Life insurance refers to a mutual contract between a policyholder and insurer/insurance company wherein the insurer guarantees the payment of a sum assured (often known as death benefit) to named beneficiaries of the insured in case the individual (he/she) dies. The sum assured is paid basis on the premium paid by the insured and the policy contract.
Among all the major segments, Life Insurance happens to be one of the largest and one of the fastest growing in India. While opting for a life insurance is one of the most important decisions of life, only a handful of the Indian population has a proper life insurance in place. However, with time this trend is gradually changing and several variations in life insurance policies have been launched.
According to Vineet Arora MD and CEO of Aegon Life Insurance, “purchasing life insurance is one of the most important decisions an individual makes. You buy it anticipating the risk associated with unforeseen situations. The primary objective in mind when buying a Life Insurance policy is to protect loved ones from the burden of financial loss providing monetary support in the time of dire need. Life Insurance also assists in timely repayment of debts that you may have taken as home loan, personal loan etc. leaving your family with a sense of security.”
Some of the major reasons for buying a life-insurance policy include the following:
The most important reason behind opting for a life insurance is that, you end up safeguarding your family and loved ones. Remember the day of your wedding when you made a promise to your spouse that you would take care of each other and be with them at every nick of time. Its time for you to keep up that promise.
Most importantly, if your family happens to depend upon you completely on financial terms, then it’s essential that you opt for a life insurance. Insurance will ensure that your family is protected even during your absence (sudden death).
No one wants to suffer from any kind of financial liabilities, especially during a crisis. Every individual and family wants a proper insurance that would take care of outstanding expenses such as home loans, credit card outstanding or mortgages. Having a proper life insurance plan can ensure that such liabilities are taken care of. Needless to say that one can pay off debts and several other expenses.
The next most important benefit of opting for a life insurance is that it can definitely ensure financial security and help plan retirement corpus for many. While parents want the best for their children, as a responsible individual, you would want your family to be financially secured even when you are not around. A life insurance can definitely ensure that.
On the other hand, it might become difficult to manage financial challenges after you retire. If you do not want to depend on anyone during your old age, especially financially, opting for a life insurance is a must. If you put your money in the annuity-like pension plan, then you can enjoy a steady income every month even after your retirement.
Last but not the least, one of the most important reasons to opt for life insurance is to ensure tax savings. Whatever you plan to purchase, you could be exempted from paying too much taxes. As per section 80C, you are eligible for a maximum tax benefit of Rs. 1.5 lakh under Section 10(D) of the Income Tax Act, 1961 and tax-free proceeds on death or maturity. Many individuals buy life insurance for this purpose and opt for a permanent policy to benefit from the coverage till the end of their life.
Well, it can be said that life insurance is as important as food and water is for human sustenance. It not only acts as a financial well-being but also acts as a savior in difficult times. Therefore, do opt for a life insurance, especially when you are young.