The key advantages of having life insurance or simply put, the important features of life insurance are as follows:
Financial Protection
Life insurance in India serves as a safety net for your family’s financial well-being. In the unfortunate event of your demise, the policy provides a lump sum amount, known as the death benefit, to your beneficiaries. This financial cushion ensures that your loved ones can continue their ways of life without the burden of unpaid debts, mortgages, or everyday expenses. With the payout, they can cover the necessary day-to-day expenses and may also meet their aspirations, like going abroad for higher education.
Tax Benefits
One of the attractive features of life insurance in India is the tax benefits it offers. Premiums paid towards life insurance policies are qualified for deductions under Section 80C of the Income Tax Act, providing significant savings on your annual tax liability. Additionally, the maturity proceeds of the policy are tax-free under Section 10(10D), making life insurance an efficient tax planning tool. However, you can get these perks only if you opt for a new tax regime.
Wealth Accumulation
Certain life insurance policies in India, such as Unit Linked Insurance Plans (ULIPs), offer the dual advantage of insurance protection and wealth creation. A portion of your premium is invested in market-linked funds, allowing your money to grow over time. This wealth accumulation can help you achieve long-term financial objectives like purchasing a house, funding your child’s education or enjoying a comfortable retirement. The best aspect here is that you can plan your investment portfolio on your own. Depending on your risk profile, you can allocate most of your funds to equities or balance it with an equal proportion of debt and equity.
Riders for Customisation
Life insurance policies in India offer various riders that allow you to customize your coverage according to your specific needs. Critical illness riders, accidental death and disability riders, and waiver of premium riders are examples of these add-ons. Choosing the right riders can enhance your policy to provide additional protection and benefits tailored to your circumstances.
Guaranteed Income
Some life insurance policies, such as endowment and money-back policies, offer guaranteed income at regular intervals. This feature ensures a steady cash flow during critical life stages. Whether funding your child’s education or celebrating important milestones, the guaranteed income from your life insurance policy can be a reliable source of financial support.
Long-Term Savings
Life insurance encourages disciplined long-term savings. Regular payment of premiums instills a savings habit, ensuring you accumulate a substantial corpus over time. This can be particularly beneficial for meeting retirement expenses when your regular income stops. Life insurance acts as a financial anchor, providing a reliable source of funds in your golden years.
Nomination and Assignment
Life insurance policies allow you to nominate a beneficiary who will receive the policy’s benefits in case of your demise. This ensures that your loved ones are the ultimate beneficiaries, and the proceeds do not get caught up in legal complexities.
Flexible Payout Options:
Life insurance policies may offer flexibility in the payout options, allowing beneficiaries to choose between a lump sum, monthly, or annual installments. Beneficiaries can select a payout option that suits their immediate and long-term financial needs.
Peace of Mind:
Life is unpredictable and uncertainties abound. Life insurance provides peace of mind, knowing that your family’s future is secure. It relieves you of the constant worry about what might happen if the unexpected occurs. This emotional security is one of life insurance’s intangible but invaluable benefits.
Loan Facility
You can avail loans against certain types of life insurance policies. Life insurance ensures you have access to funds during emergencies, with the policy serving as collateral for the loan. It further leverages your life insurance for financial needs.
Conclusion
Life insurance in India is not just a financial product but a lifeline offering protection, savings and peace of mind. The features and benefits discussed in this article showcase the multifaceted advantages of life insurance, making it a fundamental part of your financial portfolio. By investing in a suitable life insurance policy, you not only safeguard your family’s future but also embark on a journey of financial stability and prosperity. So, make sure to secure your tomorrow today with the right life insurance plan.
