- Family Financial Security
Why it matters: The main advantage of life insurance is to give your loved ones financial protection when you die.
Details:
If you pass away unexpectedly, the death benefit from the insurance covers your family to continue their standard of living, cover day-to-day expenses, and not face financial struggles. This is particularly important if you are the sole breadwinner.
- Paying Off Debts
Why it matters: Your family can be financially burdened in your absence.
Details:
The life insurance amount can be utilized to repay home loans, personal loans, automobile loans, or credit card debts, so the financial burden on your family after your death will not be those debts.
- Wealth Creation & Savings (In Endowment/ULIP Plans)
Why it matters: Certain life insurance policies also have savings and investment features.
Details:
With policies such as Endowment Policies and Unit-Linked Insurance Plans (ULIPs), you not only avail life cover but also get returns in the long run, generating a corpus which can be utilized for retirement, education, or other objectives.
- Tax Benefits
Why it matters: Life insurance enables you to save money via tax exemptions.
Details:
Premiums paid can be claimed as deduction under Section 80C of the Income Tax Act (up to ₹1.5 lakh annually in India).
The death benefit and maturity amount can also be exempt from tax under Section 10(10D), with conditions.
- Peace of Mind
Why it matters: It gives emotional security to know that your family is covered.
Details:
Life is unpredictable, but life insurance provides reassurance by making sure your family won’t be financially affected if something were to happen to you.
- Critical Illness & Disability Riders
Why it’s important: You can increase protection by adding riders.
You can add riders for covering major ailments (such as cancer, heart attack), death due to an accident, or permanent disability. They are even paid when you are alive and can help recover medical expenses or lost income.
- Business Continuity (for Entrepreneurs)
Why it matters: Ensures that your business operates smoothly in your absence.
Details:
For business owners, life insurance can fund buy-sell agreements, protect key employees (keyman insurance), or provide funds to pay business debts after death.
- Support for Retirement Planning
Why it matters: Some plans offer regular income post-retirement.
Details:
Policies like whole life insurance or pension-linked life plans can provide income during retirement, serving as a supplementary pension along with life cover.
- Educational Support for Children
Why it matters: Your child’s future is insured, even without you.
Details:
Child plans (a category of life insurance) are designed to pay for a child’s education, even if the policyholder passes away before the child becomes college-aged.
- Liquidity in Emergency (Loan Against Policy)
Why it matters: You are able to obtain funds during bad times.
Details:
Most life insurance policies have the provision to take a loan against the policy after a specified period. This comes in handy in times of need without impacting the policy coverage.