Insurance has become one of life’s necessities that every person should invest in as protection for the future. A life insurance policy plays a significant role in your entire family by keeping all the financial worries at bay. You do not need to think about the contingencies of life always and how you will manage them as you are financially secure with adequate insurance.
The primary objective of the life insurance policy is to provide financial support in times of crisis and minimize your hardships. If you are the sole breadwinner of your family, the loss of your income will affect your loved ones. Your children may even have to compromise their studies and career. Therefore, it is always advisable to buy a life insurance policy as soon as possible. However, you must be aware of some crucial facts about life insurance before you make a decision.
Below are five facts about a life insurance policy that you must know about:
- Must buy if you Have Dependents
Being a family man, you have many responsibilities to take care of, including daily lifestyle expenses and your child’s future planning. If you are wondering why a life insurance policy is essential, it is because life is uncertain, and you never know what may arise next.
In case of your untimely demise, your dependents will have an added financial burden along with the emotional trauma. A life insurance policy will make sure your loved ones have the required financial support to maintain their lifestyle and follow their dreams as well.
- More of a Risk Management Tool than just Investment
A life insurance policy facilitates risk management in your financial portfolio as it acts as a safety net for your whole family. While you look for investment opportunities to maximize your savings, your life insurance policy serves as the foundation for your loved ones, especially if anything happens to you.
The primary purpose of a life insurance policy is to provide a significant amount of money to help your family take care of their lifestyle expenses and goals in your absence. The insurance benefits are neither affected by market volatilities nor taxation – the coverage benefit from life insurance plans is tax-exempt under Section 10(10D) of the Income Tax Act 1951.
There is nothing more precious and uncertain than life itself. So, while buying a life insurance policy, look at it as a risk management tool rather than an investment.
- Two types of Policies- Term and Permanent
Life insurance is a very flexible financial tool as it allows you to meet multiple objectives. A life insurance policy can be of two types, according to your convenience. Either a term life insurance policy or whole life insurance. A term life plan is the purest and most affordable form of life insurance. It covers you for a fixed duration of time, and nothing is payable in case you survive the policy term. Nowadays, however, there are term plans with Return of Premium benefit, which offer to pay back all the premium paid upon surviving the coverage period.
Whereas, a whole life insurance policy covers you for your entire life and guarantees a pay-out to your dependents after your demise. There is no pay-out if the insured outlives the policy period.
- You can Choose a Policy within your Budget
Most people often end up uninsured, thinking that insurance is an expensive affair. However, with the expansion in the insurance sector, you can now buy a life insurance policy within your budget and customize it according to your liking. Remember that a life insurance policy will become your support system in times of crisis. It provides you with financial stability by inculcating the habit of saving in the form of premiums every month. Also, there are life insurance tax benefits under Section 80C of the Income Tax Act, which you can take advantage of for further investments.
It is advised to cut down on your monthly expenses and save for premiums that are quite affordable if you look at the bigger picture. Make sure to create a budget and ensure that you buy a life insurance policy that covers you and your family’s needs.
- You can Easily Check your Premiums Online
Life insurance premium calculators allow you to ascertain your premium amount in simple steps within minutes. This way, you can plan your funds beforehand and manage them better. Make sure to use online calculators before buying a life insurance policy to avoid any troubles in payments later.
Life Insurance Policy: A Must for your Financial Portfolio
A life insurance policy is the best way to provide a more secure financial future for your family and gives you peace of mind. It is crucial to fully understand the facts about life insurance to make a prudent decision. Indeed, no one can deny the importance of a life insurance policy in today’s world. Life insurance plans offer comprehensive insurance coverage that you can customize according to your needs and budget. So, make sure you consider all your family’s needs and buy the right life insurance policy.