Benefits of Life Insurance Policy

What is Life Insurance and How Is It Helpful?

Life insurance is the contract between an insurer and an insured person in which the insurer gives assurance to its customer to give a sum assured amount of money to its family member after the death of the insured person. Life insurance works as a financial roof for the head of family members after the death of an insured person. An insured person pays a premium in exchange for a Life insurance policy which is given by the insurance company.

Life insurance is a kind of insurance plan and investment which is helpful in different ways and some of them are below:-

It acts as an income replacement for the family after the death of the insured person and helps with the ongoing expenses of the family.
There are certain tax benefits which can be used by an insured person to save money from taxable income.
It can be used as a collateral for loans.
It gives peace of mind to an individual knowing that their family is secure and they will not face any financial crisis in future in his/her absence.

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Disclaimer :

1. Premium has been calculated for coverage till 60 years

2. Eligibility depends on income, occupation and educational qualification

What Are The Benefits of Having Life Insurance?

Life insurance comes with several benefits through which an individual can take advantage of it and save money. It provides peace of mind to the individual that their family will be safe after their absence.

Some of the main benefits of life insurance are given below:-

Tax Benefits - Life insurance comes with several tax benefits which can be used to save money from tax. Under section 80C of the Income Tax Act 1961 the premium which is paid for life insurance will be deducted from taxable income, and under section 80 10(10D) no tax will be imposed on the sum assured amount which will be given to the nominee after the death of the policyholder.

Income Replacement - It acts as an income replacement for the family after your death and helps with daily living expenses.

Peace of Mind - It gives peace of mind knowing that your family is financially protected in your absence.

Collateral - Policyholders can take a loan against the life insurance policy which means that they can keep their policy as collateral.

Health Coverage - Life insurance covers various types of illnesses like terminal and critical. This can be added to the base plan with a nominal premium.

Retirement Income - Some life insurance plans come with a retirement plan in which the sum assured amount will be given to the insured person after their retirement.

Benefits of Buying Life Insurance in Early Years of Life

Investing money in Life insurance at an early age is considered a good investment decision. Life insurance gives facilities for both savings and covers the expenses of unexpected events like accidents, death etc. Buying life insurance at an early age comes with a lower premium rate.

Low premium- The premium amount of the life insurance plan is lower when you are younger and healthy. The insurance company calculates risks based on your age and medical condition when you buy life insurance from them.

Low Rejection Rate- When you are at a younger age with good health condition with no medical issues then the underwriter will easily approve the policy and it will be delivered to you.

Cash value Increases- There are some insurance plans in which cash gets collected and its value increases with time, so taking life insurance at an early age will help to grow money value over time.

Add-On Benefits- Taking life insurance at an early age helps in taking different types of add-on benefits which depend on the health and age of an individual.

Tax Benefits- The Government of India gives various types of tax benefits to individuals who have life insurance plans through which they can save their money from tax deductions using different sections of the Income Tax Act 1961.

How are Life Insurance Plans Suitable For Your Needs?

Age Group	Needs
In 20s	At the age of 20-30, many individuals get their UG and PG degrees and due to the increase in inflation in the education sector students get the expense of their degree from the education loan. In case the person who has taken an education loan dies then the burden of repaying the loan will not go on the head of the family. It will be covered from the sum assured amount received by the nominee. In case someone has bought his first home with the help of a home loan and after some years he dies then the outstanding amount will be covered by life insurance.
In 30s	After the age of 30 people have their families after marriage and financial security for the family is very necessary, so taking life insurance at this age decreases the financial risk of families after the death of an insured person. It also helps in the educational expenses of children after the death of their parents.
In 40s	People of this age group carry most kinds of debt on their heads like car loans, home loans, personal loans etc. So in case the person dies then the outstanding amount will be paid through the sum assured received from life insurance after their death. Buying life insurance at this age will reduce the stress of their educational expenses.
In 50s	At this age, people think about their retirement and many companies do not give pensions to their employees so after retirement planning is essential. After retirement, if anything happens to an individual then their spouse should not face a financial crisis so life insurance at this age is necessary.