Ensuring financial security is a must for your family and for those who are dependent upon you. Life insurance has been evolved essentially to safeguard the interests of people from uncertainty by providing the certainty of a financial backup. It is, undoubtedly, the most important financial decision of your adult life. Besides, apart from being your buffer and having your back at times, life insurance also has several other benefits, especially if you’ve started young.
Although we can give you innumerable reasons to buy a life insurance plan for yourself, these 6 top the list:
1. Debt protection- In addition to providing an income to cover daily expenses, in case of an untimely demise or any such unforeseen circumstances, your family would not have to deal with the mountain of debt that mortgages, credit card debts, car and other loans might cause. Whats more, if you opt for a term insurance plan, you can get a high cover amount at a nominal premium (you pay a small premium amount for a certain tenure), and your family is given a large, predetermined, lump sum amount or cover in case of an unfortunate incident.
2. A smart investment (sure shot method to save!)- Life insurance works wonders as an investment channel. Facilitating systematic saving by allocating money for premium at the end of every year, it also gives a lump sum pay-out, adding to your financial victories. Regular saving over a period also ensures that a decent corpus is built to meet financial needs at various stages of life. Term insurance even gives an additional cover for 36 critical illnesses so you save on medical costs as well!
3. Extra benefits if you start early- The earlier you start in life, the lower would be your annual premium payout. Every year that you delay getting yourself insured translates into higher rates. Being at a stage in life when you do not generally have any financial dependents and have a steady stream of monthly salaries flowing in, a life insurance premium of, say 7-8 K in a year for a 1 crore cover, would hardly cause a dent in your pocket. Also, the younger you are, the healthier you are bound to be, which reduces the premium price you must pay.
4. Get to save on your taxes – When you invest in life insurance, you also save taxes. Under Section 80C, the Income Tax Act, 1961 gives a tax exemption on any amount invested in the same for a maximum benefit of up to Rs. 1.5 lakhs. Its Section 10 (D) has a provision for tax-free proceeds on death/maturity. So, while ensuring financial stability for your family in the future, you also end up saving money that can easily be invested elsewhere.
5. Peace of mind at retirement – Imagine retiring 30 years from now, completely in charge of your life and at peace with yourself because you decided to be responsible early in life? The finances all sorted, the account sheets of your life all balanced. A small annual premium, starting with your first job would be a small price to pay.
Remember compound interest from your basic math class? Apply it in this scenario, and voila! You have more money compounded if you start early in life, thanks to the increase in accumulation years.
6. A priceless gift for those you love – What better a gift for your loved ones than financial security and the right to live their lives, even when you are not around? Even with a small policy, you would know you have done the best you could for your family. And if this doesn’t cinch the deal, nothing will.
When it comes to life insurance, it is important to safeguard all your assets, the biggest of them being your family. Instead of stressing over the money you must take out to pay the premium, look at the bigger picture- the peace of mind, the smiles- the return is indeed invaluable.