WHY LIFE INSURANCE IS IMPORTANT?
The number of persons dying at a young age has risen dramatically in the last five years. If something were to happen to you, the family’s sole source of income, a life insurance policy would help you ensure the financial security of your loved ones by assisting them with bills, debt repayment, and maintaining a good quality of living. Below we’ll learn in detail about the importance of life insurance to clear all your doubts.
In the case of a human life event such as death, injury, accident, retirement, and so on, life insurance provides financial protection. Natural and unnatural causes can cause death and disability in human life. When a person’s life is lost or he or she is permanently or temporarily disabled, his or her family suffers financial losses, especially if the person is the sole breadwinner.
While human life cannot be priced, a monetary value can be calculated based on anticipated income losses. As a result, the sum insured is the ‘benefit’ of life insurance. In the event of the policyholder’s death or if the policyholder becomes incapable due to an injury during the contract’s lifetime, the life insurance policy offers a guaranteed income.
Types of Life Insurance Plans
The insured’s family (survivors/nominees/beneficiaries) is protected by life insurance, which can also be utilized to accomplish other financial goals. The following are the numerous types of life insurance plans:
- Long-Term Planning
Because these plans are purchased for a specific period and have no cash value or maturity benefits, they are less expensive. It is only beneficial if the occurrence occurs.
- Endowment Strategy
These policies, like term plans, have the extra benefit of providing an assured payment if the policyholder survives to the maturity date.
- Units are used to plan
Provide policyholders with the option to earn money while also protecting their lives. The policyholder earns market-related profits on both halves of the premiums: one for life insurance and the other for market instruments.
- Guaranteed Money-Back
This plan offers a variety of survivor benefits, which are delivered proportionately throughout the insurance period.
Whole life insurance offers a survival benefit to the insured and covers the policyholder for the remainder of his or her life. The policyholder has the option of taking out a loan against the promised cash or withdrawing a portion of it.
- Arrangements for Annuity
The premiums are accumulated as assets and then provided to the insured as income in the form of a lump sum payout or annuity, according to the insured’s preferences.
Benefits of Life Insurance Plan
Life insurance can assist provide for your family in the event of a disaster; however, this is only one of the benefits of life insurance. In addition to the coverage amount, different types of insurance may offer extra benefits. Some of the advantages of life insurance are as follows:
- Life insurance provides risk coverage to the insured/family policyholders in the form of monetary compensation in exchange for the premiums paid.
- Life insurance companies provide a variety of plans based on the needs of the insured. Additional perks come with a larger price tag.
- Life insurance policies also cover health-related expenses like hospitalization and essential disease treatment.
- A few life insurance policies also contain savings plans that invest your money in lucrative businesses.
- Some life insurance policies feature a guaranteed sum assured.
- Life insurance companies provide the option of borrowing a particular sum of money against the policy in the event of an emergency. However, this option is only available on a few policies.
Importance of life insurance
In the case of your unexpected death, life insurance provides crucial security covering for your loved ones. Aside from providing financial security, there are several other reasons behind the importance of life insurance.
Continue reading to discover the importance of life insurance and why everyone should purchase life insurance.
- Take Care of Your Family’s Needs
One of the most important advantages of life insurance is that it safeguards your family’s financial interests even if you are no longer alive. Death benefits from life insurance will assist them in paying for things like child tuition, house payments, and other expenses while preserving their existing lifestyle.
- Defend Your Company
Life insurance is necessary for more than just your family and yourself. Certain insurance plans also cover your company’s needs. If you own a firm, your business partner will be able to easily buy your share of the company. Your business partner(s) will enter into a purchase-sell agreement, with the proceeds going to the beneficiaries of the deceased partner but with no interest in the company.
- Debt Reduction Aids
You don’t want your family to be burdened by financial commitments in the case of a disaster or your death. All of your unpaid liabilities, such as a personal loan, a home loan, or a credit card loan, would be covered if you bought the right life insurance policy.
- Contribute to your retirement account
It is a normal desire for everyone to have a secure retirement plan. This can be accomplished by purchasing good life insurance policies. After you retire, numerous life insurance policies pay out a monthly income.
- Taxes’ Advantages
Regardless of the sort of life insurance coverage you select, you will save money on taxes. The cost of life insurance premiums can be deducted under Section 80C of the Internal Revenue Code. The death benefit or maturity is tax-free even if Section 10 applies (10D).
Conclusion
Death is a fact of life that cannot be avoided. In the event of an emergency or disaster, the very least you can do for your family is protect their financial future. Life insurance is a great way to protect yourself while also saving money, and it may help you systematically develop a successful corpus. Refer to Welfin to know more about the importance of life insurance.
