Life insurance is a type of protection that offers financial coverage to your family after your death. It is also a platform that you can use to invest, save tax and meet your financial milestones. Take a look at this article to know more about life insurance, its types and the various benefits it has on offer.
Understanding life insurance
What is life insurance? As stated, life insurance offers financial protection. You assess your needs and get a policy that covers the economic needs and requirements of your family. You have to factor in their cost of living, education expenses, medical expenses and future expenses when you buy a life insurance policy. The coverage amount you choose will have an impact on the premium.
You have to pay a premium according to the coverage, and in return, the insurance provider will keep your loved ones safe. If you die within the policy period, the insurer will pay your family a sum of money as promised. If you outlive the policy period, you will get your invested money back.
Types of life insurance plans in India:
The common types of life insurance are:
- Endowment insurance
An endowment plan is one of the best and most popular forms of life insurance in India. There is a combination of the elements of insurance and investment in an endowment life insurance plan. This makes it the perfect financial tool for a young person who has a steady income and several familial responsibilities.
- Term life insurance
Term insurance covers your life for a fixed period of time. Hence, it is called term insurance. It is a straightforward form of life insurance that offers a hundred percent life cover, without any added frills. If you die before the policy expires, the sum assured is paid out, but if you survive the policy period, there is nothing to expect from the plan.
- Whole life insurance
As the name suggests, a whole life insurance plan is a type of insurance that covers you till the last day of your life. It is slightly more expensive than term insurance but it offers comprehensive coverage. You can never predict the future and what dangers may come forth. So staying covered for a long period of time proves to be very helpful.
- Annuity life insurance
This is an excellent life insurance option as it helps you to build up a corpus for your retirement years, while your life stays covered. You can either opt for an immediate annuity plan, where you invest a lump sum amount of money at a go, or a deferred annuity plan where you invest in small amounts for a long period of time.
- ULIP
A unit-linked insurance plan is a type of life insurance where a part of the premium you pay is invested in the financial markets, while the other part is left in the life fund. You can choose the type of investment, based on your risk-taking capacity. This is another popular and beneficial type of life insurance that many people opt for.
Choose the type of life insurance that would suit you the best. Every life insurance plan may not be appropriate for your family’s needs, so select the correct type carefully.
Benefits of life insurance
- Financial coverage
The biggest and most obvious benefit of life insurance is the financial cushion it provides. Dying and leaving your dependent family members in a challenging situation is undesirable, so get a life insurance plan and keep them protected against all eventualities.
- Investment
Life insurance is a safe investment tool. Not only does your money stay safe, but you also get a life cover. So you don’t have to worry about making multiple investments. Just get a suitable life insurance plan and complete your financial portfolio.
- Tax saving
Life insurance offers a tax benefit of up to INR 1.5 lakhs a year under Section 80C of the Indian Income Tax Act. This is an excellent way to save your hard-earned money while getting all the other benefits of life insurance as well.
- Flexible
Life insurance is very flexible. You can choose the type of life insurance policy you want, the coverage amount, and the term of coverage and you can also customise the features of the plan with the help of add-on covers. This makes it easy for you to provide for your family and keep them safe.
- Peace of mind
And finally, you get a lot of mental peace when you know a life insurance plan is there to take care of your loved ones in case something happens to you.
Conclusion
As you can clearly see from the points mentioned above, life insurance is a highly beneficial product that everyone needs. If you are the primary breadwinner of the family, you need to cover your life with a life insurance plan. Thankfully, many policies are available in India, and you can choose the one that best suits you.
