Why is life insurance necessary for financial security at different ages?
These days, the importance of life insurance is unfathomable, as it offers monetary benefits for individuals and provides financial security under any unforeseen circumstances. As this COVID-19 pandemic has snatched many lives, now, people have become more cautious about their health and understood the importance of life insurance in their lives. Now, many people are opting for essential life insurance policies to offer the utmost security and financial protection to their families.
Is life insurance security?
Yes, these days, life insurance offers comprehensive financial security to your family members and motivates them to lead a healthy life in your absence.
Importance of life insurance policies in today’s fast-paced world
Why is life insurance important in India?
- A 360-degree pillar of financial security
- Customize your policy to cope with the changing needs of various life stages
- Research and more research
- To settle your debts and other expenses
- Save taxes
Let’s dig deeper and find out why life insurance has become a necessity for Indians.
1. A 360-degree pillar of financial security
An adequate life insurance policy is the pillar of financial security to your family members. Apart from protecting the future of your family members, a life insurance policy also inspires them to lead a wholesome life in your absence. Moreover, a life insurance policy offers great savings that you can utilize in many ways, including wealth creation, securing the future of your children, retirement planning, and many more.
Many policyholders are unaware that they can get loans against specific life insurance policies like you can get a loan against MAX life insurance policy. After evaluating your policy type and its surrender value, the insurance company will offer you a loan that you can utilize to solve your immediate monetary problems.
2. Customize your policy to cope with the changing needs of various life stages
After purchasing a life insurance policy, you need to pay a lot of attention and monitor your policy on an interval basis because a robust life insurance policy can meet all the changing needs of your life.
Before investing, you should have adequate knowledge that different types of insurance policies can successfully meet all financial needs at various stages of life. Thus, you should prudently choose the best policy that you can customize as per your evolving needs. By purchasing riders, you can also strengthen the effectiveness of your insurance policy. These riders are quite effective against customized requirements.
Though riders are optional, they offer add-on benefits to your insurance policies. These riders are also helpful in fulfilling the unique requirements of individuals. To enhance the financial protection of your loved ones, you can go for riders.
3. Research and more research
Before purchasing an insurance policy, you need to do plenty of research. Every applicant should invest a chunk of time and effort in researching online, interacting with leading insurance providers, and reviewing their product policies before taking the final call.
Before investing a single penny, an applicant should take a close look at the insurer’s sum assured and claim settlement ratio (CSR).
In a nutshell, the sum assured is the amount that an insurance provider guarantees to pay policyholders under any unfortunate incidents. This COVID-19 pandemic has forced everyone to understand the importance of sum assured that an insurance company offers to policyholders.
Similarly, you also need to pay attention to the claim settlement ratio of the insurers before making any commitment. A company’s claim settlement ratio implies how efficient they are in settling the claims of a deceased policyholder. It also indicates the reliability and trustworthiness of the company. A claim settlement ratio also reassures the kind of security and service you can expect from the insurance provider after your sudden demise.
4. To settle your debts and other expenses
A life insurance coverage helps your family pay your debts and other financial liabilities during a critical period. An effective life insurance policy will manage and look after your outstanding debts, including a home loan, car loan, education loan, or personal loan.
5. Save taxes
Life insurance policies embrace policyholders with income-tax saving provisions. The policy premium is eligible for a maximum tax benefit of Rs 1.5 lakh under Section 80C. In addition, you don’t need to pay any tax on death/maturity under Section 10 (10D) of the Income Tax Act, 1961.
Importance of having life insurance cover at various stages of life
- 18-25 years: A plethora of surveys has claimed that nearly 90% of the youngsters in India didn’t have a life insurance policy. Because they feel they are quite healthy, and that’s why they don’t need any life insurance. Moreover, they don’t have any financial responsibilities or dependents. But experts recommend youngsters to invest in life insurance policies as they will get a higher sum assured with a lower premium. Moreover, a youngster can go for a flexible term plan that can be customized with increasing responsibilities and liabilities.
- 25-35 years: During this period, your responsibilities (a home loan, a car loan, etc.) may enhance as you become a family man. So, you can go for a term plan that offers a monthly income.
- 35-50 years: Now, you are flooded with responsibilities, and the number of dependents (your parents, children, etc.) will also increase. So, life insurance could be your utmost choice at this stage. You can go for ULIP or a retirement plan policy that will offer regular payments like a pension to cover your family’s financial needs.
- 50 and above: A term plan with decreased coverage could be the best choice for you at this stage of life. Since you have fewer liabilities, you don’t need a high coverage amount. In addition, because of low coverage, your premiums will not burn your pocket.
So, a life insurance policy is inevitable at every stage of your life. A life insurance policy offers a plethora of benefits at different stages of life. You should invest in essential life insurance policies to thrive your wealth and protect your loved ones under any circumstances.
