5 Reasons You Need To Purchase A Life Insurance

Having life insurance is vital whether you're married with children, have a partner, or have other relatives that rely on you financially. After you die, life insurance pays out death benefits to your nominated beneficiary that can help your family overcome any financial problems. Hence, understanding life insurance can help you make long-term financial plans for your family. 

5 Reasons You Need To Purchase A Life Insurance

Here are five reasons to buy a life insurance plan.

• Financial Security 

Life insurance is designed to safeguard the financial future of your family. Even if you have resources, they are unlikely to be sufficient to meet your family's needs for several years, if not decades, if anything unforeseen occurs to you. This is where life insurance plans help. Moreover, optional riders are available on most term life insurance contracts, allowing you to renew or change your policy. Furthermore, whole life insurance products have a cash value component with potential for growth.

• Repay Loans & Debts

In India, working professionals often take out home loans, auto loans, and personal loans. But you wouldn't want to leave your loans to your family if you died unexpectedly. Life insurance can help reduce some of the financial obligations that your loved ones may face after you pass away, at a time when they are already suffering from your loss. Credit card debt, company debt, personal and educational loans, and home debt are all examples of debts that life insurance can help your loved ones in paying off.  

• Income Replacement 

Your income may cover a portion or even all of your family's daily needs, whether you are a salaried employee, a self-employed person and operate a small business. Housing, food, clothing, vehicle maintenance, utilities, and health-care premiums are likely all part of your monthly expenditure, and your family will still need to manage these bills without your income. A life insurance policy's death benefit can enable your family to get the money they need to offset these costs. Hence, when weighing your options, you might want to consider using a life insurance calculator to help you figure out how much coverage you'll need.

• Retirement Planning

Insurance companies now have a myriad of unique products to choose from. Life insurance policies with retirement benefits are now available. These policies pay you a monthly pension after you pay premiums for a set period of time while still providing death coverage. This might be a great strategy to ensure that you have a steady stream of money after you retire. This way you won't have to be dependent on your children, family and friends in your old age.  

• Tax Benefits 

While tax savings are not as important as the benefits outlined above, they are nevertheless beneficial. You can claim tax deductions up to Rs 1.5 Lakhs in a financial year under Section 80C of the Indian Income Tax Act. You can also get additional tax savings under Section 80D if you buy life insurance with built-in health coverage or purchase additional health-related riders. Even the death benefits and maturity benefits offered by the insurance provider are tax-free under Section 10(10D) of the Act. 

Take Away

When planning long-term financial goals, it's important to understand all aspects of life insurance and how much coverage you'll need. Making financial arrangements to assist your family's financial security if you die away can help alleviate the stress and strain of an already stressful situation. Life insurance can be a significant aspect of this plan, depending on your financial goals and needs. You can even consider speaking with a financial consultant for further information.

Also read: How Are Term Life Insurance Premiums Calculated?

Types of Life Insurance Plans in India

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.