Why Life Insurance is Essential for Every Indian Household

Every family needs financial security because life is full of surprises. Sudden incidents can cause diseases, accidents, or the death of a loved one can cause financial difficulties to any family.

That is why life insurance is required. It is financial protection and peace of mind for families. Moreover, they can cover the expenses even in times of trouble. 

Life insurance in India has various plans provided by various life insurance companies that can be suitable for all families. Let us know why it is a necessity for all Indian families.

What is Life Insurance?

A life insurance policy is an agreement between the insurer and the client. The policyholder will be giving money to the insurance company at regular intervals using premiums. Additionally, in return, the insurer provides the necessary support to the surviving family of the policyholder. 

Additionally, certain policies also confer saving and investment benefits. Hence, enabling the family to plan for future undertakings like a child’s education, marriage, or retirement.

The Importance of Life Insurance for Every Indian Family

Accidents and unexpected emergencies in the family can impact the financial situation in India. Given the fact, that most Indian families are already living below the poverty line, deaths and sudden accidents can impact their financial stability.

So, having life insurance can provide them the opportunity to stabilize their family income when accidents or unexpected deaths occur.

Here’s a list of some of the importance of life insurance in India:

1. Economic Security for the Family:

When the main earners in the family pass away, life insurance places sufficient funds in the hands of the family. The family can use this to take care of their daily needs. These include household bills, school fees, loan repayments, and other economic needs.

2. Protection Against Uncertainty:

Accidents and ill health will arise at any time. Life insurance is a safety net for cushioning the family against the financial hardship that may come. Additionally, a well-chosen policy guarantees that dependents do not have to struggle through life economically.

3. Helps in Settling Loans and Liabilities:

Many families take different loans such as housing loans, car loans, etc. In case of the unfortunate death of the policyholder, life insurance can come in handy. Moreover, they can help in settling these financial debts without burdening the family.

4. Provides For Child’s Future: 

Every parent wishes to give his child the best in life. Therefore, life insurance provides for one’s children who would need money for their studies and other expenses in the event of death by the clause.

5. For Retirement Planning: 

Some life insurance plans provide for a maturity benefit, and also, help build long-term savings. Additionally, it helps to provide a retirement fund, fulfilling the objective of independence in old age. 

6. Tax Benefits as per the Income Tax Act: 

Under the Income Tax Act, Section 80C, life insurance premiums can be claimed as a tax deduction. It can be regarding the income earned by the life insured. Life Insurance maturity amounts are also exempt from tax under section 10(10D) of the Income Tax Act.

Types of Life Insurance Policies

Different life insurance companies in India have different kinds of policies to suit different needs:

1. Term Life Insurance – 

It provides life coverage for a certain period, giving financial assistance to the family on the death of the insured. Typically, the term period for life insurance ranges from 10 years to 30 years. Upon completion, you can renew the term for an extended period of time.

2. Whole Life Insurance – 

It gives life coverage for the whole life of the insured, giving an instant payment to the deceased’s family. Moreover, this kind of insurance is not limited to any time period. Additionally, the whole life insurance policy is guaranteed to pay out upon the death of the insured.

3. Endowment Plans – 

It is basically a savings account that pays a sum either on death or on a specific date. This is a typical kind of investment, where your life is insured while your money is growing. Moreover, upon maturity of the policy, the insured receives a large sum of money, and upon the death of the insured, the nominee receives the death benefits.

4. Unit Linked Insurance Plans(ULIPs)- 

Combination of investment and insurance, safeguarding wealth and ensuring insurance simultaneously. This is a type of life insurance policy that bestows the benefits of both insurance and an investment. A portion of the money paid for the policy is used for market investments and the remaining is kept for providing life insurance.

5. Child Insurance Plans – 

For planning a child’s future education and finances. The main purpose of this kind of investment is to provide financial help for your child’s future. You can use it for funding their higher education or marriage events.

6. Retirement Plans –

So that financially, the insurance supports you after retirement and you can live life without a care in old age. This is a typical investment of the insured to ensure that upon retirement you are enjoying life without financial constraints. Moreover, a retirement plan policy can help you to achieve your dreams in the future without taking loans or borrowing money.

How to Select the Best Life Insurance Policy

• Determine Financial Requirements: Think about expenses, loans, future goal-oriented targets, and family obligations.
• Compare Multiple Policies: Research and compare different policies of multiple life insurance companies in India.
• Check Premium Affordability: Choose something your wallet can afford.
• Look for the Claim Settlement Ratio: Seek an insurer that has a good claim settlement ratio for hassle-free claim settlement.
• Understanding Policy Terms and Conditions: Go through the fine print so that there are no surprises down the line.

Concluding Remarks

Life insurance is essential for each and every Indian household. It gives security in finances, assistance in future plans, and assurance of peace for the future. 

Moreover, you can obtain multiple policies having varied specifications through India’s prime life insurance corporations and therefore every family. 

Furthermore, each should take the life insurance cover so their families are secured and their own lives are worthwhile to live.