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Why is Buying a Life Insurance Plan Always a Smart Decision?

Updated On Aug 22, 2021

A life insurance policy is without any doubts a smart investment tool. As we are all aware that life is uncertain and in the absence of the main earning member of the family, things get difficult for the whole family. Life insurance cover does not only provide a financial safety net but also comes as an income replacement for your family in your absence.  It is one of the best protection plans for your entire family and can be availed at a nominal price.

 Life Insurance Plan--- A Smart Investment Option

Highlighted below are a few reasons why investing in a life insurance plan is a smart decision:

  • Income Replacement

 As afore-mentioned, a life insurance plan offers an income replacement in the event of demise of the policy buyer. It is one of the standard benefits offered under all types of life insurance policies. A term insurance plan is designed specifically to offer a financial safety net at just an affordable premium amount. In the event of death of the policyholder, the sum assured is offered directly to the nominee either in installments or a lump sum. For people who are looking forward to their retirement, there are several retirement plans that provide income replacement in the form of annuity payouts.

  • Investment Benefits

An insurance company provides several kinds of life insurance policies, which includes whole life plans, pension plans, guaranteed income plans and growth plans. These plans don’t just provide coverage for life but also offer maturity benefits that provide financial safety for your family members. A whole life insurance plan provides coverage till 100 years of age whereas guaranteed income plans assist in meeting financial goals at different phases of life. A ULIP plan invests a part of the premium in financial tools such as debt, equity and various government securities. These insurance plans assist you in building a corpus over a longer investment period.

  • Tax Benefits

Even when you know the significance of a life insurance plan, you may not consider buying one because of the premium outgo.  One of the best advantages of a life insurance plan is that the amount of premium payable is eligible for tax benefits as per section 80C of the Income Tax Act. It helps in reducing your tax liability and assists in saving money at the time of ensuring financial safety to you and your family members in the event of an unforeseen incident.

  • Loan Protection

It is possible that you may be having long term liabilities like a home loan. In the event of an unforeseen situation, your family members would have to pay back the loan in place of you, which may lead to certain serious consequences. At the time of buying a life insurance plan, the benefits of the insurance plan becomes available to your dependents when you are not around. This amount would help them in paying back the outstanding loan amount without falling into any kind of financial distress. 

Also read

Life Insurance or Fixed Deposits? Which Is Better?

Why Life Insurance Is A Must Have For Home Makers?

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.

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