Is Life Insurance Worth It Or Not
Updated On Jul 29, 2022
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A fantastic approach to protect your family's finances from life's risks is via life insurance. A life insurance policy might give your family the money or an income source they need to live a healthy lifestyle and accomplish their objectives while you are away. Even without you, the proceeds from a life insurance policy can assist your family in meeting their daily needs, paying off debts, etc. Term life insurance, unit-linked insurance plans, endowment plans, money-back plans, child life insurance, and retirement plans are just a few of the various types of life insurance policies that are offered on the market. Term life insurance plans are protection plans that operate similarly to standard life insurance plans, but other types are thought of as life accumulation savings plans. One can select among these plans based on their needs.
Does Life Insurance Pay Off?
There are several objections to using life insurance as a tool for investing. The following are a few of the most often cited advantages of buying life insurance for financial planning:
Expired Taxes:
Tax exemptions are one of the main advantages of acquiring a life insurance policy for the life guaranteed. In accordance with Section 80C of the Income Tax Act of 1961, a life insured may be eligible for tax exemptions for all premiums paid for a life insurance policy. If the premiums paid under this provision do not exceed 10% of the amount insured, the life assured may receive a tax exemption of up to Rs. 1.5 Lakh for the premiums paid.
Economic stability:
A life insurance policy will provide a person peace of mind since it guarantees the financial stability of the life assured's family in the event of an unexpected death within the policy's term. With a life insurance policy, the life assured can provide financial support for his or her family, allowing them to meet their immediate financial requirements, continue about their everyday lives, and accomplish their objectives in the event of the life guaranteed's passing.
Improved Coverage
A life insurance policy gives the life assured the choice to increase the base coverage by including riders at the time the policy is issued. Riders, or supplementary coverages that come with an additional fee, are another name for this type of insurance. Popular life insurance riders include accelerated terminal illness benefit, critical illness benefit, accidental death, accidental complete and permanent disability, and others.
Against Loan Policy:
Some life insurance policies offer the option of borrowing money against the policy at a low interest rate, which might assist the life insured in covering his or her urgent financial obligations. This enables the person whose life is insured to obtain a significant sum of cash under life insurance. Typically, ULIPs, Endowment, Retirement, or Child Life Insurance Plans offer the borrowing against the policy capacity. Throughout the term of the policy, this provision aids the life insured in meeting his or her urgent financial commitments.
Take Away
A useful investment instrument for financial planning is life insurance. Every person who provides the main source of income for their family ought to have it.For certain high-net-worth people trying to reduce estate taxes, investing in perpetual life insurance may make sense. However, purchasing term and investing the difference is typically a better choice for the ordinary person. Even if you're buying life insurance solely to protect your investments, you should still do your homework on the top life insurance providers to make sure you're receiving the best possible deal.
Also read: What Happens When a Term Insurance Policy Matures
