What is a Life Insurance?
Life insurance is a legal contract between the policyholder and an insurer wherein the policyholder pays a certain amount of money, also known as premiums. In return, the insurer provides life coverage in the form of sum assured and other benefits. For example, life insurance provides you with financial security for your family in case of an unforeseen event such as the unfortunate demise of the insurer. In this case, the insurance provider will pay an amount equal to the sum assured to your family so that they do not face any financial constraints in your absence.
Apart from financial security, life insurance gives you peace of mind and develops a habit of saving.
Why is Investing in Life Insurance Important?
There are various reasons getting a life insurance is important. Let us see a few reasons.
1. Mental Peace
Investing in a life insurance policy gives you mental peace a sense of financial security for your loved ones in case of your absence, i.e., in case of an unfortunate demise of the insurer.
2. Make Your Retirement Easy
Another reason why is life insurance important for you is that by investing in a life insurance policy, you are making your retirement goals easy. With a savings plan, you will be eligible for monthly incomes after you retire. Thus, you would not have to worry about finances after you retire.
3. Protect Your Loved Ones
One of the crucial reasons why is life insurance important is that it protects your loved ones in case of your absence. Mishaps don't come with a warning. In case of an unforeseen event such as an unfortunate demise of the insurer, the investment company will pay a lump sum amount to your family. As a result, your family will not have to worry about financial security.
4. Tax Benefits
The premiums paid by the insurer are eligible for tax benefits under Section 80C of the Income Tax Act, 1961, for a maximum amount of Rs. 1.5 lakhs annually. However, tax laws are subject to change from time to time.
5. Life Insurance is Cheaper When Bought at An Early Age
The premiums that you pay for an insurance policy are cheaper and much more affordable when bought at an early age than when purchased at a later age.
6. Means of Wealth Creation
Apart from insurance, another reason why is life insurance important is that it is an ideal method of wealth creation. This means that not only does life insurance insures your money, it also allows you to let your money grow by investing a particular part of your premium in the market in the form of stocks, bonds, shares, etc.
If this is your first time with a life insurance policy, let us assure you that you do not have to worry. There are many insurance companies that can help you get the right insurance policy in accordance to your needs. You should always choose the ideal and the best life insurance policies keeping in mind your financial requirement and goals.