Tax Planning

Why Life Insurance

Interested in investing in a life insurance policy? Confused about how it works?

We've created this page so that you understand how it works and what you need to know to choose the product that's right for you. Everyone has some primary needs at every stage of their life that require adequate funds to be met. As a result, life insurance offers tailored products to cover every aspect at different stages of life.

Life insurance is a necessity for everyone. Thus, it is very critical to understand the value that a life insurance policy can bring to your life and the lives of your loved ones.

Insurance policies are contracts with insurance companies. When an insurer dies, the nominees or beneficiaries receive a lump sum amount, known as the death benefit, in exchange for paying premiums.

Your advisor will help you map your needs and goals when choosing a life insurance policy. By doing so, you can select the most suitable option for you.

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Types Of Insurance

  • Term Life Insurance: Life insurance is the most affordable type. Plans in this category tend to have lower premiums than other life insurance products.
    Beneficiaries receive the Sum Assured at the end of the policy period.
  • Whole Life Policy: As the name suggests, this type of policy covers an individual for their entire lives. It includes both insurance and investment components.
    An insurance component protects the nominee in the event of the policyholder's death and an investment component provides the policyholder with the ability to borrow or withdraw from the account.
  • Endowment Plan: An Endowment Plan's Maturity Benefit is one of its main differences from a term plan.
    A plan of this type pays out both a death benefit and profits in the event of survival. Equities and debt investments are used to reap profits in such plans.
  • ULIPs (Unit Linked Insurance Plans): A market-linked plan, as its name suggests.
    The plan is a variation of traditional endowment plans that pays out a certain sum assured upon death or maturity, whichever comes first.
  • Money Back Policy: Over the course of the policy term, periodic payments are made.
    If the policy holder dies during the policy term, the beneficiaries receive the full sum assured, and if he/she survives, the balance amount (sum assured) is paid to him/her.

Benefits Of Insurance

Sound policy is often ignored because we think it is not required and what could possibly happen to us?

A mishap/accident can leave us feeling fearful of the future-both for us & our families-which leads us to believe life insurance is not worth the money.

The most effective option for ensuring an individual's financial security and protection is life insurance. A life insurance policy has a number of advantages. Let us look at them briefly:

  • Offers Risk Cover: A high risk cover protects you and your family in the event of an unfortunate incident.
  • Death Benefits: If a loved one passes suddenly, the dependents are left grieving, and financial worries should be the last thing on their minds. Having a sufficient life insurance policy ensures that one's family will be protected in the event of such an event. If applicable, the insurer pays out the sum assured to the bereaved family, along with any bonus or profits.
  • Benefits of Taxation: A tax rebate is available to investors in certain specified instruments under Section 80C of the Income Tax Act. Furthermore, Section 80C is an effective way for salaried individuals to reduce their tax burden. Because life insurance premiums are taken into account, you can reduce your tax burden.
  • Loan Facility: You can apply for a loan if you need it during an emergency, as per the policy provisions. You can take a loan based on a percentage of the amount assured on your life insurance policy.
  • Assured Returns/Income Benefits: With money back benefits offered by certain policies, you will be able to keep your family secure with regular & timely payouts. Rent, bills, loans, and other regular expenses are met with this income.
  • The Life Stages Planning Process: Through insurance, you can effectively plan for every stage of life and every need. The purpose of life insurance is to provide solid financial support as a long-term investment.
  • Safe Investment: You get paid back on time for the investments you make in life insurance. The money gets returned to the policyholders/beneficiaries either at the end of the policy term or at the time of death, whichever comes first.

The Importance of It

If you wish to protect your dependents or family from economic hardship in your absence, life insurance is of paramount importance.

Many people consider it an expense & choose not to consider its importance at all. A will is an invaluable tool that can help you build wealth while also protecting you and your family.

Person on their own.

Having no immediate dependents does not mean that you do not need life insurance. As a result, you need to factor in many costs and earn additional income to fulfill them. Life insurance protects your income while allowing you to meet these costs.

Among family members

When an individual passes away unexpectedly, the surviving family members are left to deal with a great deal of stress and trauma. No matter what, there will always be expenses to contend with, whether it is rent, childcare, loans, etc. As a result, your loved ones are left in financial hardship, due to the loss of income. Hence, life insurance is an essential consideration for every family.

Have questions or Interested in Insurance Planning for Family ?