat for your family or even financing your children's wedding. This effectively justifies the need and importance of a life insurance policy.
3. Ensures Peace of MindAlthough life is uncertain, you can ensure the financial security of your dependents in case of any unfortunate incident. Also, you can rest assured that they will not have to turn to other people to survive in your absence. This will bestow you with peace of mind and aid you in living your life to the fullest.
4. Helps in Planning RetirementYou can receive enough money after your retirement once the insurance policy matures. You can use this amount for any expensive treatment or travel to your favourite destinations. Thus, you will not have to stay financially dependent on your children for your daily expenses and fulfilling your post-retirement plans.
5. Pays Off Your LiabilitiesYou will not have to worry much about repaying any unsettled debt after your demise. If you leave substantial money for your family, they can quickly pay off the debt on time without facing any crisis. This ensures that lenders do not hassle your family regarding loan settlement.
6. Aids In Education Planning of Your ChildSince the claim amount of an insurance policy is large, your kids can use it to fund their educational expenses. They can select the best course in a top-ranking university without worrying about fees. This ensures that they receive the best education and build successful careers.
7. Saves Substantially on Your TaxesThere are several tax benefits that you can enjoy from different sections under the Income Tax Act. This allows you to save substantially on your premiums and claim amount. You can use these savings for various investment purposes to increase your income and profit to a great extent.
8. Serves As an Income for Your FamilyA crucial role of life insurance is that it serves as a steady income for your family after your demise. Additionally, if you plan the payouts monthly, they would receive a fixed monthly amount to meet their needs. Thus, it will ensure judicious use of money without compromising their current lifestyle.
9. Takes Care of Your Dependent Spouse
If your spouse is financially dependent on you, then they will not have to worry about finances. After raising a claim, your partner can get sufficient money from the insurance policy. This will help them to stay financially independent and ensure that they do not have to compromise on their lifestyle in your absence.
Now that you know the importance of a life insurance policy, you should purchase one to financially secure your family. However, you should select the right insurance company for purchasing a life insurance policy. Otherwise, it might get difficult for your nominee to receive approval on their claim, which might attract financial problems for your family.
FAQs About the Importance of Life Insurance
Different sections under the Income Tax Act offering tax benefits are as follows:
- Section 10D: States that your nominee will not have to pay any additional tax on the claim amount of the policy.
- Section 80C: According to this, you can claim a deduction of up to ₹ 1.5 Lakhs on the premiums of your policy.
- Section 80D: You can claim a deduction under this Section of the Income Tax Act only if you include a critical illness cover in your policy.
However, you will have to fulfil certain conditions to qualify for these deductions under the Income Tax Act.
First, you will need to identify if your death will financially impact your close ones. Accordingly, you can decide the urgency of purchasing a life insurance policy.
With an increase in age, there are high risks in your life. Hence, the cost of premiums proportionately increases. So, if you purchase a policy at an early age, you will have to pay lesser premiums, and so you have the opportunity of saving more.
Other Important Features of Life Insurance
- 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.