Buying life insurance is one of the most important financial decisions in an individual’s life. But the question arises why? Well, regardless of your good earnings, it is impossible to predict future events. If you being the sole income-earner of your family, your sudden death in an accident, by an unexpected illness or even due to natural causes- can happen at any time which could result in severe consequences.
Life Insurance serves as a great tool that helps your family in meeting their critical needs and maintain the same standard of living. So, basically, the purpose of life insurance is to make your family financially secure even after your death. Below listed are the appealing reasons for buying life insurance:-
- Taking care of your family’s financial requirements after your death:
If you are the only person in your family who is earning, then the family’s income will cease when you are no more. Whether it’s for replacing lost income, paying for your child’s education or making sure your spouse get the much-needed financial security, life insurance serves as an aid for your surviving dependents in such a situation.
- Repayment of debt:
Life insurance policy will deal with your outstanding debts, whether it is a home loan, personal loan, car loan or a loan on credit card saving your family from the burden of such financial liabilities in a situation when they are already suffering from a huge crisis.
- Helps achieve long-term goals:
Some life insurance policies, for instance, child insurance plans, whole life insurance plans, Term life insurance plans, Unit-Linked Insurance Plans(ULIPs) etc. also helps in achieving long-term goals such as buying a home, marriage of children etc. by providing diverse investment options.
- Supplements your retirement:
Life Insurance plan ensures that your retirement savings last until you do. An annuity is like a pension plan- put in some money regularly in a life insurance product and in return you get a regular stream of income every month, as long as you live.
- It saves tax too:
Life Insurance policies are also a good way of saving tax too. The premium you pay on an insurance policy is eligible for tax deductions under Section 80C, and for tax-free proceeds on death/maturity under Section 10 (D) of the Income Tax Act, 1961.
- Also takes care of business:
Life Insurance not only looks after your family and loved ones, some policies also helps protect your hard built business from financial loss, liabilities or instability in the case of the death of a business owner/partner.
- Helps in raising loans:
Life Insurance policy not only helps in paying the existing loan but you can also raise a fresh loan against it in case of an emergency. It is a financial asset which increases your credit capacity. Besides, it helps in taking health insurance as well.
- Peace of Mind:
No amount of money can ever replace you as a person, but planning ahead with life insurance can make things easier for those left behind in difficult situations that they are going to face after you are gone.
In the light of the above-mentioned facts, it is essential to buy one early on in your life when you are young and free of illness because If you develop a serious illness, later on, you may not be able to get it to the extent your need or at all.