Why is Life Insurance Important? Life insurance is essential for you, as it offers your family a vital safety net in case of your untimely disease. It preserves your family’s financial independence and enables them to maintain their living standard without compromising on essential needs. Life insurance policies act as a caring shield in case of an unexpected incident to ensure that your loved ones are not left unsecured and can linger to thrive with adequate financial support.

Why is Life Insurance Important?

Secure your family’s financial future.

Life insurance is all about fortifying you and your family financially. All parents want their children to be cared for even when they are not around. Life insurance ensures your loved ones won’t agonize financially in your absence.

Accomplish your financial goals

We all have some goals in life for which money wants to be saved. Life insurance plans help you achieve those goals by providing you with a financial corpus with the protection of a life cover. Life insurance plans inculcate a habit of disciplined saving. Paying a small monthly insurance premium will help you amass funds. What’s even better is that this small monthly amount only keeps growing. So, years from now, you’ll have enough wealth accumulated to complete your more substantial and long-term financial goals.

Brings peace of mind

Having life insurance will give you peace of mind. Life is uncertain; besides, life insurance can offer financial assistance to your family when you are no longer around. You can also plan your retirement by taking a departure plan, which will give you a monthly income.

Save tax

Generally, you can claim an income tax deduction on your life insurance premiums under Section 80C of the Income Tax Act, 1961**. Payouts for death claims are tax-free under Section 10(10D) of the Income Tax Act, 1961**.

Reasons to Have a Life Insurance Plan

 Long-term financial goal

Life insurance plans help you create a substantial financial corpus for your long-term financial goals by helping you save money with the protection of life cover.

Protect the child’s future.

Every parent wants to provide their child with the best possible future. Life insurance plans ensure your child has the best possible future even when you are not around.

Loans and liabilities

If you have bought a loan, then you should always consider buying a term plan. It makes sure that the burden of your loan doesn’t fall on your dependents in your absence. Term insurance plans are the most affordable way to protect home loan amounts and safeguard the shelter of the policyholder’s family in case of his/ her untimely death.

Child’s education planning

Child education plans help you save and build a financial corpus for your child’s future education expenses. These plans provide life cover so that the child gets the sum assured even in the case of the policyholder’s untimely demise.

Dependent spouse

If your spouse is financially dependent on you, then you must buy a life insurance plan. This will ensure that your spouse lives a financially independent life in case of your absence.

Leave a tax-free legacy

As life insurance payouts are tax-free under Section 10(10D) ** of the Income Tax Act, 1961, you can leave a tax-free legacy for your loved ones.

Retirement planning

Life insurance plans help you invest and build a financial corpus for your retirement so that you can live your post-retirement life comfortably

Tool for structured saving

Life insurance is a valuable financial tool that can help you establish disciplined financial habits. It makes you commit to paying a regular premium payment to keep your policy active. This essentially makes you set aside funds that accumulate over time periodically and helps you prioritize your financial security. Moreover, life insurance policies often feature various investment options that offer higher incentives to save for the future. The importance of life insurance in this context lies in its role as a structured savings tool that helps you with long-term financial planning. Through consistent payments, you not only secure your future but also build a financial nest egg for your beneficiaries.

Optional riders

The option to add riders also highlights the importance of life insurance policies. Optional riders provide you with additional benefits and customization options. Purchasing these optional add-ons helps you enhance your financial protection beyond basic life insurance coverage. It also offers comprehensive protection and peace of mind to your family. Riders provide added flexibility to ensure that your life insurance plan adapts to your evolving life situations over the years.

Key Takeaways

The importance of life insurance is evident as an income replacement tool. In the unfortunate event of your absence, the proceeds from the life insurance can serve as a vital lifeline for your dependents. The payouts from the life insurance policy can replace the lost income and ensure the continuity of financial support for your family members. This can be particularly significant for the sole breadwinners of a family. Life insurance provides a safety net to the surviving family members and helps them maintain their standard of living, cover essential expenses, and pursue long-term financial goals. It can be used to pay loan repayments, educational expenses, or daily living expenses.