Life insurance importance
Why is life insurance important?
Protect your family’s financial future. This is life insurance. Every parent wants their children to be cared for even when they can’t be there. Your loved ones will not be left financially behind by your death through Life Insurance Plan.
Accomplish your financial goals
Each person has a set of goals for their lives, and money is essential to achieve them. These life insurance plans will help you reach your goals by building a financial corpus and protecting you with a life policy. Life insurance plans promote disciplined saving. A monthly insurance premium of just a few dollars will allow you to accumulate money. The best part is that this little monthly amount keeps growing. In other words, in years to come you will have enough wealth to reach your longer-term financial goals.
It brings you peace of mind
Your peace of mind will be assured by life insurance. Life is uncertain. Life insurance can help your family financially in the event you pass away. Plan your retirement with a retirement plan that will pay you a monthly income.
Reduce tax
You generally can claim an income-tax deduction on your life insurance premiums under Section 80Cof The Income Tax Act, 1961**. Under Section 10(10D of the Income Tax Act 1962**, death payouts are exempted from tax.
Why you should have a life insurance policy
Long-term financial goals
You can build a large financial portfolio to meet your long-term goals with life insurance plans. They help you save money and provide protection for your loved ones.
Protect your child’s safety and future
Each parent wants their child to have the best future possible. Life insurance policies will ensure your child’s best future, even if you aren’t there.
Liabilities and loans
You should consider purchasing a term plan if you have taken out a loan. This will ensure that your loan does not fall on your dependents if you are unable to pay it. Term insurance plans offer the most cost-effective way to protect your home loan and provide protection for the family of the policyholder in the event that he/ she dies.
Education planning for children
Child education plans are a way to save money and build wealth for your child’s future educational expenses. These plans provide insurance that covers the child for life, so the sum is guaranteed even in the event of the policyholder’s death.
Dependent spouse
If your spouse is financially dependent, you should purchase a life insurance policy. This will protect your spouse’s financial independence in the event you are not there.
Leave a tax-free legacy
You can leave your loved ones a tax-free legacy because life insurance payouts are tax-free as per Section 10(10D)** of the Income Tax Act.
Retirement planning
Life insurance plans can help you build and invest a financial capital for your retirement to ensure that you live comfortably after you retire.
Buying Life Insurance
These tips will help you to understand your Life Insurance needs and make an informed decision about the life insurance policy that is right for your family.
Find out your current stage in life
You will go through many life stages as you get older. You will experience many life stages, including your first job, your marriage and the birth of your child. Different life stages will lead to different goals and plans. You can plan ahead to achieve these goals.
A financial goal is a plan.
It is best to have clear, specific, and measured goals. You don’t want to make vague and unattainable goals like “I want to retire comfortably” or “I want the funds to support my child’s education.” These aren’t specific and achievable goals. A concrete and measured goal might be “I want to send our child to an international school of business in 10 years.” This will cost Rs 22 lakh* now and Rs 43.27 million** 10 years later. I must plan for it.” Use our goal calculators to help you reach your specific goals.
Calculate the amount you require in Life Cover
You will need Life Cover depending on your liabilities, dependents and future income. Also, consider other factors such as your assets and any existing life insurance. Your Life Cover should at minimum be 10 times your annual income. A minimum of Rs 1 Crore should be purchased for Rs 10 lakh annually if you earn Rs 10 lakh each year. Our Human Life Value Calculator will help you determine the amount of life insurance that you require.
Select the longest term possible
You can increase the amount of compounding power by investing more money for longer. For example, if Rs 1 lakh is invested every year for 5 consecutive years, it would save Rs 5,632,298/- @ 4 percent interest rate and Rs 6,33593/- @ 8 percent interest rate. You would save Rs 12,48,635/ – @ 4% and Rs 15,64,549/ – @8% if you stayed invested for another five years (totalling 10 years).
Verify all fees and benefits
Take the time to read through all fees associated with your life insurance plan. It is also important to review the tax benefits that are available with your insurance policy.
Understanding the claim aspects
By examining the claim settlement speed and quality, you can find out about a company’s claim settlement processes. A company’s Claim Settlement Ratio is also available. This ratio indicates how many claims have been received and how many claims have been settled. A higher Claim Settlement Ratio is better.
Keep up-to-date about all service options
Make sure you are aware of the services offered by your insurance company. It is important to check whether the company has many branches or if they offer digital services. These details can help you receive convenient service at a later stage of your Life Insurance Plan policy.
Additional Resource:
https://www.iciciprulife.com/insurance-library/insurance-basics/what-is-life-insurance.html
https://www.efulife.com/
https://en.wikipedia.org/wiki/Life_insurance
