Financial security is one of the major aspects of one’s life, though only a few actualise this fact. In addition to creating wealth for your future, it also helps you cement a secure tomorrow for your loved ones. While its importance cannot be overstated, did you know that only of Indians have life insurance? It is an alarming fact that has risen mainly due to a lack of knowledge.
Where should I invest? – a question that echoes through the minds of those who wish to ensure financial security and stability. Here, life insurance policies act as perfect solutions to serve as potent investment tools. Are you wondering how? Let’s go through their features and benefits to find out.
Why Life Insurance Policy is Important?
Life insurance is one of the most essential elements of financial planning. It offers a safety net for your loved ones in case of unforeseen situations. Therefore, it is a product for the elderly or those with dependents; it is a versatile financial tool suitable for individuals of all ages.
Moreover, life insurance policies go beyond providing a death benefit. They also serve as potential investment instruments. These policies offer a dual advantage of protection and wealth creation where age is not a barrier. In fact, the earlier you invest, the greater will be the potential for wealth accumulation.
Let’s take a closer look at their features now that will help instil confidence in you to pursue a life insurance policy.
Features of Life Insurance Policies
Understanding the life insurance policy’s features can help you make wise decisions when selecting one that meets with your financial goals and protection needs.
1. Policy Types
There are several financial instrument types available in the market these days. However, only a few stand out as the ones worthy of pursuing. Here are a few life insurance policies that you can explore:
- Term Insurance: This life insurance type provides coverage for a set period, assuring that the chosen beneficiaries receive a lump sum after the policyholder’s demise. It’s a cost-effective choice for maximum coverage at affordable premiums.
- Whole Life Insurance: Unlike term insurance, whole life insurance covers the policyholder’s entire life. It has death benefits that accumulate a cash value over time, which can also be utilised during the policyholder’s lifetime.
- Endowment Plans: These plans combine insurance with savings. These life insurance policies pay out a lump sum amount at the policy’s termination or upon the policyholder’s demise, whichever occurs earlier.
2. Premiums and Payment Options
Life insurance premiums can be tailored to suit your financial capabilities. Whether you prefer an annual, semi-annual, quarterly, or monthly payment schedule, life insurance policies often offer flexibility in premium payments. Some policies even come with the option of limited premium payment terms, allowing you to tailor the policy to your financial situation.
3. Riders and Add-ons
Extending the scope of your life insurance coverage is possible through riders or add-ons. These supplementary benefits can be customised based on your specific needs. Common riders include:
- Critical Illness Rider: It offers a lump sum payout upon diagnosis of a critical illness.
- Accidental Death Benefit Rider: It offers an additional sum that is assured in case of demise due to an accident.
- Waiver of Premium Rider: It waives future premiums in case of disability or critical illness, ensuring the policy remains active.
4. Surrender Value
Life insurance policies, like whole life insurance and endowment plans, often accumulate a cash value over time. Here, you have the option to surrender the policy before maturity and receive the surrender value. This can serve as a financial cushion during emergencies, offering a degree of liquidity.
5. Policy Term and Maturity Benefits
Understanding the duration of coverage and the benefits at maturity is crucial. Term insurance, among other insurance policies, provides coverage for a specific term with no maturity benefits. This term waives off if the rider is included in a critical illness. Whole life insurance and endowment plans, on the other hand, provide a lump sum amount at maturity or the policyholder’s demise.
Benefits of Taking a Life Insurance Policy
Having understood the features, here are a few benefits that life insurance policies bring to the table:
1. Financial Security
The primary benefit of a life insurance policy is the financial security it provides to your family in case of an unfortunate event. The death benefit ensures that dependents are taken care of financially, covering immediate expenses and providing a cushion for the future.
2. Tax Benefits
Life insurance policies offer attractive tax benefits, making them a tax-efficient investment. When you pay a premium towards your insurance policies, they are eligible for deductions under the Income Tax Act’s section 80C. Moreover, the maturity proceeds and death benefits are usually tax-free under Section 10(10D).
3. Loan Facility
Many insurance policies also provide a loan facility against the cash value accumulated within the policy. This can be a valuable resource during times of financial need, offering liquidity without surrendering the policy.
Embrace Certainty, Embrace Life Insurance
As you find out which life insurance policy aligns with your financial needs, it becomes evident that these instruments are about securing the future. While they allow you to secure your and your loved one’s future, they also offer an investing opportunity.
Choosing the right one among many life insurance policies is a significant decision, and it’s crucial to explore reputable providers. Tata AIA Life Insurance stands as a reliable option, offering a range of life insurance plans tailored to meet various needs. Whether you’re a young professional or a seasoned investor looking to cement your portfolio, visit their official website to explore your options today!
Santosh Kumar, He is a SEO + Blogger have 12 years of experience in writing tutorial, informative and product reviews topics.