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10 Reasons You Need To Buy Life Insurance

Why to buy life insurance

10 Reasons You Need To Buy Life Insurance


Today, the biggest Myth among Youth of India is - Life Insurance is something you need to think about when you get old!

Buying life insurance is one of the most important and basic financial decisions, but believe it or not, only 10% of Indians are insured! 

Why is it so important? 

Well, regardless of how much you earn, no one knows what the future holds. Lots of people die prematurely every year from illness or due to various different accidents and, if you happen to be the sole bread earner in your family and you were to pass away, it could have devastating consequences for your loved ones their ability to pay household expenses, debts and maintain their standard of living.

The least you can do, therefore, is to secure your family's financial future by buying a life insurance policy. Besides, do not overlook benefits of a life insurance during your lifetime, especially if you are young. 

Here, I have listed 10 very genuine and important reasons for buying a life insurance policy.

LOOKING AFTER YOUR LOVED ONES IN YOUR ABSENCE

This is the most important factor of life insurance that one needs to consider first. Your family is dependent on you even after you're gone and you certainly don't want to let them down. Whether it's for replacing lost income, paying for your child's education or making sure your spouse get the much-needed financial security, life insurance could save the day for your surviving dependents.

DEALING WITH DEBT

You don't want your family to deal with financial liabilities during a crisis in your absence. Any outstanding debt which can be your home loan, auto loan, personal loan, or a loan on credit cards will be taken care of if you happen to buy the right life insurance policy at right time.

HELPS ACHIEVING LONG-TERM GOALS

Life Insurance is an instrument that keeps you invested for the long term, it would help you achieve your long-term goals also such as buying a home, child's marriage, child's foreign education or planning your own retirement. It also provides you with diverse investment options that come along with different types of policies.

Some policies are tied to certain investment products that pay dividends based on their performance. If you are opting for an investment-linked policy (ULIPs), be sure to read the fine print to be fully aware of the potential risks and returns.

LIFE INSURANCE FOR RETIREMENT

Who wouldn't like to enjoy his/her retirement tension free? Yes, With a life insurance plan, you can ensure you have a regular flow of income every month. Putting money in an annuity is like a pension plan put in some money regularly in a life insurance product and enjoy a steady income every month even after your retirement.

BUY IT WHEN YOU'RE YOUNGER

Not everyone needs a life insurance policy. If you don't have any dependents or you're still living off your parents' money, insurance shouldn't be your priority.

However, if you have dependents or you have co-signed a loan with your parents (or any other member of your family or friend), whether it be a student loan or a home loan, you need to start considering buying a life insurance policy. Besides, coverage costs are very much lower when you're single.

Therefore, approach a financial planner today itself to determine how much insurance you need considering the other assets you may own. Even if you're single, there may be other dependents and you need to ensure they're taken care of. 


The earlier the better. 

For instance, single people provide financial support for ageing parents or a sibling with special needs. Insurability is another reason to consider life insurance when you're single. If you're young, healthy and have a good family health history, your insurability is at its peak, and you can get the best rates on your life insurance policy.

YOUR BUSINESS IS ALSO TAKEN CARE OF

Life insurance isn't only for yourself and your family. Some insurance policies also take care of your business. If you own a business, then your business partner can purchase your portion of the business without hassle. Your business partner(s) will enter a buy-sell agreement and the payout would go to the deceased partner's nominees, but without giving them a stake in the company. There are two types of life insurance policies-a term insurance policy and a life insurance policy.

While we are all aware of the death benefits these insurance policies provide, we know little about the various options they lay out that could help strengthen your financial position.

A term insurance provides protection for a specified period of time (10, 20 or 30 years) and pays out the benefits only if you die during the term. The policy will expire and coverage will end after completion of the policy terms you chose. 

Onbthe other hand, an investment-cum-protection plan offers you a lump sum amount on the completion of the term of the policy. These plans also offer you protection but the cover is usually not as high as offered with term plans.

TAX-SAVING

Yes, You can save taxes with insurance policies irrespective of what plan you buy. The premium you pay on an insurance policy is eligible for a maximum tax benefit of Rs 1.5 lakh under Section 80C, and for tax-free proceeds on death/maturity under Section 10(D) of the Income Tax Act, 1961.

TOOL FOR FORCED AND COMPULSORY SAVINGS 

If you are unable to save a single paise every month for your financial  future consider life insurance as your  future asset. After buying it, you will have to compulsorily save and invest your money in Insurance plan for long term  which will pay you off various benefits in the coming future.

YOU MAY NOT BE QUALIFIED FOR IT LATER 

Life insurance policies run on uncertainties. You may be healthy today and paying a premium for life insurance may seem to be an added financial burden, but if you suddenly fall ill and you get any permanent major disease, you may not be allowed to buy a life insurance policy. Therefore, it is suggested to buy one early on in your life because it remains in force if your health deteriorates later on. Insurance companies allow you to attach certain riders or benefits to your existing or new policy.

These riders enhance the quality of your insurance. The accelerated death benefit rider, for instance, allows the policy owner to avail all or a part of the policy's death benefit if he or she has less time to live due to a critical illness, or wants to use the money for medical treatment or related expenses.

PEACE OF MIND

Life is full of uncertainties and Death is unavoidable. In the face of tragedy, the least you can do for your family is to secure their financial future. Even if it is a small policy, you know that you've done all you can to help them tide over difficult times.

Life insurance is a great tool for both protection as well as helping a consumer save in a disciplined manner, which leads to creation of a good corpus for your family and future. The need for life insurance changes at different stages of your lifecycle depending on the financial obligations and dependencies.

So what are you waiting for...???


Unless you are immortal, buy life insurance.

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