What is a Life Insurance Policy?
A life insurance policy is a legal contract between a policyholder and the insurance providing company. In this policy, you pay a certain amount of premium to your insurance provider and in return, you get to enjoy the benefits of the policy.
As the name of the policy suggests, the insurance provider company provides the policyholder's family with a lump sum amount of death benefit in case of an untimely and unfortunate demise of the policyholder.
Now that we have told you about what a life insurance policy is, let us see the benefits of investing in a life insurance policy.
Tax Benefits in Life Insurance Policy
Apart from providing financial security to our loved ones, did you know that another key benefit is the life insurance tax benefits? The premiums you pay for the life insurance policy are eligible for tax benefits under Section 80C and 80D of the Income Tax Act, 1961. You can claim upto Rs. 1.5 lakhs of life insurance tax benefits under this policy, subject to conditions mentioned therein.
Life insurance tax benefits under Section 10(10D) of the Income Tax Act, 1961 provides you with tax-free maturity benefits in cases wherein the premiums are under 10% of the sum assured. However, tax laws are subject to change from time to time.
Apart from tax benefits, investing in a life insurance policy has various other benefits. Let us get to know.
Benefits of Investing in a Life Insurance Policy
1. Financial Security of You and Your Loved Ones
We do not know when we face any uncertainty or an unforeseen event. Therefore, it is essential to be prepared in advance. Investing in a life insurance policy financially secures our loved ones and us. Moreover, we are at peace of mind and do not have to worry about financial drawbacks in case of demise of the life assured within policy term.
2. Helps You Secure Your Valuable Assets
Suppose you have taken a loan or have a debt to match the current financial requirement of you and your loved ones. In case of the policyholder's unforeseen and untimely demise, your loved ones might face hassle while paying off the loan. In such cases, they might have to pay off the loan against your valuable assets, such as your house, cars, etc.
A life insurance policy ensures that your family faces no inconvenience in your absence and does not have to pay off the loan against your valuable assets.
3. Add-on Rider Benefits
No one wants to invest in multiple policies to avail various other benefits, right? Life insurance policy brings you the add-on rider benefits to save you from this inconvenience. This benefit lets you get add-on benefits on the current policy without investing in separate policies. Add-on rider benefits include accidental death rider benefits, critical health rider benefits, waiver of premium rider benefits, etc. Please note that riders are not mandatory and are available at additional cost.
4. Provision of Loans
Investing in some of the life insurance policy provides you with the benefit of loans in case of a financial emergency that you or your loved ones might face.
Choosing the Right Policy: Your Journey to Secure Futures
With various life insurance options available, selecting the right one is crucial. Consider factors like:
- Your age and financial goals
- Family needs and dependents
- Coverage amount and premium affordability
- Policy type (term, whole life, etc.)
- Additional riders and benefits
Seek Expert Guidance: Navigating the Insurance Landscape
Choosing the right life insurance provider is just as important as selecting the right policy. A trustworthy and reliable insurer ensures prompt claim settlements and transparent service. Seek guidance from financial advisors and compare different plans before making your decision.
Empowering You and Your Loved Ones: The Final Step
Investing in life insurance is an investment in peace of mind. It ensures your loved ones' financial security while offering you tax benefits.
Remember, this blog aims to simplify life insurance tax benefits. For customized advice and navigating the nuances of your situation, consulting a tax advisor is highly recommended.
Wrapping Up
Investing in a life insurance policy is one of the ideal ways to secure yourself and your loved ones financially. Apart from providing financial security, a life insurance policy has various other benefits, such as death benefits, life insurance tax, add-on rider, etc.
Choosing the best life insurance for you and your loved ones is necessary, so going for the best life insurance provider is also crucial.
