Simplifying Life Insurance in India
Advantages & Key Benefits of Life Insurance in India
Life insurance policies ensure that your family stays financially protected in case of your unfortunate demise. In such a scenario, your nominees get a substantial death benefit so your family members can meet their needs.
Besides this, there are also several other benefits of a life insurance plan that you must be aware of if you have not yet gotten yourself covered.
What Are the Benefits of a Life Insurance Policy?
1. Financial Security of Family
The major benefit of a life insurance plan is the sum assured that nominees can claim after the unfortunate demise of a policyholder. It is a predetermined amount that one can choose while purchasing the plan. Therefore, by purchasing this policy, individuals can get an assurance that their families will get significant financial assistance to cope with regular expenses or to repay any of their pending debt obligations.2. Maturity Benefit
In a life insurance plan, the maturity benefit is a fixed amount of money you can claim if you survive until its term ends. Therefore, it can serve as your savings for the future. You can also deem it as your post-retirement fund if you plan your policy’s maturity period accordingly. Furthermore, since this amount is predetermined, the return does not depend on the risk of market fluctuations like other investment options.3. Opportunity to Borrow against a Life insurance plan
Another major advantage of a life insurance plan is its applicability in fetching a sizable loan amount in case of financial emergencies. You can find multiple lenders who extend a certain percentage of the maturity or sum assured value of your life insurance plan as a loan. This way, you can satisfy your financial requirements in emergencies without collateralising your assets.4. Tax Deductions
According to Section 80(C) of the Income Tax Act of India, you can reduce the total paid premium amount of your life insurance plan from your gross taxable income in a financial year. The maximum limit of this benefit is ₹1.5 Lakhs. Furthermore, the death benefit of a life insurance plan is also exempted from tax obligations according to Section 10(10D). So, you can stay assured that your nominee will get the complete value of the sum assured amount in case of any unfortunate event.5. Possibility to Enhance Policy Coverage
By adding riders or add-on covers on top of your life insurance plan, you can significantly enhance the total coverage of your policy. You can customise the financial protection of your policy according to your specific requirements. For example, if you need financial protection against critical illnesses, you will get add-on cover for that specific need. There are also various other riders like premium waiver cover, surgical care cover, hospital cash cover, accidental death cover, etc.6. Financial Planning
With the financial backup of your life insurance maturity amount, you can plan larger expenses that will come after the policy term ends. This way, you do not need to apply for any loan for funding requirements. For example, the lump sum can help you meet your goal of travelling to different countries or bear the expenses of your children’s higher education or marriage ceremony, etc.
Although financial security in the long term is the major benefit of a life insurance plan, it also lets policyholders enjoy tax deductions, requests for loans, etc. In addition, it helps individuals to stay assured that their families will not have to face financial adversities after their sudden demise.
FAQs About Life Insurance Benefits
What will happen if I fail to pay the life insurance premium on time?
What is the claim settlement process for maturity benefits?
Which documents do I need to provide while placing a claim for the maturity amount?
Following are some of the important documents that you need to provide while raising your claim for the maturity amount:
- Original policy document
- Your policy discharge form
- Government-issued ID card
- Age proof
- Bank account details (copy of your bank passbook)
What are the different types of life insurance policies available in India?
There are various types of life insurance policies in India, having different features and benefits. These are as follows:
- Unit Linked Insurance Plans or ULIPs
- Money Back policy
- Endowment plans
- Group life insurance
- Whole life insurance
- Child Insurance Plans
- Retirement Plans
Other Important Features of Life Insurance
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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