Why working people should buy life insurance now

One of the most significant financial decisions is purchasing a life insurance policy. Nobody can predict the future, no matter how much money you have made in your life. 

In the event that you are the only provider for the family and should pass away, it could have disastrous effects on your loved ones’ capacity to cover living expenses, settle debts, and maintain their standard of living.

Therefore, the least you can do after understanding what is life insurance is to purchase a life insurance policy to protect your family’s financial future. Here are a few compelling justifications for purchasing life insurance:

1. Taking care of your loved ones even after you pass away: This is the most crucial life insurance consideration. Even after you pass away, your family will still rely on you, so you don’t want to let them down. Life insurance could rescue your surviving dependents, whether it’s to replace lost income, pay for your child’s education, or guarantee your spouse gets some much-needed financial security.
2. Managing debt: You don’t want to burden your family with debt during a crisis. If you choose to purchase the appropriate life insurance policy, you will be able to pay off any outstanding debt, including any automobile, personal, or credit card loans.
3. Long-term goals: As a tool that keeps you invested over the long term, life insurance will assist you in achieving your long-term objectives, such as saving for retirement or purchasing a home. Additionally, life insurance offers you a variety of investment choices that go along with various policy types. Few investment products that pay dividends based on performance are connected to certain insurance policies. Read the fine print if you choose an investment-linked policy to understand the potential risks and returns fully.
4. Life insurance supports your retirement objectives: You can ensure you have a consistent source of income each month by understanding what is life insurance. An annuity is similar to a pension plan, in that you can enjoy a consistent monthly income even after retirement, by making regular payments into a life insurance product.
5. Purchasing insurance when you’re younger is less expensive: Not all millennials require life insurance coverage. Insurance shouldn’t be at the top of your mind if you don’t have an emergency fund or are still dependent on your parent’s financial support.

However, you should start thinking about getting a life insurance policy if you do have dependents or if you have co-signed a loan with your parents, whether it’s a student loan or a home loan. In addition, single people pay much less for coverage. Insurance salespeople may try to convince you to buy a policy you don’t actually need.

1. Life insurance covers your business: Some insurance plans also cover your company. If you run a business, your partner can easily buy your share from you. Your business partner(s) will sign a buy-sell agreement, under which the payout will be given to the nominees of the deceased partner without giving them a stake in the business. A term and life insurance policy are the two different types of life insurance. Term insurance protects you for a predetermined amount of time (10, 20 or 30 years) and only pays benefits if you pass away during the term. If you outlive your policy, the coverage will end, and the policy will expire. On the other hand, an investment-cum-protection plan provides you with a lump sum payment at the end of the policy’s term. These plans also provide protection for you, but the level of protection is typically lower than what is provided by term plans.
2. Tax-savings: Regardless of the type of insurance policy you purchase, you may be able to get significant life insurance tax benefits. Section 80C of the Income Tax Act of 1961 allows you to deduct up to Rs. 1.5 lakh from your insurance premium payments, and Section 10(d) of the Income Tax Act of 1961 allows you to receive tax-free proceeds in the event of your passing away or maturity. The tax benefit is subject to change in tax laws.

Note: From the financial year of 2020-21, a change was seen in the way taxes were going to be levied. A new tax regime with low tax rates was announced, with some reduced deductions and saving opportunities as well. Policyholders should choose the right regime to avail advantages of life insurance.

1. A means of forced savings: If you select a traditional or unit-linked policy, you must pay a monthly premium that is greater than the cost of your insurance. This small amount of extra money is invested, growing in value over time and providing you with additional life insurance tax benefits. Then, you can decide whether to sell the money or take a loan against the insurance policy in exchange for it.
2. Mindfulness: At the very least, what you can do for your family in the wake of an unforeseen tragedy is to ensure their financial stability. Even if it’s a modest policy, you know you’ve done everything within your power to assist them in getting through a trying time.

Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.