Life insurance is one of the most common and popular forms of financial support that you can depend on to protect your dependents and loved ones from the uncertainties of tomorrow. It offers a financial backbone to your family, to cope in their daily life, after your death.
Despite the fact that life insurance offers so many benefits, a lot of people never consider getting their life insured. Moreover, one of the top reasons why people hesitate to give it a chance is the confusion about this instrument – people simply don’t know about the benefits of life insurance yet.
Admittedly, the pandemic acted as a wakeup-call for Indians to get their life covered in case any unfortunate events take place. With that said, let’s take a look at five life insurance benefits that you can enjoy by planning smartly:
Helps You Make Better Financial Choices
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Before you dive into the endless market of insurance policies, you must have a clear picture of your financial health as a part of your smart planning process. You can start by brainstorming what you already have curated for your dependents and loved ones who rely on you for their finances.
It can include things like your retirement savings, emergency funds, any insurance coverage received from your job, and so on. As soon as you finish making a list, you’ll realize that you have far less preparation than you thought, and you’re not completely prepared for the unfortunate.
When you have a better idea about your financial capability, you can easily determine what your life insurance should cover for the maximum benefits – whether you’ve got children to support, a mortgage to pay, or a business to maintain. With smart planning, you can always make better financial choices.
Ideal for Long-Term Financial Requirements
According to studies, a lot of people who purchase life insurance don’t even know how much cover they require. What’s even worse, they only think about getting rid of their major debt through the policy, and never actually explore the true benefits of life insurance.
To ensure that you won’t make this mistake, you should consider using smart planning and assessing your requirements to help your partner pay bills, pay for your child’s education, or any other long-term goal that you wish to accomplish even after you’re no longer living.
As a general rule of thumb, make sure your desired policy offers you a death benefit that equates to ten times your annual salary. If you believe that your present situation and financial goals don’t resonate with the aforementioned death benefit then you can tweak with the amount. Planning smartly can help you fulfill all your long-term financial needs.
Enjoy Lower Premium Amounts
The key factors that nearly every insurance company keeps in mind while determining the number of premiums you pay for your coverage are age and health. When you purchase life insurance at a young age with proper planning, you’ll find it cheaper than it tends to be.
The reason for it is when you’re young, your body is healthy and less risky for the companies to insure you. The premium amount also depends on the policy variation you choose, along with the total sum assured after your death to your dependents.
In case you wish to get term life insurance, the premium amounts you need to pay will be greatly affected by your desired length of the term. Most insurance companies also allow you to shift from term life policy to permanent life insurance. Therefore, make sure you plan accordingly to keep your premium payments minimum.
Savings on Taxes
As per the Income Tax Act of India, if you’re purchasing an insurance policy, you’re eligible for tax deduction and benefits based on the plan you choose. With that said, planning smartly and researching some good tax-saving life insurance instruments can prove to be very beneficial.
The section 80c of the act defines that the total premium paid during the tenure of your insurance needs to be deduced from your total income as an investor. This benefit can be claimed for premiums of up to Rs. 1.5 lakhs. Therefore, smart planning also allows you to lower your tax liability.
Availing of the tax benefits now with the help of proper planning can prove to be very beneficial for your future, when you need a financial backup to cope up with the changes in your life.
Creation of Wealth
There are several life insurance policies that also allow you to generate an ample Corpus amount that may help you in the future. In addition to a complete life cover, numerous policies also invest your paid premiums in different classes of investments to provide higher returns that allow you to beat inflation.
All you need to do is plan things accordingly and determine your preferred risk bearing capacity, along with several other factors. This will ensure that you keep receiving consistent returns on your investment and make the most out of your policy with the help of smart planning.
The generated Corpus can be used for numerous purposes such as supporting the education on marriage of your children, or plan for your retirement. So, make sure that you plan properly and enjoy a supple amount of wealth afterwards.
The Takeaway
When it comes to purchasing a life insurance policy – whether it’s a savings plan or a term plan – you can only feel secure when you know what’s in it for you. This also makes it easier for you to compare various policies and come up with a decision.
With the above-given life insurance benefits that can be availed with smart planning, you can surely ensure a financially sound future for you and your loved ones. Before you zero in on any policy, make sure you go through it thoroughly and follow the tips above to make your purchase a valuable experience for your life – today and in the future as well, as you reap the benefits of this decision.
