For far too long, life insurance has been regarded as an optional purchase in India. Low awareness of what life insurance can do for an individual and the perception that the product is difficult to understand have been significant barriers to Indians benefiting from life insurance policy plans.
However, the coronavirus pandemic has alleviated some of these obstacles in India. People are becoming more aware of the importance of life insurance as they realize that unforeseen events can disrupt their lives.
What is Life Insurance?
In exchange for the premium payments made towards a life insurance policy plan, the insurer (insurance company) pays a sum assured to the policyholder or the named nominees in the event of the policyholder’s untimely death.
According to the agreement, in the event of the policyholder’s death or if the policy matures, the insurance provider will pay the person or his family a lump sum amount after a certain period.
What Are The Benefits of Life Insurance?
The four primary benefits provided by various types of life insurance policy plans are as follows:
1. Financial Security
Life is unpredictable and can be filled with unknowns. It is difficult to eliminate the possibility of a tragic event such as death. In such a case, the family faces financial difficulties due to the lack of a consistent source of income.
Investing in the best life insurance policy early in life serves as a safety net in such an occurrence. According to the definition of life insurance, the insurance provider is obligated to pay the predetermined sum assured to the nominee or beneficiary. As a result, even if the policyholder is not present, his family is protected.
2. Long-Term Savings
If you want to make long-term investments, you should consider the meaning of life insurance. Such insurance plans assist you in making systematic savings and building a corpus that can be used for various purposes, including building a new home, financing quality schooling for your child, and funding a child’s marriage expenses.
Furthermore, when you learn the definition of life insurance, you will discover that some types of life insurance policies frequently offer monthly pay-outs in the form of annuities, which is an excellent way to set and achieve retirement goals.
3. Investment Options
Understanding the meaning of life insurance in your financial context will help you plan your investments more effectively. Unit-Linked Investment Plans (ULIPs) are investment instruments based on market-linked returns that provide life insurance, allowing you to obtain dual benefits from a single financial product.
4. Tax Benefits
To keep the policy active, you must pay regular premiums, according to the definition of life insurance. You can also get tax breaks with life insurance plans under the current laws, according to the Income Tax Act of 1961. Section 80C of the Income Tax Act of 1961 allows for a tax deduction for life insurance premiums paid. Section 80C provides for a deduction of up to Rs.1.5 lakh.
Factors To Consider While Choosing A Life Insurance Plan
While there are numerous factors to consider when purchasing life insurance, here is a list of The four most important
1. Decide how long you need coverage.
Life insurance is designed to last for a set period (known as term life) or for the rest of one’s life (known as whole life) (including whole life and universal life). Consider the term if you only need insurance for a limited time (for example, while your children are growing up or for the duration of your mortgage).
2. Calculate how much life insurance you need
The “DIME” method is one way to calculate the costs you’ll leave behind. DIME is an acronym for:
- D – Debt
- I – Income replacement
- M – Mortality
3. Think about other objectives
Some permanent life insurance policies can be used to save for the future. Permanent life insurance policy plans are in effect for the rest of one’s life and have a cash value expected to grow over time. These permanent policies include a death benefit (or face amount), which is the amount paid at the time of death, as well as a cash value that grows tax-deferred over time, similar to retirement or tuition savings plans.
4. Name a beneficiary.
The person or entity who will receive the proceeds of your life insurance policy is known as the beneficiary. Avoid naming a minor child (children may not receive funds) or your estate as a beneficiary (it could have tax implications). If the policy is intended to benefit your company, you should have a formal plan in place for how the proceeds will be used
Top 3 Life Insurance Plans That You Must Check Out
1. Canara HSBC Oriental Bank Of Commerce – iSelect Star Term Plan
The Canara HSBC Oriental Bank Of Commerce – iSelect Star Term Plan is an enhanced life insurance policy that addresses your family’s financial concerns in the event of your death. It also includes coverage for terminal illness and disability, as well as women’s specific benefits. You can choose the level of protection you want under this Plan when you enroll.
2. Kotak Preferred e- Term Pla
The Kotak Preferred e-Term Plan is an online-only term life insurance policy that provides a high level of protection at a low cost. In the absence of a life insurance policy, it helps to protect the family from the uncertainties of life.
3. Tata AIA iRaksha Supreme
Tata AIA iRaksha supreme is appropriate for you because it includes a life-stage option that expands your coverage. You will receive discounts if you choose a higher level of protection. Aside from that, the policy includes a comprehensive health rider, and you can select one or more benefit options from a list.
Wrapping It U
Life insurance plans can help an individual and his family achieve a variety of financial goals. In today’s world, purchasing a life insurance policy is a must. While many people purchase various types of life insurance policies, not everyone is aware of the benefits they provide. In your absence, the purpose of life insurance is to provide financial assistance to your family in times of need.
Furthermore, investing in a life insurance policy encourages a disciplined savings habit. As a result, it is possible to build a substantial corpus.
Canara HSBC Oriental Bank Of Commerce life insurance policy plans protect your financial future while also allowing you to earn a variety of other benefits. So, choose to purchase a life insurance policy now to ensure your security!