September 26, 2022

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Finance Blog

Top Reasons Why You Should Have A Life Insurance:

6 min read
Top Reasons Why You Should Have A Life Insurance

Getting life insurance is a significant financial decision which an individual should make in their life. But does everyone understand why they should have life insurance? Do they know the reason why? Many people die prematurely each year with some illness or accident. When they are the breadwinner of their family, it will be very devastating both financially and mentally for the loved ones.

There will be a lot of consequences in that case, about how they can handle the household expenses, debts and maintain their standard of living. You should always make sure to keep your family’s financial future a priority and life insurance can help you in achieving it. Benefits which life insurance gives is essential, but life insurance itself is a benefit when you get it at an early stage.

Here are some topmost explanations of why you should have a life insurance policy:

Taking Care Of Your Loved Ones Financially Even When You Are Not Around:

The most significant reason why an individual should get life insurance is that they can financially secure their loved one’s life. Sometimes your family will be dependent on you, at those times when you are not around due to unforeseen circumstances, then life insurance can protect them financially. The financial support can help with replacing your lost income, for paying your children’s education or as financial security.

Handling Your Debts:

Sometimes we will not be sure when our time in this world gets over. We might have some financial liabilities and debts which you couldn’t have paid. Under unforeseen circumstances, your loved ones will have to take up that pressure on their already bad financial state, in this case, life insurance which you have left behind can make them come out of those debts and lead a quiet life.

Achieve Your Long-Term Goals:

Sometimes people will go for a long-term investment to fulfil their long-term goals like planning their retirement or buying a house or for their child’s education. At times like those, a life insurance policy can help you in providing protection as well as savings for achieving those long-term goals of yours. You should thoroughly check for your investment product and place an investment on it if that suits your needs the best.

To Fulfil Your Retirement Goals:

Retirement is something which everyone seems to have in mind, and everyone wants to have a peaceful life after retirement. You should save money while you are working to make your retirement phase of life peaceful without any worry about financial struggles. With a life insurance plan, you can still get a regular income in the form of interests on your account every month even after your retirement.

Buy Insurance When You Are Young To Get It Cheaper:

Not everyone needs an insurance policy. When you have no emergency fund, and you are still living with your parents, you might have no use of an insurance policy. But in case you have dependents or have co-signed a loan along with your parents, you should consider taking a life insurance policy. When you are single, then your coverage amount will be lower.

It would be best if you considered approaching a financial planner for helping you through how much insurance you will need regarding the assets you already own. Sometimes you might be single, but you will have your parents or loved ones as dependents to you whom you should take care, so taking life insurance for you will be very helpful. But always understand that when you apply for an insurance policy when you are young, it will help you in highly reducing the premium which you have to pay.

When Your Business Is Taken Care Of:

Sometimes life insurance is not just about you and your loved ones, and it will be financial support which can help in taking care of your business. When you own a  business, then getting life insurance will make sure that your partner will get the benefits and can help get your business to a better level. Also, the profits of your shares in the business will automatically go to your loved ones, and they will be a part of your financial business agreement on unforeseen circumstances.

There are two insurance types like term life insurance policy and whole life insurance policy. A term life insurance will protect for a specific period which you decide on the starting of your policy term. The policy will end when the insured outlives the term, and there won’t be any benefits. A whole life insurance policy comes with an investment along with a protection plan which offers you a lump sum at the end of the policy term even when you outlive the term.

Tax Saving Benefits:

Yes! You can exclude up to Rs.1.5 lakhs on your taxes under section 80C of the Indian Income Tax Act when you have a life insurance policy on your name. The premium which you pay towards your insurance policy will be eligible for tax which you can claim by filing income tax returns depending upon your income slab. Whatever might be the policy plan which you choose you can claim tax towards it.

Acts As An Investment Tool:

When you choose the traditional policy, you can’t claim anything when you outlive the policy. But when you select a unit-linked policy, you will have to pay an extra premium, but you will get assured returns at the end of the term even when you outlive the policy. The cash which you pay as premiums towards your traditional policy will be of use only when you die during the policy, but that is not the same in case of a unit-linked policy, it will act as both protection and an investment option for you.

You May Not Be Qualified Later:

Life insurance policies will run out of uncertainties. Sometimes when you are healthy and paying premium towards the insurance policy might seem to put pressure on your finances. But suddenly you might fall ill, which will make your need for getting a policy important. So there is not any specific time when you should buy an insurance policy, the sooner, the better.

Most of the insurance companies allow you to make changes to your policy at the later phase of your policy. But you should make sure to get an insurance policy at the early age of your life to make sure you are paying towards your premium. The premiums on your insurance policy will be determined according to your age and health conditions, so always make sure to get life insurance when you are younger and healthier.

Ease Of Mind:

Death is something no one can avoid. We should always be ready to face it at some point in time. But with the help of insurance policy, you can make sure to secure the financial future of your loved ones in those unavoidable circumstances. Life insurance will act as financial protection to your loved ones and support you during your retirement phase of life. You should make sure to analyse your requirements and choose the life insurance type which best suits you.

The above discussed are the top reasons why someone might need a life insurance policy. Each individual’s lifestyle is different, and they have different income ranges and necessities. But an insurance policy is something significant for every phase of an individual’s life. Everyone should ensure having an insurance policy on their name when they don’t want their loved ones to suffer.