We love our family, then why don’t we plan to secure our family in the unpredictable scenarios? Life insurance acts as a security instrument to the millions of people. It aids to plan for the bright future and save tax in the current state. It ensures financial security to the dependents of the family in the unpredictable scenarios.
Life insurance must be purchased in accordance to the needs of the financial planning goals. If the need is permanent, you may opt for a permanent insurance. On the other hand, if the need is temporary, the individual can opt for a term insurance policy.
Top 5 importance of Life Insurance
Life Insurance replaces income
Life Insurance replaces income of the investor and render a total support to the family. At times, the supporter or the bread winner of the family may meet with an unexpected end. He may pass away or meet an unexpected accidents. At that hard time, life insurance aids in replacing that person’s income in the family. It adds financial security to the family.
Life Insurance pays final expenses
Life insurance policy benefits can be utilized to pay for the final expenses after your death. It includes cremation, estate settlement costs, medical bills that do not fall under the health insurance and other necessities. It may relieve the burden of the family at the end of your life. It may ease the downfall of the family to a certain extent and helps in stabilizing the family function.
Life Insurance pays off debts
Life insurance aids in paying off debts. Car loan or credit card bills can be paid using this insurance benefits . It allows beneficiaries to utilize it for paying off debts. It helps in warding off the financial struggle to be faced by the family ensuring financial security .
Life Insurance benefits as inheritance
Few people would like to give the whole death benefit as an inheritance to their specific lovable people. If it is done, the benefit can be gained by that beneficiary only. It may ease the life of the inheritor. This might be suitable for a person who needs to secure their lovable person even in their absence.
Life Insurance acts as a tax saver
Life insurance policy is a tax saving weapon. The policy to which you pay is available for tax benefit under the Income tax Act of the year 1961. It adds the benefit of the tax deduction when you receive proceeds from your insurance policy.
Other benefits of Life Insurance
- It is a good choice of investment as it seems risk free.
- It leads you to contribute the amount in charitable organizations.
- It aids in achieving your long term goals like retirement income, useful in emergency situations and auspicious occasions
- It helps in stabilizing the mental health and instills peace in the family
A guide to choose the apt Life Insurance policy:
While planning financially to choose the right policy, you must look into the basic things. They are;
- determine your needs
- fix your budget
- analyze about the Insurance companies
- review the terms and conditions of the companies
- compare the varied Life Insurance plans
- find the policy benefits
After filtering and determining your goal, you can purchase a policy with clarity.
Types of Life Insurance
There are various Life Insurance policies available. They provide different coverage according to the needs of the financial planning of the investors. They are;
Term Life Insurance
Term Life Insurance is the cheapest form of all the insurance policies. It is beneficial for the younger person who needs to purchase a huge death benefit to secure the family in case of unpredictable death. It is done for a shorter period of about 10 or 20 or 30 years. People mostly opt this policy as their needs meet this policy.
Whole Life Insurance
Whole Life Insurance provides lifetime death benefit. It is the traditional life insurance. Payment can be done annually, quarterly or monthly, depending on the maxims of the company.
Universal Life Insurance
Universal Life Insurance is cheaper than Whole Life Insurance. It offers savings component and also flexible premium which aids in earning interest.
Preference to the needs
There lived a happy family. The husband is the sole bread winner of that family. He was in his middle age. He loved his family a lot. Once he came across a man who used to spread awareness on the benefits of Life Insurance policy. He decided finally to secure his family.
On his way to home, he saw a family mourning over the death of the sole bread winner of the family. The mother shared their stories to a person near her. He started hearing it then. That family struggled hard to meet with the daily expenses and had fallen into huge debts. The mother worked as a maid to take care of their daily expenses but it was hardly enough. The son ceased going to school and then started to menial jobs. It shook his inner peace.
On the next day, he shared about his encounter with that man and the story of a lady he saw, to his wife. She understood the importance of having a Life Insurance policy. She nodded to all his willingness positively. They sat together and planned. They sorted out the goals by determining the needs, benefits, budgets and analyzing the companies maxims. At last, they came up with Term Insurance Policy.
Do you wonder why they had chosen this Term Insurance Policy? I am here to clarify it to you. The need for savings last until he works. Later on his son may start working by then. So there will be no need for him to save as the son would take care of the financial function of the family. And then with that money, he could spend for the special occasions and other developmental plans in the family. If he dies unexpectedly too, it can aid in giving death benefit to the beneficiaries.
Then the family life of that person went peacefully as they lived a well – planned life. They started telling about the benefits of having a Life Insurance policy to their relatives and made them to progress in their life.
Conclusion
Life Insurance is a crucial tool for the people in financial planning at all the phases of their life. It never fails to provide serenity to the investors. Life Insurance is a bundle of benefits to the investor and the investor’s family. If you are the bread winner of your family, why do you wait for long? Invest today, be peaceful everyday.
