Benefits of Getting a Life Insurance Policy

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If you are a primary breadwinner of your family, then your focus would obviously be on safeguarding your family’s future. Investing in a life insurance policy will secure the finances of your family even while you are not around. Choosing a policy smartly will ensure financial cover not just for you but also for your loved ones. 

  • Loans over policies are exempted from tax payments
  • Are flexible in terms of adjustment of policyholders need
  • Cash values grow tax-free during the insured lifetime
  • Some policies have a cash value that accrues over time and can be utilized for paying premiums later
  • Low monthly premiums to be paid over a policy
  • These policies offer major tax benefits in comparison to any other investment options
  • Ensures fund flow while dealing with adverse financial situations
  • It can be bundled with other kinds of insurance covers such as disability ones  

Different kinds of life insurance policies

Life insurance can be categorized into three main types.

  • Term Insurance

This plan offers life cover for offering protection to loved ones at the most affordable rates possible. This is one of the simplest policies available. It promises financial security to your loved ones in your absence.    

  • ULIP

Unit linked insurance plans combine financial investment with life insurance. These offer a wide range of portfolio strategies and fund options. It also permits you to withdraw the money on a periodic basis from your policy.

  • Endowment Plan

These are traditional savings plans and are not linked to any stock market. Hence, these carry a lower risk. These plans offer bonuses such as terminal bonuses and a reversionary bonus.

  • Savings Plan

These plans combine investment with a life insurance cover. You can also create a corpus for meeting the financial goals of your life at different stages. Most of the savings plans offer a fixed amount as maturity once the policy terminates. Moreover, there are specific plans that help you devise a regular stream of income throughout the duration of the policy. 

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Advantages of choosing a Life Insurance cover

Life insurance covers the financial gaps that exist in the lives of individuals. It can take care of your financial needs at various stages of life. You just need to choose a plan as per your requirements to start reaping the benefits offered by a cover. Click to understand how these plans work.  There are numerous benefits of investing in a life insurance cover.

  • Financial security

Insuring yourself offers complete peace of mind to an individual. This cover proffers financial security to the loved ones of the policy owner even after their death. An adequate cover can ensure that your loved ones would be taken care of in case of your death. You can keep policies for up to the age of 120 as long as you are paying the premiums. You don’t lose the coverage under the permanent life insurance term. 

  • Wealth creation

Some insurance plans provide an opportunity for generating wealth. These policies invest your premium into different classes of investment for delivering superior returns. You are promised tax-deferred growth by investing in life insurance. This implies that you don’t have to pay any tax on capital gains, dividends, and interest on the cash value component of your policy until you withdraw the proceeds.     

  • Significant tax savings

These smart plans promise dual tax benefits. The premiums offer tax deductions based on the prevalent laws. Follow this link to learn why entrepreneurs need to invest in a life insurance policy: Instead of neglecting an insurance plan, individuals can benefit tremendously by not just creating wealth but also in the form of tax savings.

  • Borrowings against the cash value

If you are looking for money to pay for college or to buy a home, you can choose to borrow against the cash value of a permanent life insurance policy. Also, if you put money in a retirement plan, you can take it out for other purposes other than retirement. However, you may have to pay penalties depending upon the policy terms. Some retirement plans are not flexible and do not allow you to take money out. 

  • Accelerated benefits if you fall ill

You will be offered anywhere between 25-100 percent of the benefit of your cover if you develop any conditions such as cancer, stroke, heart attack, or renal failure. The terms are again dependent on the kind of policy that you choose. These benefits will help you pay your medical bills and enjoy a better quality of life.

The only drawback of claiming money for your treatment is that your beneficiaries would not be able to receive sufficient coverage after your death. 

  • Cheap enough to fit into any budget

Based on the coverage you choose, you may be paying a nominal amount per month as a premium towards your policy. If you don’t have any dependents, then you would not have to save a lot of money for your beneficiaries. You can invest in a cheap life insurance plan to secure your family’s future. Doing so also translates into lower premiums.

A term life insurance policy would cover most of your expenses such as business partnership, expenses of children, and mortgage payments. If you invest in a policy early enough, then you can save a lot of money than you would do by buying this coverage later in life. In short, you simply pay for whatever the need of your family is. 

In summary

A life insurance policy can be immensely beneficial if you know when to invest and what kind of policy you need to invest in. You can go through the different options available to decide which one would be the best fit for your requirements. Various tools are offered by several policy providers so that individuals can make an investment based on what they are looking for. 

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