A life insurance policy works like a contract between the policyholders and the insurance providers. Here, the policy buyers are responsible for paying the premium, and the policy providers are responsible for offering financial backup when required.
But the question is, why should you invest in a life insurance plan? Are there any benefits?
Well, of course! There are benefits to buying a life insurance plan, and that is precisely the point for discussion in this blog. While these life insurance plans are known for offering financial backup, there is more to them, and you should know that before moving ahead.
So, read on.
8 Significant Reasons to Buy a Life Insurance Policy
Here are the major reasons for investing in a life insurance policy:
1. Financial Safety Net
The biggest advantage of a life insurance plan is the financial safety net it offers. In the absence of the policyholder, the family left behind receives considerable financial backup, which helps them manage their needs without any stress.
2. Create Wealth
By investing in life insurance plans, you can preserve a considerable fund for the future. All you need to do is to pay the premium every month. This monthly amount will consistently grow, leading to the creation of a considerable corpus. So, you get a chance to create wealth using these insurance policies.
3. Save for Retirement
As life insurance policies help build wealth, they can be a great asset for post-retirement financial planning. Moreover, you can opt for a dedicated retirement plan that guarantees a lump sum return at the end of the tenure.
4. Helps in Diversifying Investment
Life insurance policies also help diversify your investments. With these policies providing financial cover, you can also explore other avenues of investment and earn more profits. Additionally, the return from these policies is guaranteed, which is an added advantage.
5. Meet Long-term Financial Goals
A life insurance policy helps you to make a habit of saving for the future. As a result, you become more disciplined and organised about your financial goals and planning. You can build a large corpus by paying a small premium. This way, you can reach long-term financial goals.
6. Excellent Income Tax Waiver
With these policies, you can claim an income tax deduction under Section 80C of the Income Tax Act of 1961. Also, tax-free payouts for death claims are available under section 10 (10D).
7. Additional Benefits with Optional Riders
You can purchase optional riders or add-ons for additional benefits. These riders extend the financial protection of the basic life insurance policy. It incorporates extended protection and flexibility, which will meet your needs in life’s changing situations.
8. Peace of Mind
Lastly, peace of mind is an important reason to purchase these insurance plans. With the policy offering death benefits and guaranteed return after the tenure, it gives you assurance and peace of mind about your family’s financial future.
Different Types of Life Insurance Plans You Can Buy
Following are the popular life insurance plans for you:
● Whole Plans
These plans come with extended coverage of 99 to 100 years. That means your financial interests are safeguarded for the longest possible time. Additionally, they act as a guaranteed return investment plan.
● ULIPs
Unit Linked Insurance Plans (ULIPs) provide an opportunity to diversify your investment through insurance and investment. Here, your premium amount is distributed and allocated in insurance and market-linked investment instruments. So, you earn a return and secure your financial future with ULIPs.
● Retirement Plans
Retirement plans are classified as guaranteed return insurance as they provide financial coverage for the non-working years. The long-term investment horizon and death benefits make them an excellent investment option for many. With these plans, you will get numerous options to withdraw your money, such as a one-time lump sum payment, regular income or a combination of both.
● Money-back Policies
Money-back policies are suitable for short-term financial goals. In this case, you can receive a percentage of life coverage at regular intervals. Additionally, if you live beyond the period of this policy, you will receive the rest of the corpus plus a bonus at the end of the policy.
● Term Plans
Term life insurance policy provides death benefits for the nominee if the policyholder dies during the term of the insurance plan. However, the nominee doesn’t get any benefit if the policyholder survives.
However, some variants of a term insurance policy come with pay-out benefits at maturity. For instance, you can get a 100% refund of the premium with a no-cost term plan or a term insurance plan with a return of the premium.
● Endowment Plans
Endowment life insurance plans offer dual benefits — wealth creation and life cover. During maturity, you will get a lump sum. Also, the nominee will get a death payout if the policyholder dies.
Types of Riders You Get with Life Insurance Policy
Riders are the additional benefits you can get from the policies over the basic plan. Here are some examples of life insurance policy riders:
● Term Rider
Life coverage will increase when a term rider has been added to your policy. With this rider, you can get an additional lump sum beyond the sum assured by the primary plan on the policyholder’s death.
● Critical Illness Rider
These riders protect the policyholder from the financial burden if they suffer from critical illness or conditions covered within the rider. After the diagnosis of the disease, the policyholders and their families will get a lump sum payment for the treatment and additional expenses.
● Accidental Death
This rider offers an additional lump sum for the family in case the policyholder had an accidental death during the tenure of the policy. This lump sum will be paid over the sum of the basic plan.
● Waiver of Premium
These riders waive off the future premium payments in case of the death, partial or total disabilities, or critical illness of the policyholder. But it keeps the base insurance plan active.
How Can You Purchase the Best Life Insurance Policy Online?
Since you are planning to buy life insurance online, here are some factors that you must consider:
- Your financial goals
- Income and expenses
- Age
- Current health condition
- Occupational hazards
- Total desired coverage
- Claim settlement process and record of the insurance company
- Customer service of the policy provider
So, considering these factors will help you find life insurance online that meets your requirements and secure your and your family’s financial future.
Conclusion
Hopefully, now you have understood the reasons for investing in a life insurance plan that secures the financial future of your family. So, talk to experts, do your research, and consider the basic parameters to find a policy that fits your needs and enjoy peace of mind knowing that you’ve secured a stable financial foundation for yourself and those who depend on you.