Five reasons why everyone needs Life Insurance

Introduction

When you are young, you rarely think about what will happen to your family or dependents if you are no more or suffer an accident that leads to permanent disability. Youth can be blind to the uncertainties of life. A way to hedge this risk is to buy life insurance policy.

Life insurance is a low priority financial product among the youth. Life insurance is quite an underpenetrated market in India. According to the latest Economic Survey, just three out of 100 Indians have life cover. 

A financial expert will tell you that life insurance is one of the most important financial products for risk protection. No matter your age, having a life cover has many advantages. When you purchase life insurance at a young age, your premiums will be much lower. It is a financially-prudent investment to protect your loved ones. 

Additional read: What is Life Insurance? What are its Coverages?

If you are not convinced about why you should buy life insurance, here are five reasons that could change your mind:

1. Protection for your loved ones 

If you die or suffer an accident that leads to disability, life insurance can provide financial protection to your family. If you have dependent parents, grandparents, a spouse or children, getting life cover becomes even more critical. While money cannot compensate for your death, but having life insurance policy can ensure that your family is financially looked after even if you aren’t around.

2. It can clear your debt 

If you don’t have financial dependents, you could still take life insurance plan to ensure your debts are covered if you die prematurely. In today’s world, having an education loan, car loan, home loan or even credit card debt is common. If your parents or spouse have co-signed on your loans, they will become responsible for paying these loans if you die. Buying life cover can ensure that you take care of debt on your own even after your death.

3. Tax savings

Premiums on life insurance are tax-deductible up to Rs. 1,50,000 a year under Section 80C of the Income Tax Act. If you cannot choose the suitable tax-saving instruments to invest in, you could buy life insurance to reduce your tax liability. At the same time, it will also give you financial risk protection.

4. Create an emergency backup 

Did you know that you can take a loan against an endowment or a whole life insurance policy? This is often a better alternative to personal loans since the interest rate is lower. Think of it as borrowing from your future self. If you find yourself in a financial crunch, you can take a loan against your life insurance policy. However, do note that term policies are not eligible for loans.

5. Peace of mind 

Perhaps the most significant intangible benefit of getting life cover is the peace of mind that it offers. You can be rest assured that your loved ones and dependents will be taken care of with a life insurance plan. You will leave behind no debt for anyone else to cover. At the same time, with the right life insurance policy, you can also generate income to meet long-term plans and your retirement goals.

Additional read: 5 things to consider before buying a life insurance cover

Takeaway 

Life cover is essential for risk protection and your family’s welfare, not just when you enter mid-age but also when you are young. When you purchase online life insurance (or offline), the younger you are, the lower your premium would be. You can also benefit from tax savings.