Sound financial planning involves buying life insurance. Your family depends on you for their protection and wellbeing. In case of an unfortunate event, your life insurance policy can safeguard your loved ones against financial difficulties.
Also, a cashback insurance policy provides the resources for your future financial stability.
Hence, life insurance is one of the essential financial tools to include in your portfolio. Here's a rundown on how this product secures your financial future.
Life Insurance for Financial Protection
1. Serves as an income replacement
Your income sustains your family’s livelihood and future aspirations like career goals. In case of an unwanted event, they lose that financial support. So, as the principal wage earner, you need to arrange for alternate resources for your family's present and future expenses.
Life insurance is a legal contract in which you pledge to pay a predefined premium. In return, the insurer assures a specified payment to your family members in case of an eventuality. Thus, it can replace the lost income.
2. Reprieve from debts
You may have outstanding dues such as a mortgage on your home or credit card bills. In the event of your demise, your family will have to shoulder the EMI burden. They can use the payout from your life insurance to repay such loans, keeping their savings secure.
3. Covers children's education costs
Children's future security is every parent's primary concern. But your absence can affect your children's education and career prospects. Fortunately, your life insurance can fund their schooling costs and life's milestone events, such as marriage or starting a business.
4. Builds funds for long-term life goals
Life insurance policies offering savings opportunities help you create wealth. The maturity proceeds can fund your investment goals, such as buying property or amassing retirement corpus. Even pure protection term insurance that gives money back provides a nest egg at the end of the policy period. You can use it to buy an annuity as an alternative income or invest in various avenues to earn profits.
5. Reduces your income tax1 outgo
When you start earning, you become liable to pay income tax1. Without proper planning, the payable tax1 amount can be a burden.
Life insurance premiums are eligible for deductions from your taxable income1 under Section 80C of the Income Tax Act, 1961. Thus, it can lower your taxes1, allowing better use of your finances.
6. Acts as a safety net against unpredictable events
Most insurers provide add-on benefits, called riders#, at nominal extra costs along with your base life cover.
An accidental death benefit provides extra payouts to your family in case of a fatal accident. A critical illness rider# gives you a lump-sum payout on the diagnosis of life-threatening health conditions covered under the plan. You can use the money to access quality healthcare.
Thus, life insurance helps you stay prepared for various unforeseen circumstances.
How to make sure your life insurance policy is the ideal protection plan?
For effective defence against contingencies, you need to choose enough coverage to meet your family's current and future financial needs. Also, the premium for the required life cover should suit your budget. Failure to pay the premium will void the insurance cover.
A term insurance plan attends to all these parameters. Offering life cover at affordable premiums, it can provide sufficient financial protection to your family in your absence. However, to ensure the plan matches your family's needs, you should consider the following factors:
- Your annual income: The primary purpose is of life insurance is income replacement. Financial experts suggest multiplying your yearly income by 8 - 10 as a rule of thumb to arrive at a suitable cover amount.
- Your family's living costs: Calculate your total current household expenses. Then multiply the amount by the number of years for which your family needs insurance protection. This sum can cover your dependents' livelihood.
- The duration of coverage needed: Your insurance payout should support your loved ones until they attain financial independence. Often people select the number of years left until their retirement or before their children's education ends as the policy duration. But if you anticipate having financial dependents even after you retire, you could opt for whole life coverage.
- Potential future expenses: Along with current costs, your family looks to you for their future goals and financial needs. Children's education, marriage, your spouse's old-age financial freedom are some of the future needs you need to consider. Also, policies that allow increases in coverage with changing financial needs can be useful.
- Inflation: The money that covers current expenditures may not be enough for future spends. Factor in the historical inflation trends to estimate possible future expense amounts.
Why should you invest in term insurance with maturity benefit?
If you survive the policy term, you do not get any maturity amount from traditional term plans.
But TATA AIA recognizes investors need to get returns on their money. Hence, it offers term insurance with money back option. At maturity, such plans return the total premium paid if no regrettable event occurs during the policy term.
Thus, such term plans not only secure your loved one's future but also satisfy your financial needs. You can use the returned premiums to generate an income or to fund big-ticket expenses. Besides, knowing your money will not go to waste provides mental peace.
Tata AIA offers the following term life insurance plans under their Protection Plans segment*:
- Tata AIA Life Insurance Maha Raksha Supreme (UIN: 110N102V03)
- In-built accelerated payout benefit pays 50% of the sum assured on the diagnosis of a terminal illness
- Provision to increase coverage without fresh medical underwriting
- Tata AIA Life Insurance Sampoorna Raksha (UIN: 110N129V05)
- Financial protection of your family with flexible premium payment term
- Tata AIA Life Insurance Sampoorna Raksha+ (UIN:110N130V05)
- Return of premium at maturity to celebrate the policyholder's survival after the policy period
- Tata AIA Life Insurance iRaksha TROP (UIN: 110N106V02)
- Return of premium at the end of the policy term
Moreover, the beneficial features of all the products include:
- Discounted premium rates for women
- Enhanced protection that can be customized through Riders at minimal prices#
Thus, these term plans ensure financial protection against various economic challenges.
Even if you buy investment-linked insurance products, you should not miss out on the competitive advantage of term plans. Compare plans and select the best term insurance with maturity benefit for all-round protection against financial troubles.
1Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you
#Rider is not mandatory and is available for a nominal extra cost. For more details on benefits, premiums and exclusions under the Rider, please contact Tata AIA Life's Insurance Advisor/ branch.
- Insurance cover is available under the products.
- This document is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. This document is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
- Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
- Every effort is made to ensure that all information contained in this document is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.
- The products are underwritten by Tata AIA Life Insurance Company Limited. The plans are not guaranteed issuance plans, and they will be subject to the Company’s underwriting and acceptance.
For more details on risk factors, terms and conditions, please read the Sales Brochure carefully before concluding a sale.
Tata AIA Life Insurance Company Limited (IRDAI Regn. No.110 • CIN: U66010MH2000PLC128403). Registered & Corporate Office: 14th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel, Mumbai - 400013. Trade logo displayed above belongs to Tata Sons Ltd and AIA Group Ltd. and is used by Tata AIA Life Insurance Company Ltd under a license. For any information including cancellation, claims and complaints, please contact our Insurance Advisor / Intermediary or visit Tata AIA Life’s nearest branch office or call 1-860-266-9966 (local charges apply) or write to us at firstname.lastname@example.org. Visit us at: www.tataaia.com.
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