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How Does Life Insurance Help You Stay Financially Safe?

Many turn to life insurance to fulfil plans such as wealth creation for the long term or financial security for the family. But can insurance safeguard you financially and meet various requirements? Well, it certainly can! Though life insurance is popular for its tax-saving perks and a life cover, there’s much more to the policy. So, let’s understand the features of an insurance plan, which enables you to get financial safety.

  • Provides a Death Benefit

The basic feature of a life insurance policy is to provide the policyholder with a risk cover. In case something unfortunate happens to you, the insurance provider shall pay out a death benefit to your family. This lump sum amount can offer financial independence to your loved ones and meet all their requirements. Thus, at the time of purchasing an insurance plan, you can estimate the exact sum assured amount by considering the various expenses of your family. This can include any pending loans, debts, higher education of your children, retirement corpus for your parents, etc. With this, the death benefit can financially secure your loved ones.

  • Presents Opportunity to Avail a Maturity Benefit

There are several types of life insurance policies that offer a maturity benefit at the end of the policy tenure. Except for term insurance, you can avail a lump sum benefit in case you survive the insurance term. You can also personalise these policies to suit your needs such as a money-back policy that gives regular payouts every five years. This amount can be used to meet various requirements like purchasing a home, marriage, retirement planning and many others. Therefore, a life insurance plan helps create wealth for the long term and keeps you financially secure.

  • Offers Loan Against Insurance Policy

Every individual goes through tough times when they require immediate funds for an emergency. During such times, a loan against an insurance policy is a lucrative option. Instead of opting for a personal loan, you can borrow some funds against the cash value of your plan. As the insurer has already verified your documents and paperwork, the disbursement of money doesn’t take much time, unlike other loan options. Hence, your life insurance policy stands by you during the time of need.

  • Allows You to Get the Surrender Value

Many policyholders opt for life insurance policies to secure the risk of a mortgage loan or a debt. But if you are done paying off such loans and do not require a risk cover anymore, many might consider surrendering the plan. This feature allows you to get the cash surrender value of your insurance plan, which it has accrued over time. Thus, you shall get something from your insurance policy and your investment won’t go in vain.

  • Grants Tax Benefits

Life insurance plans also enable you to save on taxes while financially securing your future. The premiums paid towards the policy can be claimed under Section 80C of the Income Tax Act. A maximum deduction is capped at INR 1.5 Lakh per financial year. The maturity or death benefit can be claimed under Section 10(10D) as tax-free. So, the various types of life insurance plans act as lucrative tax-saving instruments.

With this, you must have learnt what life insurance benefits are, and how they can financially safeguard you and your dependents. It is recommended to understand your insurance requirements to help choose a suitable policy. Ensure to go through the terms and conditions of the policy before buying one.

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