Know the advantages of owning a suitable life cover?

Posted by Jenny Dsouza on January 27th, 2017

Life insurance is one of the best financial tools which offer many advantages such as risk cover, long-term savings, tax benefits & more. It offers the best financial protection in today’s time for an individual taking into account the present and future value of his/her assets and liabilities. The product is now having more awareness and acceptance in India. In fact, companies have introduced customized life insurance policies that will not only meet their requirements but also fit into their budgets. But, its better consumers should develop a better understanding of the products before buying a suitable one.

There are a number of things that each of your life insurance policies should be carefully reviewed, along with terms & conditions. This is why it is always important to check a policy carefully when you first receive it, to make sure that everything that you wish to have is being included in the policy.

The main reason of life insurance plans is to offer financial protection for your family in your absence. A life insurance policies stands out to be the core of your financial plan, especially if you’re the primary earning member of your family. An ideal policy offers your family an adequate cover to live life comfortably and maintain their standard of living. It can even help fund future financial needs like child education, business, etc.

Your life insurance plans will help you protect against financial expenses due to critical illness or other health related issues. The riders act as a perfect way to enhance policy to cover against risks like first heart attack, stroke, accident, critical illness, surgeries or other operational costs, etc. The benefits vary from policy-to-policy.

Retirement Plan

While insurance covers the risk of a sudden death, but when you survive it helps to give some very good returns. In your old age, it is the policy that will financially secure you and take care of post-retirement expenses. This could be a challenging task due to the lack of steady income. But life insurance policies (pension plans) can offer you a steady source of income in the form of annuities that make it easy to handle your post-retirement expenses.

Tax Planning

When invested wisely, life insurance policies can prove to be a great tool for savings taxes. The premium paid towards your life insurance policy is deductible under section 80C, while contribution made towards your pension plan are deductible under section 80CCC. But, there are certain annual limits to these deductions and the benefits can vary as per the provisions of the Income Tax Act. It is advisable you can consult your tax advisor for detailed advice on this.

Ideally, when people start a family by midlife, they get engrossed in raising children and paying off debt like house or car loan. At this point of time, you might require a higher level of cover for your family’s requirement with adequate finances. Therefore, the first thing while buying life insurance plan would be understanding your income source, risk appetite and future projections of your family needs along with rising inflation costs. If your spouse is lending help to pay a premium you can consider opting higher insurance cover.

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Jenny Dsouza

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Jenny Dsouza
Joined: November 25th, 2016
Articles Posted: 44

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