A legal contract signed between the insurer and the policyholder where the insurer promises to give a decided amount to the beneficiary of the insured (after death) in lieu of premium is called life insurance. The fact that life is unpredictable creates the requirement for a life insurance policy. Different insurance plans have their own limitations and benefits. Thus, you should thoroughly read the terms and conditions of the policy to reap the benefits of life insurance.
Why You Need Life Insurance?
Buying a life insurance is one of the most secure methods to invest and protect the financial well-being of your loved ones. Insurance lessens the financial burden on your loved ones after your death. If you pay the premium regularly, your beneficiaries will get appropriate returns through the insurance plan. Other than the death benefits, some plans also offer additional benefits on the maturity of the insurance policy.
On the sudden demise of the breadwinner of the family, his/her family members can overcome the financial loss in future through life insurance policies. The family members might need to pay for the bills, EMIs (if any), children’s education, and other financial necessities. Insurance policies can offer financial aid to the family members of the deceased in such difficult times.
Benefits of Life Insurance
Income Tax Benefits
• Under the Income Tax Act 1961, all policyholders are eligible to get tax benefits.
• The death benefits of all life insurance plans are tax exempt.
• Some death benefits include exemption of estate tax for the beneficiary.
• During the term of the plan, the cash value of the policyholder increases without being affected by tax.
• The withdrawals made from cash value are tax free.
• If you avail a loan against your insurance, the loan amount is exempted from tax.
• Under Section 1035 Exchange, you can replace your insurance policy with a new insurance policy without paying any tax.
Steady Investment
• Buying an insurance plan will help you and your loved ones overcome a massive economic loss, in case of the sudden death of the sole breadwinner of the family.
• This investment option promises steady returns of the premium paid by the insurance holder during their lifetime at the end of the insurance period.
• By buying insurance, you can achieve the goal of making investment and providing protection to the loved ones from an abrupt loss of income.
Loan Availability
• You can avail a loan against the cash value of your insurance plan, in case of any financial emergencies.
• The percentage of cash allowed to be taken as a loan depends on the type of loan and the company/organization offering the facility.
Guaranteed Returns
• Certain life insurance plans offer assured returns.
• The investment that goes into the insurance is safe and secure, covering risks like accidents.
• In case of an accidental death, the beneficiary is sure to get the decided amount which is tax exempt under Sec 10 (10D) of the I-T Act 1961.
Assured Income
• If the policyholder is the sole breadwinner in the house, family members, including the beneficiary, will receive a decided income at regular intervals, on the death of the insured.
• This income can help family members to incur expenses that might be suddenly required in the form of bills and debts.
Retirement Benefits
• Not having enough funds after you retire is the most haunting fear for many.
• Returns from life insurance plans availed in your early years can help you meet expenses during your retirement.
• You must earn a good corpus when you can to enjoy your retirement without worry and hassle.
Long-Term Goals
• Apart from aiding in case of death or in the form of retirement plans, you can also plan for long-term goals like buying a new home, your children’s marriage, etc. through your life insurance policies.
• You can decide the tenure of your insurance and set up financial aid for future expenses to lessen the financial burden that you might have to bear later.
Some of the insurance policies in India
| Policy | Term Limit | Age Limit | Assured sum |
| ICICI iProtect | Min: 10 years
Max: 30 years |
Min: 20 years
Max: 75 years |
Rs 3 lakh |
| Aegon Life | Min: 5 years
Max: 40 years |
Min: 18 years
Max: 75 years |
10 lakh |
| HDFC Click 2Protect Plus | Min: 10 years
Max: 30 years |
Min: 18 years
Max: 65 years |
10 lakh/10 crore |
| Bajaj Allianz iSecure | Min: 10 years
Max: 30 years |
Min: 18 years
Max: 70 years |
20 lakh |
| Aviva I Life | Min: 10 years
Max: 35 years |
Min: 18 years
Max: 55 years |
25 lakh |
| LIC Amulya Jeevan | Min: 5 years
Max: 35 years |
Min: 18 years
Max: 60 years |
25 lakh |
| SBI e-shield Plan | Min: 5 years
Max: 30 years |
Min: 18 years
Max: 70 years |
20 lakh |
| Bharti Axa e-protect | Min: 10 years
Max: 35 years |
Min: 18 years
Max: 70 years |
25 lakh |
| HDFC Life Sanchay | Min: 15 years
Max: 25 years |
Min: 30 years
Max: 35 years |
1,05,673 /- |
| SBI Shubhnivesh Plan | Min: 5 years
Max: 30 years |
Min: 18 years
Max: 60 years |
75,000/- |
| Max Life Online Term Plan | Min: 10 years
Max: 35 years |
Min: 18 years
Max: 70 years |
25 lakh/100 crore |
| Kotal Life Preferred e-term | Min: 10 years
Max: 40 years |
Min: 18 years
Max: 75 years |
25 lakh |
| LIC Term Plan | Min: 10 years
Max: 35 years |
Min: 18 years
Max: 75 years |
50 lakh |
Considering the multiple benefits of purchasing life insurance plans, it is evident that a life insurance policy is a must if you want to secure the financial life of your loved ones. There should be no second thoughts while opting for life insurance plans. It is also important that you read all the terms and conditions of your policy since it may vary from policy to policy. The benefits mentioned above may vary for different insurance providers and policies that are availed.