Reasons You Should Not Exit Life Insurance Policy
Published On Dec 23, 2021
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Unemployment is rising day by day, and incomes of families have gone down considerably. Inflation rates are higher due to which prices have been out of control. As a result, everyone is looking to streamline their budget and cut down on some expenses. Given these issues, you may have thought about canceling your life insurance to save some money. However, before taking such a step, remember that life is full of uncertainties. In case of any unfortunate eventualities, life insurance is the perfect instrument to take care of the financial needs of your family.
Reasons Why You Should Not Exit Your Life Insurance Policy
Life insurance must be a crucial part of your financial plan. Here are some reasons why you should not cancel your insurance at any cost.
You Need To Take Care Of Your Family’s Financial Needs
If you are the sole breadwinner of your family, your loved ones depend on your income for all their needs. In this fast-paced world, eventualities can wreak havoc with your finances. In the case of your death, your family may be forced to compromise on their needs. But with life insurance, your loved ones can have a safe and secure future. Such plans can work as a replacement for your income. Hence, cancelling it can deprive your family members of financial freedom.
You Will Miss Out On Tax Benefits
According to Section 80C of the Income Tax Act of 1961, insurance premiums qualify for tax deductions. The premium paid towards your life insurance plan can provide you tax benefits up to ₹1.5 lakhs a year. Thus, term plans not only secure the future of your family but also help you to save tax along the way. You will no longer be able to claim these deductions if you terminate your life insurance policy.
You Will Have To Pay More For New Insurance
Many people cancel their life insurance, thinking that they will purchase it again in the future. However, this ends up increasing the overall costs. Insurance premiums rise with age. So, if you buy life insurance with the same coverage in the future, it will be costlier than before. With rising premiums, you are likely to struggle more at a later stage. Moreover, if you suffer from an unexpected illness, the insurance company may not accept your application or may offer you a comparatively low coverage.
Your Family Members May Not Be Able To Pay Your Liabilities
Your family members have to deal with liabilities you leave behind in case of your untimely demise. Without life insurance, they may have to let go of some precious assets to cover up for your debt or loans. Hence, you should aim to keep their interest safeguarded at all times with an active plan.
Cancellation of your life insurance policy can be a waste of your hard-earned money. Moreover, you may have to pay a much higher amount to buy the same policy later. In this fast-paced world, life insurance has become a necessity. It can help your family members to fulfil their needs. If you terminate your insurance policy, your family can be left without a financial cushion. Therefore, you should never terminate your life insurance plan.
Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.