Purchasing policies stand out to be an important responsibility, particularly when you are the head of your household. However, the amount of cover each family needs varies greatly in respects to their needs and requirements. A life insurance cover helps individual pay off its present debts, help his or her family survive and maintain a normal standard of living, in case of his /her death. So, if you are an individual with dependents on your income, then getting insurance is a good idea to bridge up your earning potential when you are gone.
An individual can use insurance to fulfill two main purposes in their lives. Firstly, to take care of financial needs of the family after they are gone and secondly, to use insurance as an instrument for making investments. Depending on the scheme of insurance and individual needs you can opt to invest a part of your funds from insurance in variety of funds. In some cases, loans can also be drawn loans against your insurance.
The articles share some simple reason why individual should avail life insurance plan:
Owning a decent house and car, quality education for children and finally letting them see married is probably every family’s goal and this will very well achieved even in your absence if you own good life cover. The right amount of cover will let your family cover its needs and wants, without worrying about whether or not they can afford it.
Your absence will obviously give them emotional stress but if they have some form of income security they will be partial calm during such crisis situation. Life insurance can reduce the negative impact of losing a source of income by contributing towards replacing your financial contributions to your family.
Each individual has its set form of lifestyle in life. But your sudden demise can hamper things and displace them quite a lot if there is no proper financial back up. Thus, it’s the insurance policy that will give you right financial support that allows your family to maintain the lifestyle you chose for them. Your family will not have to undergo drastic alterations after losing you.
Your life cover will not only give financial back up to your family but most importantly it will let them clear off any debt, or loans running in term. It is obvious that your spouse might find it difficult single handedly to repay loans and other financial obligations that you made together. However, an adequate life insurance cover (sum assured) might mean that there will be no need to worry about outstanding loans or debts.
Tax savings is another good reason for buying insurance cover. In India, majority of people by policies for saving taxes. Premiums paid towards life cover are currently deductible under section 80C, while contributions made towards your pension plan are currently deductible under section 80CCC. The maturity and claim amounts are also tax-free. However, there are certain annual limits to these deductions. Further, the benefits can vary as per the provisions of the Income Tax Act. For proper guidance you can consult your tax advisor.
But only tax savings approach is wrong.People have to see beyond the taxation horizon and embrace the benefits of life insurance in India.
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