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Business News/ Money / Personal Finance/  What are the benefits of Life Insurance Policy?
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What are the benefits of Life Insurance Policy?

Even if you are not around, your life insurance policy will make sure that your family’s financial worries are taken care of. It's a safety net that ensures that your loved ones will get the much-needed financial support in your absence. Read further to know more on it

Life insurance policies also provide tax benefits. (Photo by Vlad Deep on Unsplash )Premium
Life insurance policies also provide tax benefits. (Photo by Vlad Deep on Unsplash )

It's essential to safeguard your family's future, especially if you're the household's sole or major breadwinner. Life insurance ensures that your family is protected even if you are not present. It is a safe house which assures that you and your loved ones are always provided with financial assistance. It also tends to bridge the monetary shortfalls in your life and as an all-around policy, can meet a variety of financial demands at various periods of life.

Most individuals are aware of the most important advantages of obtaining life insurance i.e. If you die unexpectedly, your family gets money, and you get the peace of mind that they'll be able to go on without you. While those advantages apply to all types of life insurance, there are additional benefits that vary based on the type of policy and quantity of coverage you obtain.

Let us understand some basic benefits of life insurance policy in detail.

Financial security with risk coverage

Having life insurance gives you the greatest sense of security. This is because if someone passes away, they may rest assured that their family and loved ones will be financially secure. We all have financial obligations, but having enough life insurance guarantees that your bills and loved ones are financially protected in the case of your death.In exchange for the premium paid, insurance offers risk coverage to the policyholder’s family in the form of financial settlement.

READ MORE: How to file a life insurance claim?

Tax benefits and savings

Life insurance policies provide two tax benefits. The premiums paid are eligible for a tax deductible under Section 80C of the Income Tax Act. This implies that you may deduct up to 1.5 lakh in premiums from your gross income each year, decreasing your tax payment. The maturity insurance policies, on the other hand, may be completely tax-free. This tax advantage is provided under Section 10(10D) of the Income Tax Act.

Assistance in wealth creation

Some life insurance policies also provide you the opportunity to build income. Apart from providing life insurance, these plans reinvest your premiums in a variety of investment sectors to provide better risk-adjusted returns that outperform inflation and help you build your savings.

Financial backup in case of major health issues

Life insurance policies can safeguard you financially in the event of a serious sickness. When a wide range of catastrophic health problems are diagnosed, critical illness insurance pays out a flat amount. This is a one-time payment based solely on the diagnosis. As a result, after receiving treatment, there is no need to file invoices or wait for claims. Critical illness insurance provides you with funds to pay for your treatment and to support your family while you are undergoing treatment. The claim money can be used in any way you like.

Provides loan facility

If you have life insurance, you have the option of taking out a policy loan if you are in dire need of cash. Depending on the policy conditions, the loan amount can be obtained as a proportion of the monetary value or sum insured under the policy.

All life insurance can provide you with financial assurance that your family will be financially secure in the event of your death. However, the more life insurance you possess, the more benefits it will offer to your family in the event of a claim.

It should go without saying that life insurance is a must-have. It's a risk-mitigation and protection tool that has to be acquired without hesitation. After all, it is a matter of a way of life that sustains a large number of people. As a result, one should understand the need for life insurance and sign up for it without delay.

 

Important Life Insurance terms who should know
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Important Life Insurance terms who should know

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Published: 20 Apr 2022, 11:45 AM IST
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