Why Life Insurance?
Thinking about investing in a life insurance plan but unsure how it really works?
This guide will help you clearly understand how life insurance functions and what factors you should consider before choosing the right policy. At every stage of life, we all have essential financial needs that require proper planning. Life insurance supports these needs by offering customized products designed to protect you and your family at every milestone.
There’s no denying that life insurance is essential for everyone. That’s why it’s important to fully understand the value a life insurance policy brings to your life and the security it offers your loved ones.
A life insurance policy is simply a contract with an insurance company. In exchange for regular premium payments, the insurer provides a lump sum amount—known as the death benefit—to your beneficiaries in the event of your passing.
When selecting a life insurance plan, your advisor will help you align the policy with your financial needs and future goals, ensuring you choose the option that fits you best.
Life Insurance Products
| Category | Plans | |
|---|---|---|
| Endowment Plans | ||
| Child Protection Plans | ||
| Whole Life Plans | ||
| Retirement Solutions | ||
| Health Insurance Plans | ||
| Pure Protection Plans | ||
| Money Back Plans | ||
| Ulip Plans |
What Does It Offer?
Insurance provides immense value when it comes to financial security and peace of mind. It ensures that your loved ones are protected even in your absence. Beyond offering coverage against various risks, it also creates an opportunity to grow your wealth over time. Life insurance serves as a long-term financial tool that helps you prepare for future needs such as your children’s education, retirement planning, and other major expenses.
With a wide range of life insurance plans available, individuals can choose options that suit their specific requirements. Many of these plans can also be personalized to match their goals and preferences.
Types Of Insurance
Term Life Insurance
The most affordable form of life insurance, premiums of plan under this category are cheap compared to other life insurance products. In the event of an unfortunate demise during the policy term, Nominees will receive the ‘Sum Assured’.
Whole Life Policy
As in the name, this type of policy covers an individual for his/her entire life. This type of insurance covers insurance and investment components. The insurance part covers the nominee in the event of death of the policyholder and the investment component helps the holder to borrow or withdraw against.
Endowment Plan
One main difference that Endowment Plans offer from term plans is the Maturity Benefit. This type of plan pays out sum assured along with profits under both scenarios - death & survival. The profits that are availed in such plans are the result of investment in equities & debt.
Unit Linked Insurance Plans (ULIPs)
As the name suggests, this plan is linked to the markets.
This type of plan are a variant of traditional endowment plan and pay out a certain sum assured on death or maturity, whichever is earlier.
Money Back Policy
This type of policy gives out periodic payments over the policy term. Incase of the death of the policy holder, the beneficiaries get the full sum assured and if the holder survives the policy term, he/she gets the balance amount (sum assured).
Benefits Of Insurance
Most of us are often tend to ignore the importance of sound policy as we think it not required and what could possibly happen to us. This leads us to believe that life insurance is not worth the money for but a sudden mishap/accident leaves us feeling fearful of the future-for us & our family.
There is no two way about what an individual wants- financial security & protection; for which life insurance is the best option available. There are multiple advantages to availing a life insurance plan, let us glance at them:
Offers Risk Cover
In case of an unfortunate event, you and your family are protected with a high risk cover.
Death Benefits
Sudden demise of a family member leaves the dependents grief-stricken and during such situations financial worries should be the least they should think of. An adequate life cover ensures that one's family is well taken care of in case of such incidents. The insurer pays up the bereaved family the sum assured along with any bonus or profits, as applicable.
Tax Benefits
Under Section 80C of Income Tax Act, investments made in certain specified instruments are subject to tax rebate. Moreover, Section 80C is an effective way by which a salaried person can reduce his/her tax liability. Since life insurance premiums are taken into consideration, it can be a way that will help you reduce your tax burden.
Loan Facility
As per policy provisions, you can avail loan facility to meet any emergencies. The loan amount can be taken in a percentage of the sum assured of your life insurance.
Assured Returns/Income Benefits
Certain policies that offer money back benefits helps in keeping your family secure with regular & timely payouts. This income helps in meeting certain regular expenses like rent, bills, loans, etc.
Life Stage Planning
Insurance enables you to effectively plan for every life stage and needs during that stage. Life insurance can be viewed as long term investment instrument that provides solid financial support. As per your life stage and risk appetite, you can fix and meet all your financial goals whether it is your child's education, wedding expenses, buying dream home or your retirement- all taken care of.
Safe Investment
Your money is invested in life insurance is safe and returns are paid back on time. It also fetches good returns as the money is returned to the policyholder/beneficiaries as sum assured either on completion of the policy term or death, whichever is earlier.
Why Is It Important?
Life insurance plays a crucial role in protecting your family or dependents from financial difficulties in your absence. Many people mistakenly view life insurance as an unnecessary expense and overlook its true value. In reality, it is an essential financial tool that not only helps you build wealth but also provides comprehensive protection for you and your loved ones.
For Single Individuals
Even if you do not have immediate dependents, life insurance can still be beneficial. There are future financial commitments and unforeseen expenses that may require additional resources. A life insurance policy helps you manage these costs while keeping your current income secure.
For Families
The unexpected loss of a family member leaves behind both emotional and financial challenges. Regular expenses such as rent, childcare, and loan repayments continue, and without a steady income, the financial strain can be overwhelming. Life insurance ensures that your loved ones are not burdened during such a difficult time, making it an essential consideration for every family.
What To Buy
There are several types of insurance policies available in the market today. Based on your needs and financial objectives, your Financial Advisor can guide you in choosing the most suitable plan. It is important to share accurate details about your current financial situation, as well as your short-term and long-term goals, so your advisor can make an informed and effective recommendation.
Insurance plans come in various categories such as Retirement Plans, Money-Back Plans, Child Protection Plans, Endowment Plans, and many more.
Remember, life insurance is an excellent tool for both financial protection and disciplined savings, ultimately helping you build a strong corpus over time. With the support of your advisor, set clear goals, align them with your financial priorities, and enjoy peace of mind with a secure financial future.