Purchasing a life insurance policy is one of the best ways to ensure financial stability for your dependents, particularly when you are no longer around to support them financially. Many may witness unanticipated demise due to accident or illness and if you are the breadwinner of the family, such cases may cause huge financial trouble. Your dependents may face a tough time repaying debt, dues, bills, looking after mandatory household expenditures etc. Such difficult scenarios can be managed if you buy a suitable term insurance plan now.
Here are some important facts about term insurance plans –
Premiums of life insurance are lower when you are younger
This is one of the crucial facts of life insurance cover. One of the important parameters that go into deciding your insurance premium is your current age. If you are older, the risk to the insurance company is higher and thus, your premium is higher. However, if you are younger, the life insurance premium is often lower due to the presence of lower health risks concerning you.
Provide financial stability
It is the primary reason for individuals to choose a life insurance policy. The demise of the sole earner of the family can turn the remaining family members’ life upside down. On such occasions, effectively managing the monthly mandatory expenses of the household, and meeting the necessity of the family members becomes a tough task. Life insurance provides a sum assured on your death, which can make the life of your dependents easier.
Secure the future of your dependents
Each earning family member has certain obligations and responsibilities towards parents, spouse, and kids. Sudden death can stop you from meeting such obligations. With an insurance plan, you can plan your future accordingly. On your death, the payment of the sum assured by the insurance company ensures uninterrupted higher education for your ward, post-retirement security of your spouse etc.
Helps deal with loan debts
Mostly every individual at some point in time avails a loan. It may be a car loan, personal loan, education loan or home loan. Proceeds from life insurance can assist the paying off of loans clubbed with interest and even ensures that the burden of such borrowings does not fall on your family members.
Provides tax benefits
You can save taxes with life insurance regardless of the type of plan purchased. Premium paid on insurance policies is eligible for a tax benefit of up to Rs 1.50 lakh as per Section 80C of the IT Act and for the tax-free proceeds on maturity/death as per Section 10 (D) of the IT Act, 1961.
Provision of additional benefits in the form of riders
Riders are additional benefits, which can be purchased and added to your basic life insurance policy. Such options permit you to enhance your insurance cover. Riders help cover such risks, which are not within the scope of the main life policy. This results in comprehensive protection. Riders might cover personal accidents, critical illness, waiver of premium, family income benefit etc. Such additional cover comes as a rescue in those events where your main life
policy might not be of much help. They even provide tax benefits and ensure that you are eligible for tax deductions in compliance with health and life covers. For example, if you choose an accidental death rider, you become eligible to claim tax deductions as per Section 80 C on the premiums paid and for the critical illness, Section 80 D would be the relevant section to claim tax deductions.
You may avail a loan against the policy cover –
Do you know that life insurance policies like endowment plans permit you to take a loan against your cover? If you are in immediate need of funds, then you can simply take the help of your insurance coverage to keep it as collateral to take up a loan against it. Once your financial emergency is met, you can repay the loan according to the agreed terms of the policy.
Ending note
Now that you are aware of the crucial life insurance facts, ensure to go ahead with it and invest in a plan. For deciding on the correct insurance plan, you can take the help of a life insurance calculator. Such calculators ask for your specific personal details like your income, age, number of dependents etc. and based on the inputted details suggest plans as per your suitability.
