Know Why Life Insurance Is Essential For Your Financial Plans

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Know Why Life Insurance Is Essential For Your Financial Plans

Amidst the various emerging changes in lifestyle including transitioning from joint families to nuclear families and increasing inflation, life insurance policies hold great importance as a reliable way to secure the life of their dependents and addressing various processes of financial planning.

Talking about financial planning, it is a process of charting your long-term objectives and financial goals along with the means through which they’ll be achieved in the long run. This may include various elements of investments such as wealth creation, protection, and life goals.

Additionally, financial planning also consists of planning for emergencies in the future. It requires to be completely in synchronization with the various stages of your life along with the several requirements that are required at certain points in life.

Moreover, with changing circumstances like buying a property, marrying, or paying for a child’s education, the financial plan needs to be evolved with the necessary changes required to meet all the objectives you’ve defined in your life.

Nowadays, there are several investment options available that resonate greatly with financial planning. However, it is noticed that while people always focus on wealth creation in financial planning, they often forget about protection, which is often neglected.

Life insurance policies are a great addition to your financial plan in case you’re looking to save money while keeping your family protected against any financial burden in the event of your unfortunate death. Here’s why it is important for your financial plan:

1. Retirement Planning Made Easy 

Through a life insurance policy, you can fulfill all your long-term life goals and even plan for your post-working days. There are several types of life insurance policies such as ULIPs and Endowment plans that allow you to accumulate a corpus of savings for your retirement.

This collected corpus acts as a reliable medium to live a comfortable lifestyle after your retirement. It also allows you to gain periodic payments or lump sums as per your needs. This makes your financial planning reinforced by helping you safeguard your future.

As long as you’re capable of working, you should consider saving your capital through a life insurance policy to plan for the days when you can no longer earn a regular paycheck. That’s why it should be included in your financial plan.

2. Secure Your Child’s Bright Future

With a life insurance policy in your financial plan, you can also secure the future of your child by being able to fulfill the monetary requirements of getting your child admitted to a good school or university through regular investments.

There are also various dedicated types of insurance policies, designed specifically for the betterment of the future of your children. With such purposeful policies, you can grow your capital adequately and provide the best possible education to your child.

The benefits provided by a life insurance plan can also be used to meet the expenses associated with your child’s marriage, which allows them to have everything they need to enter a completely new and unique phase of their life.

3. Save Money on Taxes

Along with the various reasons listed above, a life insurance policy also helps you save money on taxes, which makes it even more promising for your financial plan. As per the mandates of section 80C of the Income Tax Act of India, premiums paid towards the plan are eligible for a tax deduction.

The maximum value for the benefit is Rs. 1.5 Lakhs, and as per section 10(10D) of the Income Tax Act, the death and maturity benefits associated with this plan are also exempted from any kind of taxation, which allows you to save money in the long term.

The best thing about life insurances being tax-free is that you can prevent the taxes from eating up a significant proportion of your hard-earned capital, and choose to spend your money on your terms without any obligations.

4. Provide Financial Security to Your Family

With a good life insurance policy added to your financial plan, you can safeguard a financially secure future for your family by ensuring that there’s always an alternate source of income in the event of your unfortunate death.

A life insurance policy includes a death benefit that promises a lump-sum amount of money to your selected nominee. This monetary support allows your family and dependents to manage their day-to-day expenses without depending on anyone.

If you’re the only breadwinner of your family, a life insurance policy is even more important for you as in your absence, your family might not be able to cope with the daily requirements to sustain a proper lifestyle.

5. Plan Ahead for Health Issues 

There are various types of riders available in life insurance policies that allow you to extend the coverage of your plan as per your requirements. Among the various available riders, the critical illness benefit is one of the most important ones.

If you opt for this rider in your plan, you can gain coverage from the insurer in case you’re diagnosed with any of the critical diseases listed in the policy terms. This helps you cover your medical liabilities without the need for dependency on anyone.

Moreover, while you may be perfectly fit and healthy as of now, nobody knows what could happen next and you might get diagnosed with some sort of disease in the future. In such circumstances, it is extremely crucial to have a life insurance policy in your financial plan.

Best Life Insurance Plans Available in India

  • Canara HSBC OBC iSelect Star Term Plan – It is a term life insurance policy that offers financial protection to your family in the event of your demise and also allows you to cover your spouse in the same policy with just a small amount of additional premium.
  • HDFC Life Click 2 Protect Plan – It is a traditional insurance policy that offers monthly income payout after 60 years of age and also provides you multiple options for premium payment terms for added flexibility.
  • ICICI Pru All-In-One Term Plan – It is a term plan that can be zeroed in online without any involvement of middlemen or paperwork. The plan consists of an in-built critical illness benefit that keeps you covered against 34 varying diseases.

Final Words

The reasons listed above clearly indicate the uttermost importance of including a life insurance policy in your financial plan. There are various types of life insurance policies available in the market as per your ranging needs and financial capabilities.

By including life insurance in your financial plan, you can generate a massive corpus of money while keeping your family and loved ones covered under the shed of financial support in the event of your unfortunate demise.

Therefore, make sure you give it a try and experience all the benefits stated above.

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