You might have a great investment strategy of dividing your risks and increasing returns between mutual funds, recurring deposits, shares and debentures, gold and silver and much more, but have you considered Insurance? We’re not talking about the host of insurance policies available out there on travel, automobiles and home, we’re talking about the all essential life insurance.
Think of the person after you
If you are the sole earning member of your family, then this is an important reason you should buy life insurance. Have you calculated how much money would your family lose as a source of continuous income if you died? Even if you are single, you must plan for your dependent beneficiaries who may bear the brunt of pending expenses you leave behind for them.
Your life insurance policy will make sure that the Sum Assured given to your family replaces the stream of monthly income so that they can live a comfortable life. The Sum Assured will obviously depend on the life insurance scheme you choose and the levels of premium you pay.
Youngsters who are skeptical about buying life insurance can rejoice at the fact that there are many life insurance schemes in India which offer tax deductions on premium payments under Section 80C of the Income Tax Act, tax rebates and tax benefits in cases of claims made and maturity amounts received under 10(10)(d) of the Income Tax Act. Amongst the many instruments of investment that you may have divided your portfolio in, why not choose life insurance to kill two birds with one stone – gain tax benefits and avail financial security?
Cover the expenses that you may leave behind
Have you been a co-signer on a loan, home mortgage or a personal debt? Have you considered your funeral costs? Are you a part of a family business or a sole proprietorship with unlimited liability? Then that’s a good enough reason for you to opt for life insurance. Life insurance is also critical if you have just started your life as a married couple. Have you thought about how your partner alone will pay your child’s college fees?
Why take a chance if you know in advance that a hereditary disease runs in your family? The younger and healthier you are when you buy life insurance, the lesser premium you will have to pay. Whether you have dependents or not, taking life insurance before your hereditary ailment gets diagnosed will save you lot of money. Did you know that many times, life insurance policies are denied to people with hereditary diseases even if they are ready to pay high levels or premium?
Many people also use life insurance to fulfill two purposes. Firstly, to gain the traditional benefits of taking care of financial needs of the family after they are gone. Secondly, to use life insurance as an instrument for making investments. Depending on the scheme of life insurance you select, you can opt to invest a part of your funds from insurance in a variety of funds. In some cases, loans can also be drawn loans against your life insurance. Specific term assurance schemes can also be taken to pay fixed amounts of premiums through a certain period.
Many youngsters today see life insurance as very long term investment instruments. But as they say, it’s an amount you must keep aside to reap benefits later. Treat is as a gift you will give you your family after you are no more, not as an obligation.