Life comes with its own share of misfortunes and uncertainties, none of which comes with an announcement. Some unfortunate events have a lasting and irreversible impact on your life. Your loved ones cannot do much beyond grieving when such incidents happen. It is highly recommended that you take an adequate life insurance cover to lessen the impact of the financial burden that may befall on your loved ones once you are gone.
Crucial instrument for investment
Life insurance is the most crucial instrument of investment that will come in handy for your family to meet their essential financial needs when you are not around to help. When the insurance policy is dispersed upon the death of the policyholder, the cover amount insured is provided to the nominees or the beneficiaries. In addition to death coverage, some policies also offer investment benefits when the policy term is over. In this manner, you get two-fold benefits of carrying life insurance.
Limited awareness regarding life insurance offerings
It is generally observed that there is limited awareness regarding various life insurance offerings. This mainly happens because people are not fully aware of the reasons for which they are purchasing a life insurance policy. The very basic need for purchasing a life insurance policy is to provide the immediate family with financial support in the event of the death of the policyholder. For example, if the policyholder passes away while they were still earning, then the family will have to suffer the brunt of financial loss caused by losing a steady source of income. The family will still need to continue making payments towards pending EMIs, regular bills, mortgages, any outstanding loans, and other crucial financial goals, such as savings to be made for retirement and children’s education. To help the family take care of this burden after you are gone, life insurance companies operating in the market offer attractive life insurance plans. These plans promise to pay out the death benefit value of the cover to the beneficiaries of the policyholder in case of his/her death.
Along with the discussed basic need of replacing lost income, few people know about several other benefits that you get when you buy life insurance plans. Some of these are discussed here.
Stable investment option
Life insurance plans are not just a plain instrument to offer a replacement for the loss of income. They also serve as investment instruments that offer substantial returns on the amount paid in premiums during the policy term. Several policies provide a considerable return on maturity, which helps you meet the dual needs of protecting your loved ones against abrupt income loss and achieving your investment goals.
High benefits at low cost
In return for small premium amounts, life insurance offers substantial payouts. For example, a term insurance plan provides extensive coverage, sometimes more than 10 times the premium paid. This makes it one of the lowest-priced financial instruments.
Annuities that provide assured income
Life insurance happens to be one of the best investment instruments when it comes to retirement planning. It provides a stable payout in the shape of annuities, thus acting as a source of pension after you retire.
Life insurance policies can be used as important tax planning tools as they provide the policyholder with an opportunity to avail tax benefits on the premium paid.
As you can now see, life insurance plans come with a wide range of far-reaching benefits that not only secure the future of your family but also act as an excellent investment option for yourself. So with the dual benefits that life insurance policies offer, you should definitely make them part of your investment portfolio.