Why you need a life insurance cover: Key things to know

Some life insurance policies provide facilities for taking loans against the money deposited.

A life insurance policy is a contingency tool for individuals to provide financial cover to their families if they die prematurely or become disabled due to an accident. In times of epidemics like COVID-19, where millions of people have lost their lives, the importance of life insurance has become more apparent. In the midst of thousands of business closures, millions of jobs lost, and life’s uncertainty, people are becoming more sensitive about health and well-being. In times of such crisis, an insurance cover can extend a helping hand in every phase of life.

Apart from providing a protective cover to your family, it also provides an opportunity to save a good amount of money for future needs. As a general rule, your life insurance should ideally be at least 10 times your current income.

Here are 6 reasons why you need a life insurance cover:

Financial security for your family: Life insurance is an expression of love. It is about fulfilling responsibilities and fulfilling promises, a tool that protects your family from potentially catastrophic financial losses that can result in your premature death. An insurance cover will support your children’s education and provide financial protection to your spouse.

Help to repay debt: A life insurance cover will help your family in dealing with any type of debt or financial liabilities during a crisis. A right life insurance will take care of any outstanding loan like home loan, personal or car loan.

Retirement Plan: A life insurance policy is usually long-term. Therefore, the amount deposited is also usually sufficient to help you in purchasing a home or planning your retirement. If you invest in an annuity-linked scheme, you are assured of regular income even after retiring from working life.

Insurance for youth: When you are out of college, a life insurance policy is probably one of the last things on your mind. You might think that this is for parents or middle-aged people. However, it is cheaper to buy an insurance policy when you are younger. The cost is usually lower than what happens later. Also, it helps you to create an emergency fund. Therefore, make buying a insurance policy a priority.

tax benefits: All life insurance policies provide income tax savings provisions. The policy premium is eligible for a maximum tax benefit of Rs 1.5 lakh under Section 80C, and tax-free income on death / maturity under Section 10 (d) of the Income Tax Act, 1961.

It will be easy to take loan: Some life insurance policies also provide facilities for taking loans against the money deposited after a specified time. So, if you need immediate money after a few years of continuing the policy, you can take a loan and then repay the insurer in easy installments.

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