The life of the bread earner of the family is very precious because if they die, the whole family suffers mentally and financially. Every family must plan for any financial uncertainties arising from the sudden death of the family head or the bread earner. Life insurance of India is the most popular form of insurance that provides financial cover to the family in the event of the demise or disability of the insured person due to natural or accidental causes. The sum assured cannot compensate for the person, and that is obvious, but it can provide the family support to hold on to their financial status and grow after recovering from the loss. Life insurance companies offer the assured sum to the family member when the insured person passes away within the policy’s term or on the maturity of the policy as mentioned in the terms and conditions of the policy.
There are different types of life insurance in India, and the most popular ones with the people are the term life insurance plan and the whole life insurance plan.
Need of Buying Life Insurance
The significant needs of life insurance are:
- Protection of Family: If the insured person passes away early naturally or accidentally, the family would need financial support for day-to-day life and special events. Buying a life insurance product would protect the insured person and his family by providing a lump sum amount on such a sad event and help the family regain financial stability over time.
- Education: If parent/s pass away accidentally or due to any natural cause like a critical health problem, child education must not suffer. Life insurance sum would help the child to continue with their education after the demise of their parent/s. Life policy is just serving the way they served if you are not available between us to watch all this service. Buying a life policy means buying a safer future for yourself and for your family.
- Retirement Benefit: Many life insurances come with a retirement benefit plan that helps the insurer of the insured person’s family by providing regular income flow after the retirement of the earning person. It is also beneficial for future financial needs. in retirement life, you just want to sit at your home and play with grandkids, but at the end of the day you must look at the source of income and life policy is a way to get the money at every certain period of time, and this is what you need in retirement life…. a fixed source of income.
- Illness: When the earning person is ill, the income flow reduces or stops, and the savings also go into the person’s treatment. Life insurance product helps in recovering the losses by providing extra income.
- LifeStyle: Every family has a particular lifestyle and financial status, and no one wants to change it for any unanticipated event. Life insurance product helps maintain the same economic level and lifestyle and also help in meeting other financial obligations.
Advantages Of Life Insurance
Many facts describe why life insurance is essential, and here we are going to take a look at some of the most crucial advantages of life insurance.
- Financial Needs: Life insurance is the best option for you if you are the only earning member in your family. Your family depends on you for financial needs, and any harm to you would cause significant mental and financial loss to your family. To fight against such contingencies, a life insurance policy is the best instrument as it provides a lump sum amount to deal with such loss and meet the family’s financial needs.
- Investment option: If you know the investment industry, you must know that every profitable investment has a part of risk attached to it. Every investor wants to mitigate the risk factor, and life insurance products come with no chance of losing money except the premium in a term life insurance plan ( if it expires). Though insurance is not an investment and you must separate them from each other to diversify your savings and investment. It provides a certain amount of money after a certain time or during the time of need which is the primary motive for any investment.
- Insurance as Collateral: If you have a life insurance product, you can use it as collateral security for drawing a loan from any financial institution. In the event of the insured person’s demise, the loan would be repaid by the insurance company to the loan provider.
- Repayment of Loan or other expenses: If there is a loan that is yet to be paid and the earning member passes away, the life insurance amount can be used to repay the loan amount. It is also beneficial for certain expenses which involve lump-sum amounts.
- Tax Benefit: Life insurance premium is exempted from tax u/s 80c of the IT Act.
- Accidents/Critical Illness: Life insurance pays for the insured person’s death and if they are disabled in an accident or critically ill in the form of riders. Life is full of struggles and uncertainties, and we can’t even trust ourselves. What if anyone met an accident, if he died then the family will cry or he survives then he would be a burden for the family, but in both situations, if anyone suffering from this is our family. If you don’t want to ruin or stuck your family’s life then you should think about buying a life policy.
Conclusion
Life insurance is mandatory for every earning person, as the family depends on them. Life cannot be compensated by life insurance amount even though it is enormous money, but the family gets necessary financial support for the time being. There is nothing certain in life, but you have to be prepared for your worst period of life, and in this situation, life policy plays a vital role. It saves you financial burden and also protects your health, life policy provides you death benefits, and this kind of benefit can save your family financially even after your demise or you met an accident lost your body part.