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In India, life Insurance is often misunderstood to be a straight-forward financial product. In reality; however, these plans can be far more complex and valuable. While life insurance policies are generally about insurers receiving premiums and paying out a death benefit to your beneficiaries in case of any eventuality, these plans pack a variety of long- and short-term incentives. Here’s a look at five things you may not realise your life insurance policy can do for you.
1.Tending to Family Commitments
You leave no stone unturned to provide for the people you love and making sure that they always have what they need. After you’re gone; however, your family is still dependent on you. Whether it is for paying for your child’s college education, replacing lost income or getting the much-needed financial security, your family would be lost in your absence. Thankfully, life insurance could save the day by providing a significant amount in the form of the death benefit that you would have provisioned for, in your lifetime.
2. Funding Child’s Education
As you go through life, get married and start a family, you would have a flurry of large expenses such as a home loan, family healthcare or your kids’ education expenses. With a life insurance policy in place, your medical expenses would be taken care of. That said, life insurance can also give you means to help maximise your savings, so that you can handle your child’s education expenses.
Enter child insurance plans, a variant of traditional life insurance that also offers investment benefits. These plans offer you an opportunity to invest as per your current financial status, your child’s education needs, and other financial goals while providing life cover benefits. While you would receive the life cover as a lump sum payment once the policy term expires, you can also avail flexible pay-outs at significant milestones of your child’s education.
3. Retirement Assistance
Life insurance, in the form of retirement plans, can help you supplement your retirement income after your working income stops. These plans offer you an option to put away your savings in an annuity such as pension plans. Over time, your regular savings into the insurance plan would accumulate cash value, and then, you can use the proceed to furbish a guaranteed, steady monthly income after retirement. Overall, life insurance, especially retirement plans, would allow you to plan your life after retirement in a disciplined, secure and affordable way.
4. Save Tax
One of the most significant perks of buying a life insurance policy is the tax saving benefits that accompany the policy. The premium amount that you contribute towards the insurance plan is tax deductible, up to a maximum of Rs. 1.5 lakhs under the Section 80C of the Income Tax Act 1961. Also, the life insurance payouts, in the form of sum assured/coverage, are exempted from tax under Section 10(10D) of the Act. Therefore, both death benefit and survival benefit (including bonuses, if any) are free from any taxation.
When you start your career in your 20s or sooner, you’d realise that your income wouldn’t always match up to your expenses. As your responsibilities in life increase after marriage and childbirth, you would have to create more than one source of income, while making sure that your loved ones are financially secure in case of any eventuality. Therefore, you would have to identify a life insurance plan that can help you provide a financial safety net to your family and streamline your finances to support your life goals.
That being said, life insurance isn’t just about investing towards a life cover and death benefit. Instead, life insurance plans from reputable insurers including Max Life Insurance comprise an array of insurance benefits and additional features to help ensure your family’s security and happiness. Also, these life insurance plans offer the flexibility of customisation, meaning that you can choose a plan and customise it to suit your changing needs.
Article By Meera Deewan