There’s a famous saying, it’s foolish to leave your home without life insurance. Yes, come what may, make sure you avail a life insurance plan. Why life insurance? It’s really simple. You must avail a term life insurance plan, which is a type of life insurance plan. You pay a premium and get cover (sum assured) for a fixed time period. This is called the tenure of the life insurance plan.
If a policyholder dies within the tenure, the nominees (wife) get the death benefits. Nominees can use this money to repay any car loans or even a home loan. You get nothing if you survive the term of the plan.
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In this article, you must take a look at the 5 reasons you need to buy a life insurance plan.
You must be well familiar with the Endowment Life Insurance Plan. This is a twin-benefit plan where you enjoy mortality cover (insurance) + savings. Endowment plans give you a maturity/survival benefit, if you survive the term of the plan.
You get the sum assured + any bonuses like guaranteed bonus, revisionary bonus (this is paid out of the profits of the insurer), terminal bonus and so on, if you survive the term of the plan.You can avail a loan against an endowment plan if you so desire.
If you avail life insurance like term life insurance, endowment life insurance, ULIPs, whole life insurance or a money back plan, you can save tax. You get Section 80C tax deductions up to Rs 1.5 Lakhs a year, on the premiums paid for a life insurance plan. The death benefits in a term life insurance plan are tax exempt under Section 10(10D) of the income tax act.
You can build wealth by investing in ULIPs which are a type of life insurance plan. You get the twin benefits of Insurance + Investment. Unit Linked Insurance Plans popularly called ULIPs, give you life cover and the investment benefit. A part of the premiums you pay are set aside for mortality cover (life insurance) and the remaining amount is invested in equity or debt, depending on the type of life insurance plan.
The money invested by the Fund Manager of the ULIP, grows with time and your wealth increases. You can also take a loan against the fund value of the ULIP.
Let’s say you have availed a home loan or a car loan. You regularly pay EMIs on these loans. Now, if something untoward happens to the policy holder, the life insurance plan pays the death benefits to the nominees. If the policyholder had availed loans, part of the death benefits are used to pay back the loans. This is very important as the bank could seize the asset (car or home) if the dues are not paid back.
If you avail life insurance, no matter what happens, the loans are paid.
If you are the breadwinner of the family, then you must avail life insurance. The premiums on life insurance plans are not paid for you, but for your family. Your family gets the money on an unexpected demise and can enjoy the same standards of living, they currently enjoy. If you avail an endowment plan, you can take a loan against it and meet any emergency financial needs.
Try to avail life insurance as early as possible (when you are young), so that the premiums are low. It’s easy to avail life insurance at a young age, as you are young and healthy. The premiums paid are low if you avail life insurance at this age. Be Wise, Get Rich.
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