Life Insurance Benefits
Life insurance acts as a shield for the policyholder and the family members of the policyholder if the policyholder is not around. It promises to offer the sum assured to the policyholder’s family in the event of the policyholder's death. Other than death benefits life insurance also offers maturity/survival benefits to the policyholder if he/she survives the whole policy term but life insurance also has other benefits and a potential buyer must understand what benefits come along when you purchase a life insurance plan.
Top Benefits of Life Insurance Plans
Following are the benefits of purchasing life insurance plans:
1. Life Cover: A life insurance policy provides a sum assured as the death benefit in the event of the demise of the policyholder, thereby providing financial security to the insured family. Life insurance thus acts as a shield and ensures that the goals and aspirations of the insured’s family members are not affected even in his/her absence.
2. Peace of Mind: Life Insurance helps creating a sense of peace of mind for an individual because it ensures that the policyholder gets life coverage and also ensures that the policyholder’s loved ones are financially secured at the time of the untimely demise of the policyholder. Life insurance also provides financial aid at the time of medical emergencies that decreases the stress to arrange funds right at the same time.
3. Tax Benefits: Life insurance premiums qualify for tax deduction under Section 80C of the Income Tax Act. Also, as per Section 10D, the sum assured received on maturity of the life insurance plan is tax-free if the premium is up to 10% of the sum assured or the sum assured is at least 10 times the premium amount.
4. Availability of Loans Against Life Insurance Policy: Life insurance plans provide an option to take a loan on the existing insurance policy to overcome any urgent requirements of the policyholder. The policyholder can borrow a certain amount without affecting the benefits that are already being offered in the life insurance. The availability of loans on insurance plans is available for some insurance plans only.
5. Income Benefits: Life insurance plans such as Money-Back Insurance plans provide an option to create regular income in intervals for the insured’s loved ones in the event of the untimely death of the policyholder. This ensures that the insured's family member is financially independent and secured.
6. Critical Illness Cover: Some life insurance plans include critical illness cover. Critical illness can sometimes be inbuilt in the life insurance plan or it can be purchased for additional coverage along with benefits under the life insurance plan. Critical illness cover provides financial support at the time of diagnosis of any critical illness that is listed under the insurance companies. This cover also provides financial aid for expenses made at the hospital for treatment.
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FAQ About Life Insurance Benefits
Why should I buy life insurance?
If you are the sole breadwinner of your family, then you must have life insurance to ensure that your family continues to receive financial protection even when you are not there with them. Life insurance ensures the financial safety of your family in your absence. In case of a misfortunate event of your demise, a life insurance policy provides sum assured to your family. Your family can use the sum assured to meet expenses.
What are the benefits of life insurance?
Following are the benefits of having life insurance:
- Financial stability for your family in your absence
- Tax benefits under Section 80C of the Income Tax Act, 1961
- Regular money back payouts with money back/endowment plan
- Option to avail loan against your policy that has a savings component
Is life insurance necessary?
No. Life insurance is not necessary but it is a wise decision to buy it if you are the sole earner in your family and have a dependent spouse and/or children. Apart from offering support to your family, a life insurance policy offers a number of advantages as well as flexibility for investment.
Can I avail tax benefits on the premium paid for life insurance policy?
Yes. You can avail tax benefits on the premium paid for life insurance plans under Section 80C of the Income Tax Act, 1961.
Do I have flexibility for premium payment for life insurance plans?
Yes. You can pay premiums for life insurance plans on a quarterly, monthly, half-yearly, or yearly basis. However, it is better to opt for a monthly payment mode as it becomes easy on the pocket.