What Are The Benefits Of Having A Life Insurance Policy
Published On Feb 21, 2022
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Whether you're married with kids, or have a partner or other relatives who depend on you financially, having life insurance can be important. Life insurance provides money, or what's known as a death benefit, to your chosen beneficiary after you die. It can help give your loved ones access to money when they need it.
Safeguarding your family’s future is a must, particularly if you are the only or primary breadwinner in the household. Life insurance is what keeps your family safe and sound even when you are not around. Life insurance provides a protective financial cover for you and your loved ones. It ensures that you and your dear ones always get financial support.
Understanding life insurance can help you plan for your family's long-term financial needs. Here are five reasons why life insurance is important.
Important Benefits Of Life Insurance Policy
Here are some common uses of life insurance benefits:
1. Paying Final Costs
Life insurance policy benefits can be used to help pay for final expenses after you pass away. This may include funeral or cremation costs, medical bills not covered by health insurance, estate settlement costs and other unpaid obligations.
2. Paying Off Debt Or Replacing Income
Life insurance benefits can help replace your income if you pass away. This means your beneficiaries could use the money to help cover essential expenses, such as paying a mortgage or college tuition for your children. It can also be used to pay off debt, such as credit card bills or an outstanding car loan.
Some people purchase life insurance with the intention of leaving the death benefit as an inheritance to their loved ones. If you'd like to have a specific person receive your benefits as an inheritance, the Insurance Information Institute (III) suggests naming your chosen heir as the beneficiary on your policy. This will ensure that your life insurance benefits fall into the hands of the person you intended to receive it.
4. Paying Federal Or State Estate Taxes
Depending on state laws, your heirs may need to pay an estate tax upon receiving an inheritance. The III says that life insurance benefits may be used to partially or completely offset this cost. It'd be a good idea to consult with your insurance provider or a financial professional to understand how estate taxes may affect your beneficiaries.
5. Charitable Contributions
Life insurance policies can also be created with your favorite charity as a named beneficiary, the III says. This can help ensure your philanthropic goals are met after you pass away, and that benefits are provided to your charity of choice.
6. Valuable Return On Your Investment
Several financial advisors in India suggest that everyone must invest in a life insurance policy not only to provide your family with the financial protection when you are not around but also from the perspective of gaining valuable returns from the investment. Many life insurance schemes in India offer a decent recent bonus in the form of a bonus that no other investment tools offer.
Also, life insurance is a safe investment tool as compared to other investment option. The money you invest in your policy is returned to you in full as the sum assured at the end of the term or after the demise of the insured.
7. Availability Of Loan
In the event of any emergency where you need money desperately, you can take advantage of your life insurance policy and take a loan against it. Today, almost all the major insurance companies in India provide loan facilities to the policyholders. You can borrow a certain percentage of the cash value of the policy, or the sum assured depending on the policy provisions. Make sure that you check with the loan policies with the insurer before you subscribe for the policy.
Life insurance can be a sensitive topic, but it can help provide a more secure financial future for your family if the unexpected happens. Contacting an insurance agent can help you better understand the types of life insurance and determine what kind of policy fits you and your family's needs.
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.