Is Life Insurance Important for a Robust Financial Plan

What Is Life Insurance?

Life insurance is a form of agreement that an insurer has with the policyholder where the insured person is promised a certain sum of money after the policy matures or the sum assured is to be given to the family member if the policyholder meets an untimely death. Here the policy is to be renewed at regular intervals (monthly or yearly) by paying a specific premium amount as mandated in the policy document.

Why We Need Life Insurance?

With so much uncertainty around us, one tends to get apprehensive about their own future and the future of their dependents, which is where the importance of life insurance comes into the picture. Here are some factors that would reiterate the value of getting life insurance.

Financial security:

The sum assured in the life insurance policy provides for robust financial security to the policyholder as well as the family of the insured person. Therefore, in case of any unwanted eventuality, the family of the insured person would be well-protected.

Tax benefits:

Under the Income Tax Act 1961, the government has mandated that amount up to ₹1.5 lakhs can be saved from being taxed if paid as a premium. Hence, any premium that is within this limit can be claimed in a tax deduction, thereby reducing your tax burden.

Investment options:

Life insurance also provides you with an option for investment, especially the ULIP. Here your premium is divided into parts, of which one component is invested in the financial market instruments while the other is used as a premium for providing insurance coverage.

Long term financial goals:

A life insurance policy can go a long way to help you achieve your financial goals that are planned for a 20 or 30-year period. In such cases, the term life insurance, which provides life insurance for a fixed term is the best possible policy.

Stress-free life:

Once you have life insurance to your name, the stress regarding the financial well-being of your family members is eliminated. It is just that the sum assured needs to be chosen wisely so that it takes care of all the expenses that might come their way in your absence.

Retirement goals:

Life insurance policy can be very useful if you have not planned much for your retirement. Upon the policy maturity, the sum assured will be handed over to you without any tax deduction as stated in the IT Act 1961. Moreover, the pension plans attached to life insurance, which offers you a provision to withdraw a certain amount of money after an initial fixed period, also help you in your retirement.

Loans against insurance policy:

There are many instances when taking a loan becomes indispensable, but you do not have the eligibility to get a loan. In such a scenario, your life insurance corpus would serve you and make you eligible for a loan depending on the guidelines of the insurance provider.

Get a Life Insurance to Plan Your Finances Better

Now that it is understood why life insurance is essential for every individual in today’s day and age, it is imperative on your part to be aware of the essential factors before buying a life insurance policy. Some of the important factors are claim settlement ratio, premium charges, flexibility in insurance policy regarding the term as well as premium, the history of the company vis-à-vis its competitors, etc. Once you have considered all these parameters, you need to put together all the documents that are required for purchasing a policy. You can also contact the customer support or request for a quote online.

Visit PNB MetLife to know more about Long Term Savings, Term Insurance & Term Plan