The pandemic pushed life insurance penetration in India from 2.82% in 2019 to 3.2% in 2020. In 2021, it was 3%, which is still lower than the global average and the average of other comparable nations.
This means many people still remain unaware of how important such policies are to any sound financial plan. Life insurance cover is extremely important to financially secure the future of your loved ones. What’s even better is that today, you get the dual benefits of life cover and wealth creation from the best investment plans. But before you invest, here’s what you should know about life insurance
What is Life Insurance?
It is a contract between you (the policyholder) and an insurance company (the insurer), in which the latter promises to pay a specific sum to your family members (nominee(s)) in the case of any unfortunate event. In return, you pay the insurer a specific amount of money at fixed intervals, which is called the premium.
Although money cannot make up for the loss of a loved one, life insurance helps provide a financial cushion so that your family can sustain themselves even after losing their breadwinner. The amount can be used to pay off loans, children’s educational expenses, wedding expenses, and more.
It is also one of the best investment plans because it offers a way to save on taxes while building a secure financial future.
Benefits of Life Insurance
1. Complete Protection at Affordable Premiums
If you choose a a term life policy, you can get a large sum assured at a low premium. In fact, term life insurance is one of the most affordable insurance policies. For instance, with the Edelweiss Tokio Life – Zindagi Plus policy, you can choose to include your spouse in the same plan and even get a premium discount on choosing a large sum assured.
2. Tax Benefits
The premiums you pay towards the life insurance policy are tax deductible under Section 80C of the Income Tax Act, 1961. Under Section 80C, you can get tax exemption of up to ₹1.5 lakhs annually.
3. Provision for Loan
You can take a loan against your policy too. This is useful for meeting urgent needs, such as a medical emergency.
4. Market-Linked Returns
If you choose to invest in a Unit Linked Insurance Plan (ULIP), you get life insurance along with market-linked returns. A portion of your premium goes into fund investments (both equity and debt), which helps in wealth creation. The remaining amount is put aside for insurance. So you get both death benefits and maturity benefits with ULIPs. In case of an unfortunate situation, the insurance claim value will be the higher amount between fund value and sum assured.
5. Retirement Planning
With annuity-based plans, you can ensure a fixed income stream post-retirement. It is a great way to secure your retirement years or to pay for future medical expenses and live a worry-free life.
6. Option to Add Riders
You can choose to add riders, such as a critical illness cover. This means you receive an immediate lump-sum pay-out upon being diagnosed with a serious illness. Such a plan allows you to deal with high treatment costs without derailing your family’s savings or future plans, more so in today’s unprecedented times.
If you start young, you can get comprehensive life insurance at a lower premium than what you will pay if you start in your 40s or 50s. Go through the policy document carefully to make an informed decision. If you want to explore more life insurance plans or want to know more about the product: www.edelweisstokio.in and fill in your information.