Many people in India overlook getting an insurance policy because they think it is an unnecessary investment until a sudden catastrophe or accident forces them to recognize its value. Life may be pretty unpredictable, and although you cannot forecast uncertainty, you can be well equipped to deal with it.
One of the best ways to cope with the uncertainties of life and ensure that your loved ones are protected financially in the face of hardship is to invest in a solid life insurance policy. Providing protection and financial security to loved ones is something that everyone longs for, and a life insurance policy is the most excellent way to accomplish that.
Life Insurance is a contract between the Insurance company/Government that guarantees compensation for loss of life in return for payment of a specified premium. In Life Insurance, the beneficiary whose name has been indicated in the contract receives the set money from the insurer in case of a happening event, i.e. Loss of Life. In this article, we’ll see: Buying life insurance is one of the most crucial financial decisions, yet, believe it or not, barely 10 percent of Indians are protected.
But why is it so important?
Well, regardless matter how much you earn, no one knows what the future holds. Lots of people die prematurely every year from disease or accident and, if you happen to be the single breadwinner in the family and you were to pass away, it might have catastrophic implications for your loved ones-their ability to pay household expenditures, debts and maintain their level of living.
Therefore, the least you can do is guarantee your family’s financial future by getting a life insurance policy. Besides, do not neglect life insurance benefits during your lifetime, especially if you are young. We outline ten persuasive reasons for getting a life insurance policy. Not only can life insurance help cover your final expenses — it can also provide your family with a financial safety net by helping to replace your income or serving as an inheritance for a loved one. Apart from financial stability and safety, there are numerous more life insurance benefits, which are detailed below:
Death Benefit
If any unforeseen occurrence happens to the insured, which results in the loss of income for their family, the insurance company gives compensation in the form of the death benefit. The appointed candidate receives the full money assured plus the bonus collected over time. Apart from protecting against death, many life insurance policies benefit monthly income, which is a tremendous boon for elderly old-aged persons or people nearing retirement age and has dwindling revenue.
While purchasing a life insurance policy, make sure that you compare the features and benefits of several policies and choose the one that best meets your needs to get maximum protection. Apart from protecting against death, many life insurance policies benefit monthly income, which is a tremendous boon for elderly old-aged persons or people nearing retirement age and has dwindling revenue. While purchasing a life insurance policy, make sure that you compare the features and benefits of several policies and choose the one that best meets your needs to get maximum protection.
Looking After Your Loved Ones Even After You Are Gone:
This is the most significant part of life insurance that one needs to factor in. Your family is dependent on you even after you’re gone, and you certainly don’t want to let them down. Whether it’s for replacing lost income, paying for your child’s education or making sure your spouse gets the much-needed financial security, life insurance could save the day for your surviving dependents.
Life insurance policy benefits can be used to help pay for final expenses after you die away. This may include burial or cremation charges, medical bills not covered by health insurance, estate settlement costs and other unpaid responsibilities.
Investment Components
Specific whole life insurance policies offer two-pronged benefits of both insurance and investing. While one half of your payment is paid toward insurance, the other half is invested in equity, debt or mixtures of both. You get the best of both worlds with a protective covering as well as good returns on your investments. You may make the most of this component by investing in funds that fit with your investment horizon and risk appetite. Specific policies allow you to switch between funds as per your growing aims. The Invest 4G plan given by Canara HSBC Oriental Bank of Commerce gives you the choice of picking from a selection of 7 unit-linked funds and four different portfolio management options as per your requirement.
Peace of Mind/ Financial Security
Having life insurance provides the utmost peace of mind. If someone were to meet with their demise, they know their family and loved ones will have a financial safety net. All of us have some financial liabilities, but a sufficient life insurance cover assures that your bills or loved ones will be financially taken care of in the event of your death.
Valuable Return On Investment
Several financial advisors in India suggest that everyone must invest in a life insurance policy to offer your family financial protection when you are not there and get meaningful returns from the investment. Many life insurance policies in India offer a decent recent bonus that no other investing tools provide. Also, life insurance is a safe investing tool as compared to other investment options. The money you invest in your policy is repaid to you in full as the sum promised after the term or following the insured’s demise.
Dealing with debt
You don’t want your family to cope with financial liabilities during a crisis. Any outstanding debt-a a home loan, auto loan, personal loan, or a loan on credit cards will be taken care of if you happen to obtain the right life insurance policy.
Inheritance
Some people obtain life insurance to give the death benefit as an inheritance to their loved ones. If you’d prefer to have a specific person receive your benefits as an inheritance, the Insurance Information Institute (III) proposes putting your selected heir as the beneficiary on your insurance. This will ensure that your life insurance funds go into the hands of the person you wanted to receive them.
Maturity Benefits
Life insurance policies can also act as a savings instrument by delivering maturity benefits. If the insured lives the policy period and no claims have been made, the total premiums paid are refunded at the time of maturity of the policy. Your life insurance plan might have a savings component while also delivering a protective cover in this method.
Wealth Creation:
Some life insurance plans also offer you the possibility to develop wealth. Apart from life protection, these policies invest your premium in several investment classes to generate better risk-adjusted returns that beat inflation and expand your corpus. For example, 30-year old male spending ₹ 20,000 per month for 20 years in ICICI Pru Signature (ULIP Plan)# can obtain ₹ 65.39 Lakhs at 4 percent annual return or ₹ one crore at 8 percent yearly return*
Loan Availability
In any situation where you need money desperately, you can make use of your life insurance policy and take a loan against it. Today, practically all the major insurance firms in India provide lending opportunities to policyholders. You can borrow a set proportion of the insurance cash value or the sum assured, depending on the policy requirements. Make sure that you check the loan policies with the insurer before you subscribe to the procedure.
Financial Planning Through Different Life Stages
Planning your finances wisely across different periods of life is crucial. This is where life insurance can play a crucial part. You can take utilize the benefits of term life insurance and make plans for financial support to your family in the event of your sudden death. This will help them cope with their financial duties well and help them live a financially independent life without compromising their lifestyle. Also, by investing in a life insurance policy, you can satisfy your many future aspirations like child marriage, funding your child’s schooling, building a dream home or establishing a corpus for post-retirement living. Make sure that you get the right insurance policy that meets your needs.
Long-term Goals
Since it is an instrument that keeps you invested for the long run, it would help you reach your long-term goals like buying a home or preparing for your retirement. It also gives you varied investing alternatives that come along with different sorts of insurance. Some policies are tied to certain financial products that pay rewards dependent on their performance. If you choose an investment-linked policy, be sure to read the fine print to be completely aware of the potential risks and rewards.
Charitable Contributions
Life insurance policies can also be issued with your chosen charity as a nominated beneficiary, the III states. This can help ensure your philanthropic aims are met after you pass away and that benefits are distributed to your charity of choice. Life insurance can be a complex topic, but it can help create a more secure financial future for your family if the unexpected happens. Contacting an insurance professional can help you better understand life insurance and select what kind of policy fits you and your family’s needs.
Coverage Against Liabilities
To achieve your objectives and attain your goals, you may have required a certain level of financial help – in the form of loans, mortgages and other sorts of debt. Be it college debts or credit card debt, coping with such liabilities can be a source of significant financial strain without a stable stream of income. While you may have the cash to pay off a part of your loans today, your family may find it challenging to manage such responsibilities in the event of your tragic passing, owing to the loss of income. Thus, getting a life insurance policy ensures that your family has the financial means to satisfy your loan and mortgage obligations steadily, even in your absence.
Buy Young, Save More
Life insurance products allow you the option to lock in low premium rates while you’re young. If you buy the same policy when you are older, you will be paying a lot higher premium than if you got the same plan when you were younger.
