Life insurance is known to many as a tool to reduce your taxable income. But have you considered investing in term insurance just to gain a life cover? Yes, a life cover that provides for your family and stabilizes them financially if something were to happen to you. Many of these policies come at affordable rates to fit your budget. And isn’t life all about uncertainty? So, let’s weigh the benefits of life insurance and determine if it’s really worth investing in:
1. Financially Stability:
Life insurances are known for furnishing a life cover to the insured which comes into play in the time of need. This is a vital tool for giving financial stability to your family if you are the sole earner or have loans to your name. Even if your case doesn’t fit either of the reasons, having extra reserves has never gone in vain. In the event of your death, a lump sum amount would be given to your family as a death benefit. Various life insurance plans also provide with maturity benefits or regular payouts during the policy term to suit your financial needs.
2. Long-Term Goals
Though insurance policies are invested in for the death benefit, they are good instruments for fulfilling long-term financial goals. With policies like the endowment plan or money-back insurance, you get a certain amount of money after your policy matures. Also, the money-back plan gives regular payouts every five years from the date of buying the policy. Unit-Linked Insurance Plan (ULIP) is another savings instrument where a certain amount of your money gets invested in equity or debt. These types of plans give you the best of both worlds to secure your future.
3. Lower Premium Rates
When you are younger, your health is at its prime leading to term insurances at lower premium rates. But if you were to get a life insurance plan at a later stage, the premiums would rise up due to your age. Hence, getting a policy when you are younger and do not have many financial obligations benefits you when you really require insurance. Due to lower prices, you can also buy riders or additional benefits for an extra fee. Riders provide better coverage from uncertain things like critical illness, disability, or accidental death.
4. Tax Benefits
Now we come to the tax benefit that acts as the cherry on top of all the perks. Having term insurance reduces your taxable income under Section 80C and Section 10(10D). You can claim the premiums paid towards investing in insurance under Section 80C of Income Tax Act, 1961 with a maximum limit of up to INR 1,50,000. The sum assured paid to your family in case of death or the maturity benefit received can be claimed under Section 10(10D).
After listing down the most crucial benefits of investing in insurance, it is for you to decide if life insurance is really worth the money for you. An additional perk like loan against the policy with lower interest rates also makes insurance a suitable investment medium for many.