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Why is Life Insurance Always a Smart Decision?

Published On Jul 25, 2021

We look forward to safeguarding our finances in order to meet all our financial goals.All of us are always looking for different ways to plan the financial future of our family by using several tools such as schemes, investments, and insurance. 

One such investment instrument that plays a significant role in financial planning is life insurance. A life insurance plan is a legal contract between the insurance company and the policyholder that offers your family members a sum assured in case of your untimely death. By paying regular premium, you can make sure that your loved ones are getting the much needed financial assistance for their daily requirements even in your absence.

Why Life Insurance is a Smart Investment Decision?

Highlighted below are the reasons why life insurance can be a smart investment decision for you:

1. Replacement of Income

One of the key benefits offered by a life insurance plan is that it offers replacement of income in the event of the unfortunate demise of the policyholder. It is the basic benefit that is offered under all types of life insurance plans.

2. Sufficient Loan Protection

Your present income is helpful in meeting various kinds of financial needs of your family such as daily expenses and children’s education. Moreover, a large portion of your income is spent towards paying off the EMI’s of loans taken by you (if any) such as car loan, personal loan, home loan, etc.

In the event of your untimely demise, your family can come under pressure of paying loans. In such conditions, life insurance comes forward as a saviour and helps in taking care of the loans taken by you (in case the coverage is sufficient).

3. Investment Benefit

There are certain life insurance plans that other offering a life cover also provides the option to grow a portion of your payable premium by the way of investing it in several financial tools. It can prove to be extremely beneficial for the future, wherein you would receive maturity benefit at the time of maturity of your investment. Some of the life insurance plans such as whole life plans, unit linked insurance plans (ULIP), pension plans are combination plans offering investment options along with life cover.

4. Tax Benefits

Another important reason why life insurance plans can be considered as a smart investment option is the tax benefit allowed towards the premium payable. According to the Section 80 C of the Income Tax Act, you are eligible to receive tax deductions up to Rs 1.5 Lakhs per annum for the premium paid (only if those premiums do not go beyond 10% of the overall sum assured).

In a Nutshell

By going through the afore-mentioned points, you must have got an idea about how beneficial a life insurance plan can be towards your financial planning i.e.e not just for offering financial assistance to your loved ones after your demise but also as a smart instrument for tax saving and investment. If you wish to provide your family with a robust financial foundation, then purchase a life insurance plan at the earliest.

Also read - How To Buy Term Insurance That Is Right For You?

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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