Arun is generally swamped with work and unable to find time to organise his funds. One year, around tax time, his bank's Relationship Manager offers him a terrific tax-saving life insurance plan that will help him save money. Arun receives exceptional door-to-door service. He only needs to sign the ECS documents and leave the planning to the professional. Although he needs to be better versed with the specifics of his policy, right now, he just knows that these investments help him save money on taxes.
Numerous people like Arun utilise life insurance policies to save money on taxes. Under Section 80C of the Income Tax Act, a life insurance plan provides yearly tax benefits of up to INR 1,50,000. Given the benefits available, taxpayers frequently acquire plans at the last minute to minimise their tax burden before the end of the fiscal year. As a result, people may not choose the best policy for their needs or obtain appropriate coverage.
Life insurance is unquestionably a terrific tax-saving tool, but that should not be the only reason to purchase it. Though life insurance helps policyholders save tax under Section 80C of the Income Tax Act of 1961, it also provides numerous other major benefits, which we will explore in this article.
7 Advantages of Life Insurance Besides Tax Savings
Ensures the Financial Security of the Family
The unpredictability of people's lives because of the increasing number of serious diseases, accidents, and so on has made it necessary for people to seek comprehensive life insurance coverage. Furthermore, your dependents rely on you for all their needs and a stable future. A life insurance policy can provide your family stability even if you cannot care for them. With a term insurance policy, you may ensure that your children's education continues, and your family's livelihood is secure in your absence.
Allows Policyholders to Achieve Long-term Objectives
A variety of life insurance plans are available to meet the demands of all kinds of people. Some plans provide recurring payouts, while others provide a big sum at maturity. These plans assist individuals in achieving long-term goals, including purchasing a home, funding a child's education, planning a wedding, etc. If you want to receive monthly dividends, you can choose a unit-linked or participating plan that meets your demands. Note that Term insurance does not provide any maturity benefits. It is a pure life insurance plan that pays out a sum assured to your nominees in case of your untimely demise.
Serves as a Saving Tool
The returns provided by unit-linked insurance plans and endowment savings plans are flexible. Buying these insurance plans at an early age allows for the long-term creation of wealth.
Early Bird Advantage
Many people put off purchasing insurance because they believe it's only for tax purposes. This is because many people are already in the tax-free category during their first years of employment. Furthermore, many young individuals enjoy carefree lives with no concern about investments or savings. As a result, they are unable to make any investments.
However, when you are young and disease-free, the premium rates for life insurance plans, especially term insurance, are modest. You can check the premiums using a term insurance calculator. As an experiment, try to change the age and witness the change in premium amounts as you increase it. Therefore, if you seek life insurance later in life after contracting a health condition, the premiums can be rather exorbitant. When you are young, purchasing a comprehensive term insurance plan like Zindagi Plus by Edelweiss Tokio Life Insurance is critical.
Set and Achieve Your Retirement Goals Easily
Planning for retirement when you are young and earning well is essential. If you do not carefully plan your retirement, you may experience difficulties in your old age. By selecting a solid life insurance policy with maturity benefits, you can get consistent monthly income during retirement. You can also look into annuity plans with life cover if you want your insurer to pay you a set amount in one lump sum or instalments as a source of income once you retire.
Your Dependents Can Pay Off Your Debts
Having life insurance not only gives you financial protection but it also safeguards your family from liabilities. As a result, if you have adequate life insurance coverage, your family won't need to struggle with the burden of your debt.
Attain Mental Peace
Aside from everything else, the finest thing that life insurance provides is peace of mind. It is not uncommon for a tragedy to destroy a family, especially if it is related to the primary breadwinner. As a result, it is critical to protect your family with adequate life insurance coverage. The standard rule is to choose an investment and insurance cover at least ten-fifteen times the person's annual salary. You can earn a stress-free life this way.
As previously stated, viewing life insurance as a tax-saving strategy is a mistake. Life insurance is a dynamic financial tool that provides life coverage and sometimes serves as a savings tool and income supplement. As a result, purchasing life insurance at an early age is an excellent idea. Before investing, however, it is critical to conduct thorough research and compare plans.