Life insurance is more than just a tax-saving instrument. Here’s why you should buy it

Life insurance is more than just a tax-saving instrument. Here’s why you should buy it.

A number of people purchase life insurance policies solely for the tax benefits that they offer. However, if you are purchasing a life insurance policy, it is vital that you carefully assess your coverage needs and check whether the benefits offered by the policy are in line with your requirements. A life insurance policy that suits your needs will give you much-needed peace of mind. Here are a few reasons why you should consider purchasing a life insurance policy:

Why You Should Consider Purchasing A Life Insurance Policy:

Serves as an Income Replacement:

In case of an untimely eventuality, the payout offered by a life insurance policy will serve as an income replacement to your dependents. Thus, by purchasing a life insurance policy, you can ensure that your dependents don’t face any financial hassles and are able to meet their financial needs month after month 

Can Help in Wealth Creation: 

While basic life insurance policies like term insurance plans only offer a pure life cover, you can purchase products like money-back plans, endowment plans, or unit linked insurance plans (ULIPs) to help create wealth over the course of the policy tenure. Money-back plans and endowment plans will give you guaranteed payouts that can help you meet your future financial goals. ULIPs, on the other hand, help you make investments in the stock market and, thus, earn market-linked returns.  

Aids Retirement Planning: 

If you are looking to save for your retirement, you can purchase an annuity policy. Annuity policies may or may not offer a life insurance cover. Once you purchase the policy, you will start receiving annuity payouts starting from the date of vesting. These  payouts can help you stay financially independent during your post-employment years. 

Helps Deal with Debts: 

If something unfortunate happens to you, your dependents may have to repay your outstanding loans and debts. To keep them from having to go through financial hassles, it is best to purchase a life insurance policy. When purchasing a life insurance policy, ensure that you assess your present financial situation, the financial requirements of your dependents, and your debts and liabilities before selecting the sum assured.  

Can Help You Purchase Riders that Offer Enhanced Coverage:

If you have a life insurance policy, you can enhance the coverage offered by the policy by opting for riders. Some of the most common riders that are offered by life insurance providers are the Waiver of Premium Rider, Critical Illness Rider, Accidental Disability Benefit Rider, Accidental Death Benefit Rider, etc. You can, thus, assess your coverage needs and opt for the riders that you require.  

Listed above are some of the few benefits that life insurance policies offer to policyholders and their nominees. However, for a life insurance policy to benefit you, you should ensure that you purchase the right type of policy and opt for an adequate sum assured.  

It is also in your best interest to compare the features and benefits of different life insurance policies and check the premium quotes given by respective insurance firms before you make your decision. The policy that you purchase should, ideally, give you the required coverage at a competitive premium.