A person and an insurance company enter into a life insurance agreement, where the insurance company pays the amount in cash upon the individual’s death or the policy’s maturity. Buying life insurance is different for everyone, but at its core, it is about providing financial security for yourself and your family. It will protect your loved ones from devastating financial losses if something unfortunate happens to you. This insurance solution provides financial security, pays off debts, pays living expenses, or covers any medical or final expenses. Here are some of the common reasons to buy life insurance.
Financial Safety Net
If you are an earning member of the family, the personal loss will not only hurt the family emotionally but also financially. So, having good life insurance will provide a financial safety net that does not add to the family’s burden. This financial security will safeguard your family, enabling them to sustain their standard of living and settle any outstanding debts. Additionally, it can cover any financial burden or debt you face.
Tax Benefits
Buying life insurance also gives you deductions on the premiums you pay every month. Under Section 80C of the Income Tax Act, you are eligible for an annual tax deduction up to ₹1.5 lakh limit. Additionally, if you buy any life insurance policy for your spouse and child, you can increase your life insurance tax benefits. You are entitled to a tax deduction of up to 10% of the sum assured.
Save for Retirement
Life insurance can help you prepare for your retirement, and there are many best life insurance policies to choose from. Unit Linked Investment Plan (ULIP) serves the dual purpose of insurance and investment. The premium paid is divided in two ways-one for life cover and another is invested in capital markets. A pension plan is the cheapest life insurance plan. In one phase, you pay a premium to where it is invested in market securities; in the second phase, when the policy has matured, you can get a stipulated amount on a monthly or quarterly basis.
Buying life insurance is a smart financial decision that can provide peace of mind and financial security for your loved ones in the event of your death. Whether it’s an economic safety net, providing tax benefits, or helping you save for retirement, it caters to various needs.
