Financial protection for your loved onesThe primary goal of a life insurance policy is to ensure that your family doesn’t have to worry about finances in the unfortunate circumstance that you pass away. You paid the premiums and after your untimely demise, your family will get the death benefit as a lump sum and tax-free amount. This way, any expenses life rent, loan EMIs, children’s school or college fees and day to day expenses are taken care of for many years.
Investment OptionsSome life insurance policies allow you to invest part of the premium in funds that you can choose. Such plans are called Unit Linked Investment Plans. What it basically is that you can kill two birds with one stone. You get your life coverage but in addition to that, you also get the opportunity to grow your money and accumulate wealth over a long term.
Cash ValueWhole life insurance policies have a cash value component attached to them. What this simply means is that some of your premium amount is saved as cash within the policy and allowed to grow over time. The cash value is something that can only be beneficial as long as the policy-holder is alive. It can be used to withdraw money if you’re facing a financial crisis and can also be used as a loan with much lower interest rates. Also, in case you fully or partially discontinue the policy, the cash value is surrendered to you.
Tax benefitsOne of the most important advantages of a life insurance policy is the tax benefit that you get on your premiums. Under Section 80C, you can avail up to Rs 1.5 lakhs per annum in tax deductions from your total income. This will help bring down your income tax considerably. Not only that, the death benefit that your family receives is completely tax free.
Live worry freeFinally, the concluding benefit of life insurance is peace of mind. When you’re the sole breadwinner of a family, there is always a worry about the stress they’ll go through if something were to happen to you. This thought can vanish away as soon as you sign up for life insurance, and you can rest assured that your family’s finances will be taken care of in the future.
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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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