Reasons You Need to Buy Life Insurance
Buying a life insurance policy early in life is one of the smartest financial decision you can make. Given the kind of hectic lifestyle we have in today’s day and age, it is important to plan and save up to secure your financial future and that of your family. One instrument that can help you do so at an affordable cost is a life insurance plan.Life Insurance can be defined as a contract between a policy holder and an insurer, where the insurer promises to pay the beneficiary a sum of money in exchange for a premium, upon the death or survival of an insured person. Simply put, it financially aids the family of the policyholder in case of his/her unfortunate death. Given that death is inevitable, here are the top 10 reasons why one must absolutely have a life insurance plan-
1. Looking after your loved ones in your absence- With a life insurance plan, you can ensure that your family and dependants are taken care of, even when you’re not around. If you are the sole bread winner of the family, their financial security should be of utmost importance to you and hence, getting a life insurance plan is a wise idea.
2. Paying off debt- Your financial liability should not become your family’s responsibility after your death. It is important to ensure that your debts are taken care of while you are in the pink of your health. However, in your absence, a life insurance plan comes to the rescue as your family can use pay off debts such as auto-loan, home loan etc. with the amount received.
3. Achieving Long-term Goals- As a life insurance plan keeps you invested for a long time, it can be instrumental tool to help achieve long term life goals like buying a house or funding major events of your child’s life. There are certain investment options available in the market that provide life insurance along with contributing a certain amount in secure investment options.
4. Supplementing your Retirement Goals- In the golden years of your life, your regular source of income might diminish. With a life insurance plan, you can surely ensure that you have a source of monthly income. Investing in a pension plan can be considered as you have to pay a stipulated amount regularly and get a steady monthly amount, even after retirement.
5. Cheaper Premiums when you're younger- When you are younger and comparatively healthy, you can avail a life insurance plan at a much lower rate. This ensures that you lock in the premium amount and stay covered for a longer time, without worrying about increase in premium amounts.
6. Business is also taken care of- There are certain insurance policies that also take care of your business. If you own a business, then your business partner can purchase the portion of the business that you own, without any hassle. Your business partner simply has to enter in a buy-sell agreement and the payout would go to the deceased partner's nominees, but without giving them a stake in the company.
7. Tax-Saving Purposes- Under Section 80C of the Income Tax Act, 1961, you can avail a tax rebate of upto Rs. 1.5 Lakhs from the premiums paid of a life insurance policy. Hence, not only does life insurance secure your life, but it also helps you save tax.
8. Proposes Regular Savings- Life insurance, as a financial instrument, is a long term tool and hence, require regular savings. Therefore, it inculcates a habit of disciplined savings to pay premiums, so that you save up enough to financially secure your life and that of your loved ones, in case something untoward were to happen to you.
9. You Might not Qualify later- As a healthy and financially independent individual, you would be qualified to buy a life insurance plan. However, life insurance runs on certain uncertainties and exclusions. If you fall terminally ill and are unable to work because of the same, some insurers might not qualify you to buy a life insurance plan. Hence, buy a life insurance when you healthy both physically and financially. It also is important to look for certain riders that improve the quality of your vanilla life insurance plan.
10. Peace of Mind- Having a life insurance plan brings a certain peace of mind with it as it ensures your life is financially secured. Also, in case of your untimely death, the death benefit would be paid to your dependants and their future financial needs are taken care of.
