The past year has shown us how unpredictable the world can be, with the market crashing, multiple people falling sick, and even more getting laid off. While many young people understand the key benefits of life insurance, they often forget that it is a multi-purpose financial instrument. The main objective of a life insurance policy indeed is to ensure the financial security of your family after your demise, but it tends to vary a lot depending on the type of policy and the coverage amount. This article explains the benefits of life insurance.
What are the benefits of a life insurance policy?
Below, we have discussed the life insurance advantages that you may not have known about. The common benefits of life insurance are as follows:
Life risk cover
This is the most obvious benefit that one can avail from life insurance. An insurance policy ensures the security of your family and guarantees1 that they will be taken care of even after your demise. The insurer also ensures that your expenses are covered in case of diminishing income due to increasing age. It also safeguards against disability due to unforeseen circumstances.
Return on investment
If you want consistent returns with a considerably lesser risk-to-reward ratio, then a life insurance policy can be suitable for you. You can choose customised plans that can give you regular income.
Tax benefits
One can also reduce their gross total tax* by availing the deductions under Section 80C of the Income Tax Act. Section 80C allows you to reduce your total income by deducting the amount of premium paid towards the insurance policy. You can deduct only up to ₹150000, which can still have a significant impact on your total payable tax figure, subject to meeting the terms and conditions.
Collateral for loans
You might need to take a loan when you want to buy your dream house or when you want to start a side project, but it might not be easy, as a lot of banks ask for collateral. Life insurance policies can be used as collateral. In recent years, many banks have started accepting life insurance as collateral while issuing loans to borrowers. Life insurance policies can be used as additional collateral or as stand-alone collateral.
Better life planning
Life insurance supports long-term financial planning by helping you achieve specific goals like children's education, retirement income, or purchasing a home. Additionally, ULIPs combine protection with investment growth, which supports structured financial planning goals.
Income benefits
If, due to some unfortunate event, the policyholder passes away, then their family has two options: either they will receive a lump sum amount, or they can opt for the receipt of payment at a regular interval. The regular payment helps with the payment of all the utilities that are used by the family and can also be used for the repayment of the loans and to meet other expenses. These income benefits also help your children with higher education, marriage, etc.
Financial security
The benefits of life insurance investment help ensure your dependants are financially protected in case of your untimely death. The sum assured1 can help cover household expenses, outstanding loans, education costs, and medical bills. Your family can maintain their lifestyle and financial stability, reducing financial burden.
Wealth creation
Specific life insurance plans, like a unit-linked insurance plan or an endowment policy, help accumulate wealth over time by investing part of your premiums. This encourages disciplined saving and long-term planning for major financial milestones like retirement or property purchase.
Coverage for chronic and terminal illnesses
The riders#, like critical illness and terminal illness, pay lump sums when the policyholder gets diagnosed with serious health conditions. These help to manage medical expenses, as they provide financial support to the policyholder during severe or life-threatening illnesses.
Inflation protection
Some life insurance policies provide increasing coverage over time, through increasing sum1 assured or bonuses that are adjusted for inflation. This helps ensure that your nominees can maintain their lifestyle and pay for the increased expenses of education, healthcare, and cost of living.
Life Insurance plans from Tata AIA
TATA AIA Life Insurance provides a multipronged approach to your requirements regarding insurance policies. We offer policies to match different insurance needs. Choose from:
2. Savings Insurance plan
3. Retirement Plans
4. Group Insurance Plans
And much more!
Conclusion
There are many benefits to having life insurance plans. It helps protect your family, support long-term goals, and build financial security over time. It can also provide income support, cover medical needs and help you save for the future in a disciplined way. By selecting the right plan and reviewing it regularly, you can stay prepared for life’s uncertainties and ensure your loved ones are financially safe.
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