The global pandemic situation has taught us a great lesson. Life Insurance will no longer be a choice but a necessity!

Life insurance is an official agreement or a policy between the insurance company and the policyholder. The policyholder will pay premiums to avail of the policy for a specific duration. In return, the company will provide the pre-determined sum assured when the policy matures or to the nominee in the event of the policyholder’s death.

Here are ten reasons that tell you why life insurance plans are necessary.

1. Financial Protection – If you are the only earning member in the family managing the financial expenses, your life is important for your dependents. In the event of sudden death and loss of income, your family should be able to cope with the expenses to survive. Term Insurance will serve you best in this regard.
2. Clear off debts – A life insurance policy such as the Endowment Plan will pay the lump sum money to you if you outlive the policy tenure, which can be used to pay off any debts. With an unexpected death, the nominee can get the amount and settle any outstanding debts.
3. Tax Benefits – The tax benefits for life insurance are highly prominent. Premium amounts paid for Life Insurance will qualify for tax benefits under Section 80C of the Income Tax Act, 1961. The maturity payouts, bonuses or life cover payments are tax exempted under Section 10(10D) of the Act.
4. Cost-effective – Comprehensive insurance plans are cost-effective and can be accommodated by anyone with proper financial planning. There are options to waive off premiums under critical emergencies. If you are looking for extensive coverage at low premium prices, then opt for term insurance plans. Additionally, savings plans or investment insurance plans start with low monthly investment options, making them affordable for all.
5. Riders – Life insurance plans come with additional benefits called riders, which are enhancements upon the base policy on the payment of additional premium. Popular riders include Accidental death rider, Critical Illness rider, Disability rider etc. Critical Illness Rider will pay a portion of the sum assured to manage the medical expenses, thereby securing money for your loved ones.
6. Guaranteed Insurance Savings Plan – There are guaranteed return plans that combine insurance and assured returns on maturity. It will have all the features of life insurance, along with a savings component and guaranteed returns. The return can be availed as a lump sum amount or as a regular income.
7. Supplements Investment Options – With an insurance plan like the Unit Linked Insurance Plan (ULIP), you can use a portion of the premium to get a life cover and another portion to invest in equity or debt funds to contribute towards wealth creation.
8. Help the business of the life assured– The death benefit or the sum assured from the life insurance policy of a key person or a business partner can be used to buy and sell the partner’s share, thereby reallocating it. It will help the business recover from any losses incurred.
9. Diversify – Diversifying your portfolio is one of the best financial practices one should follow. When you choose to take a Life Insurance Plan, you diversify it on insurance, savings and investment fields, making it even more balanced.
10. Online Features – Technological advancements have made accessing insurance policies, applying for them and tracking the developments of a claim online more seamless and faster. Considering the recent focus on contactless methods of transactions, life insurance companies in India allow you to compare, purchase, renew and claim for insurance policies online on their websites.

 Conclusion

Having seen the reasons to buy life insurance, you must take the necessary steps to purchase one. It is also important that you explain and share the features of life insurance and let your friends also protect themselves financially along with their family. By investing early, you can get premiums at a lower rate and also benefit from long term savings and investment advantage. Mental peace and happiness are the by-products of a life insurance policy that motivate a secure life!