The world has been significantly impacted by COVID-19. The ensuing lockdowns sparked numerous theories and investigations about how the new way of life might affect people.
One thing is certain, though: going through the pandemic has given many of us the opportunity to pause and reflect, and evaluate many essential elements of our life, such as our finances. The importance of financial security was emphasised due to the pandemic, and many people understood the significance and benefits of life insurance policy as well.
If you are still in two minds as to whether you need a life insurance policy, the following reasons can help you get a better picture:
1. Financial support and certainty for your loved ones
This is the benefit of a life insurance policy that needs to be considered the most. Even after you pass away, your family may be bereft of your support. Life insurance can provide vital support to your dependents after you’re gone, such as acting as a source of income, covering your child’s educational expenses, or offering essential financial stability for your spouse.
With increased risk to lives due to the COVID, the need for a product that takes care of loved ones is needed more than ever. Even though the pandemic may have subsided, it has taught a lesson that an uncertain event can crop up anytime. A life insurance policy can be an effective way to cover oneself and their loved ones against such uncertainties.
2. Better debt management for your loved ones
You don’t want to burden your family with debt during a crisis. If you have financial obligations such as a loan or credit card debt, it can prove to be a big responsibility for your family to pay them off if you are not around. They may have to put aside their dreams to pay for these liabilities.
If you choose to get the appropriate life insurance policy, your loved ones would be able to pay off any existing debt, including any auto, personal, or credit card loans.
3. Investment opportunities for financial growth
Since it is a product aimed for the long run, it can assist you in achieving long-term objectives like saving for retirement or making a home purchase. Additionally, it offers you a variety of investment choices that go along with various investor types. Specific insurance products that can help earn returns depending on market performance can be opted if one has the risk appetite for the same.
Thus, the right life insurance plan may help protect the future of your loved ones as well as give a chance to gain market-linked returns for your financial growth during uncertain times.
Read the fine print if you choose an investment-linked policy to fully understand the potential risks and returns.
4. Retirement planning features for a better future
Who wouldn’t want their retirement funds to continue to grow till they retire? Worrying about the present pandemic should not deter you from creating a better future.
You can make sure you have a consistent source of regular income during your retirement years by implementing a life insurance policy with pension plan or annuity features. You can ensure this to a certain extent by making regular payments or parking a lump-sum amount into a retirement-oriented life insurance product.
Some of these plans may offer a fixed amount of money at regular intervals. This kind of assurance can be a great support to help you and your loved ones course through difficult times.
5. Tax savings to reduce tax outgo
Under Section 80C of the Income Tax Act, 1961, the premium paid for a life insurance policy is eligible for a maximum tax benefit of Rs.1.5 lakhs. Additionally, the proceeds received from the policy on death or maturity are tax-free under Section 10 (D) of the same Act. These benefits are subject to terms and conditions mentioned in the Income Tax Act.
Currently, there are 2 tax regimes in India – new and old. To get the tax benefit you desire, choose the correct one after consulting an expert. You can opt for a regime change during the next financial year.
Conclusion:
A life insurance plan can be a fantastic product for providing protection and for encouraging consumers to save money systematically, which helps them build up a healthy corpus.
Depending on your financial responsibilities and dependents, you may require various amounts of life insurance policy at different times of your life.
