Life insurance is that crucial element of financial planning, which surprisingly, people don’t pay much heed to. If you haven’t gotten yourself and your family’s precious lives insured yet, it is time to halt for a moment and think. “What will happen to your family, if God forbid, you aren’t there anymore to support them financially?” If the answer scares you, it is time to call your insurance agent right at this moment and get your life and disability insurance policy. Here are top 10 reasons why you must have an insurance plan:
- Financial Stability of your family: If you are the only earning member in your family, the income of the family will cease if something happens to you. Their standard of living will go down steeply and your kids won’t be able to get the education they deserve. Your life insurance is the only thing that will come to your family’s aid in such a scenario.
- Repayment of loans: If you have taken a loan with your spouse, your life insurance money will cover the repayment of that loan in case of an unforeseen calamity.
- Loans against insurance: Apart from repaying your loans, a life insurance policy comes in handy for drawing any kind of loan against it. Be it your children’s education loan, home loan or marriage loan, you’ll realise how easy the procedure becomes if you have a life insurance policy as security.
- Investment options: Life insurance policies are a great investment option. You can consider choosing from retirement plans, child insurance plans and whole life insurance plans as they all are great policies.
- Illness and disabilities: Life insurance, medical insurance and disability insurance are great tools to protect yourself and your family from the financial pressure that you’ll face in an event of a serious illness or an accident. While life insurance will cover your expenses when you are gone, medical insurance will take care of all the medical expenses in case of an illness and disability insurance will make sure that your standard of living doesn’t deteriorate if you are rendered unfit for a job.
- Tax benefits: Insurance policies are a great way of saving taxes. Under Section 80C of the IT Act, various insurance schemes offer tax deductions on the payment of premium.
- Habit of thrift– Life Insurance is a long-term contract where as a policyholder, you need to pay a fixed amount as premium at defined periods of time. This builds the habit of long-term savings. Regular savings over a long period ensures that a decent corpus is built to meet financial needs of various life stages.
- Growth through dividends:Traditional policies offer an opportunity to participate in the economic growth without taking the investment risk. The investment income is distributed among the policyholders through annual announcement of dividends/bonus.
- Mortgage redemption: Insurance acts as an amazingly effective tool to cover mortgages and loans taken by the insured parties. Therefore, in case of an unforeseen calamity, the burden of mortgage repayment does not fall on the families of policyholders.
- Builds credit score: A life insurance policy is considered as a financial asset and owning financial assets increase your credit ratings. These credit ratings are crucial for getting your car or home loans approved.
