The primary benefits for life insurance plans are easy to understand – your family receives a significant amount of money if your demise were to occur unexpectedly within the policy period. With a life insurance plan in your kitty, you can be sure that your loved will have enough resources to continue working towards their life goals in your absence. Here it is essential to know that life insurance policies also provide financial protection and benefits above and beyond your untimely demise. If you are wondering whether life insurance plans offer protection against accidental death only, here are other benefits of life insurance plans to consider –
1. Peace of Mind
When you have the protection of life insurance, you benefit from the peace of mind. The life insurance policy would help you stay stress-free, knowing that your loved ones will not have to depend upon anyone else if something were to happen to you. With the financial safety net of the insurance cover, your family will also be able to pay off any pending debts and liabilities in your absence.
2. Wealth Creation
There are life insurance plans such as Unit Linked Insurance Plans (ULIP) that provide you with opportunities to create wealth while enjoying comprehensive life cover protection. These life insurance policies allow you to invest a portion of the premium in different market-linked financial instruments (equity and debt fund options) to accumulate superior risk-adjusted returns beating market volatilities and inflation.
3. Tax Savings
Life insurance plans allow you to avail of tax-saving benefits on both premiums paid and the insurance benefit received on death/maturity. You can claim deductions on the life insurance premium paid up to Rs 1.5 lakh under Section 80C of the Income Tax Act 1961, thus, lowering your gross taxable income. On the other hand, the amount of money you receive upon maturity or the death benefit received by your family is tax-exempt under Section 10(10D) of the Act.
4. Financial Planning for Different Life Stages
Having insurance allows you the flexibility to protect yourself and your loved ones across different stages of life, irrespective of the changing financial requirements. While you can purchase a life insurance plan early in life to avail of a lower policy premium, several life insurance plans allow you to increase the policy coverage upon reaching essential milestones such as marriage and parenthood.
Various types of life insurance plans, such as ULIPs that allow you to reap investment benefits and maximize your savings to support goals such as buying a house or a car. Then there are child plans and retirement plans that help you save for supporting your child’s educational dreams and your life post-retirement, respectively.
Overall, having life insurance enables you to fill any financial gaps that may exist in your life. With life insurance, you can identify any financial need and choose a suitable life insurance plan to support that need.