A critical component of any financial plan is insurance, particularly life insurance. But what makes life insurance so important? Why do financial planners insist you have a life cover? In short, why life insurance?
A subject that we tend to brush aside is death. Nobody likes to talk about it, nobody wants to think about it. But death is inevitable. Wouldn’t you like to protect your loved ones in the event of your demise? Of course you would, and that is why we have life insurance plans. Life insurance protects your loved ones from the financial consequences of your demise. The amount your family receives from the insurance company can be used the way they like - to pay off any pending debts, pay for the funeral expense, take care of your child’s school or college fees, etc. This makes life insurance a necessary component of a sound financial plan.
Besides being a protection tool, a life insurance policy helps you save in a disciplined manner. Investing in a life policy inculcates the habit of savings, which forms the key to a successful financial plan. Make sure to pay your premiums on time and enjoy creation of a good corpus.
Attain long-term goals
What are some of the long-term goals we plan out when we start earning? - Have a house in our name, own a car, pay for our kid’s school and college fees, etc. A life policy with an adequate cover will help you reach your long-term financial goals. Life insurers offers various kinds of plans that will help you reach a particular or several different financial goals when you opt for the right mix of insurance plans.
One of the several benefits of putting your money in a life insurance plan is that you can claim tax benefits. Under section 80C of Income Tax Act, 1961, tax benefits can be claimed on the premium you pay towards your policy. The maximum deduction you can claim under this section is ₹1,50,000. Additionally, the proceeds from the policy are also tax deductible under Section 10(10D) of the Income Tax Act, 1961.
When you make life insurance part of your financial planning, you are safeguarding the future of your loved ones. In other words, a financial plan is never complete if you don’t have life insurance.