Life Insurance policy is a contract between an insurance provider and the insured where a nominee of the insured shall receive a sum of money upon their death. Life insurance is especially important in the Indian context. According to the World Bank, only 24.4% of Indian women are part of the active workforce. This means that even today, the primary breadwinner in an Indian household is a man and the family is financially dependent on him. Thus, have an insurance cover gives that cushion for financial security.
A larger number of Indians are still ignorant of importance of having a life insurance cover. Many professionals do not take life insurance, either because they lack sufficient knowledge on how to get a cover or ignorance. People who avail home loans are obliged to take life insurance as well in case of becoming a defaulter due to death. Reputable organizations make it compulsory for employees to get life insurance.
Risks of not taking life insurance:The biggest risk of not having a life insurance cover is that it may leave the dependents financially vulnerable. No one would want that for their dependents.
Another risk or disadvantage of not taking life insurance plans is that some life insurance companies in India benefit the policyholder in ways similar to mutual funds. The policyholder can get a significant amount in his own life. By not taking any life insurance, people lose out on this.
Rewards:Having an insurance cover provides risk coverage to the family of the insurance in the form of monetary compensation in return for the premium paid.Most insurance companies in India offer different types of plans to suit the different needs of the people. Typically, higher the premium amount, better are the benefits.Certain insurance plans provide coverage for the expenses on the hospitalisation and treatment of critical illness.
One of the biggest benefits of an insurance policy is that it provides guaranteed income in the form of sum assured which is payable in the event of the untimely death of the policy holder.Some insurance companies provide the policy holder the option to avail a loan (limited to only certain amount) against the total value of the insurance.
Note: This option is available only on a few selected policies
Another significant benefit of life insurance cove is that it provides tax benefits. The amount paid towards the premium is considered as deductible under the section 80C of the Income Tax Act, 1961.
Learn more about different Online Term Insurance Plans here.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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