10 Most Important Facts About Life Insurance Plans

A life insurance plan provides life cover to the insured person. In case the insured person passes away untimely, this life cover amount can be offered to his/her family. Thus, life insurance plan can ensure the financial security of the policyholder’s family.

Mr. Shah wants to buy a life insurance plan. He finds an insurance plan that provides a sum assured of Rs. 1 crore. He purchases this plan for a tenure of 20 years.During this tenure, he is required to pay premiums regularly. However, in case he passes away within the term, the insurer can pay the sum assured amount to his nominee. His beneficiaries can use this amount to repay debts, meet regular expenses, and pay for future financial goals.With the help of life insurance, policyholders can ensure their family stays financially secure in case of unfortunate events. Thus, it’s recommended that every person who has people relying on them financially should get insured.

Here are some of the most important facts that people should know about life insurance-

Most people think life insurance provides one benefit- the death benefit. However, this type of life insurance is called term insurance .But there are various life insurance plans . Every type of life insurance plan provides the death benefit. Furthermore, the additional benefits a policyholder receives depend on the type of life insurance purchased.Here are some of the popular types of life insurance plans-

• Term Insurance
• Unit-Linked Insurance Plan (ULIP)
• Endowment Plan
• Whole Life Insurance Plan

Life insurance offers the sum assured to the beneficiary of the policyholder. Therefore, it becomes crucial to nominate a beneficiary when purchasing a plan. This can help in a smooth claim settlement process. Furthermore, a policyholder can change the nominee during the tenure of the plan.

Most insurance providers are becoming tech-driven to provide their customers with better service. Hence, many insurers have started offering their products online.Thus, an individual can compare different products, their benefits, and life insurance premiums easily online. This can help a person select the right product. Hence, purchasing insurance online has made the process easy.

One of the most important factors that impact the premium amount is the age of the individual. For instance, the premium charged to a young individual can be lower compared to the premium charged to an older person.As older individuals are more vulnerable to diseases, the insurance companies charge them a higher premium amount. Hence, it’s recommended to purchase insurance at a young age.

While life insurance offers the death benefit, it can also provide other advantages. For example, if a person invests in a ULIP, then he/she can get insurance as well as investment benefits. In case of a ULIP, a part of the premium is used for life cover. The remaining amount is invested in investment instruments, like equity and debt funds.Apart from the death benefit, people can get more advantages by investing in life insurance. By purchasing life insurance, policyholders can get maturity benefits, investment returns, etc. The benefits a person receives depend on the policy purchased.

Life Insurance Can Be Customised

Most insurance companies allow their customers to customize a life insurance plan. For instance, a person can choose the sum assured amount, policy tenure, etc. Thus, an individual can customise a plan that is right for him/her.

People Can Purchase Add-Ons

Add-ons are the additional benefits a policyholder can buy by paying an extra premium. These add-ons can enhance the financial protection provided by a life insurance plan. Some of the most important add-ons are- critical illness cover, waiver of premium, etc.

Life Insurance Provides Tax Benefits

Another important benefit that life insurance provides is tax benefits. Under Section 80C, the premiums paid to purchase a life insurance plan can be claimed as a tax deduction up to Rs. 1.5 Lakh.

Payouts from Life Insurance are Exempted from Tax

Under Section 10(10D), the death benefit from life insurance is exempted from tax. The maturity benefits can also be tax-free. However, this depends on the type of life insurance.

Life Insurance Can Help Policyholders Achieve Long-Term Financial Goals

Most people want to accumulate funds to achieve long-term financial goals, like buying a house, building a retirement corpus, etc. A life insurance plan can be a great option that can help them achieve their goals.For instance, a ULIP can enable them to make investments in equity and debt funds. Such investments can grow their money exponentially. Hence, making it easy for policyholders to achieve their long-term financial goals.

Life insurance can offer death benefit, maturity benefit, and investment returns to the policyholders. Hence, it can be a great way for policyholders to secure their financial future. Furthermore, it’s recommended to research different plans, assess their benefits, and check their premiums before making a decision.

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.