Protect your family for the future with a life insurance policy
When a family member dies, the last thing you think about is money. However, a solid life insurance policy is an undeniable financial tool that can help loved ones obtain financial assistance to continue their lives without undue financial strain. Buying a life insurance policy is a smart choice but also an emotional one because you are about to protect your loved ones after their death during their lifetime. There are many types of life insurance policies that offer a large number of benefits that act as both financial cover and both investment and insurance. Take an in-depth look at how you can buy one as well as what features so you can make a confident decision on what’s best for you and your loved ones.
What is a life insurance policy?
A life insurance policy is a financial tool that offers you a combination of savings and benefits under one plan. A virtually compulsory purchase, a life insurance policy helps provide financial assistance to beneficiaries of this policy, a foolproof plan to ensure the well-being of family members who have been left behind. Although it does require payment, you can get one that allows you to invest in market-linked funds and other investment opportunities. Often times, in the event that the policyholder survives their policy date, the final amount they get back is much higher than what was paid out, acting as a good kitty for your golden years.
Characteristics of a life insurance policy
Mentioned below are the main characteristics of a life insurance policy in India
- Possibility of investment as well as insurance under the same cover
- The policyholder can choose to switch between different coverages after the expiration of a period specified in the policy.
- You can choose to make partial withdrawals after completing a blocking period of at least 5 years
- Partial withdrawals can be free up to a certain limit
- Policyholders can opt for a debt fund at the end of the contract
- The sum insured at death is guaranteed under a life insurance policy
- Maturity benefits are available to the policyholder if he or she survives the policy
Benefits of a life insurance policy
Take a look at some main advantages that a life insurance policy will give you.
- Investing in a life insurance plan instills disciplinary savings, which can help achieve long-term goals that require funding.
- It protects the members of the insured’s family in the event of premature death by providing them with financial assistance.
- Loyalty add-ons and fund boosters come with long-term LIC policies.
- The growth of wealth is promoted over time.
- Tax exemptions are granted with investments in life insurance policies
- Mortality costs are reimbursed at maturity in some life insurance policies
How does a life insurance policy protect family members
Although we have covered a generic idea of how a life insurance policy helps protect the financial interests of family members, the points below on how to do this will help to give a clearer picture.
1. Provide financial stability
If the policyholder is also the breadwinner, his death can cause more emotional turmoil than a normal person. Family members are devastated by the loss of a loved one and are barely able to cope with the loss, and an additional financial burden can cause further chaos. When the deceased person has a strong life insurance policy, they can make sure that their family will receive the amount the company has promised so that they can live the comfortable life they are used to.
2. Monetary aid for critical costs
One of the most prolific benefits of a life insurance policy is that it offers life coverage and delivers excellent returns at critical life stages, where applicable. Some plans offer a lump sum payment upon retirement, so you can use it when you need it most. Others offer large payments when needed, like your children’s education costs, etc.
3. Help during difficult times
Many life insurance policies are designed to provide financial assistance during difficult times that generate excessive expenses such as hospitalization due to illness, accident, medical bills, legal fees if something goes wrong. legal fees, funeral costs in the event of death, etc. are hard on family members because the liquidity of funds is not easy. A life insurance policy that helps cover such expenses is a godsend in disguise.
4. Benefits of loan coverage
Taking loans is a common occurrence among people. There are home loans, business loans, personal loans, etc. In the event of the unexpected death of a borrower, the burden of repaying the loan falls on his dependents. This can add to a lot of undue pressure on them. In the event that the borrower has an infallible life insurance policy against his name, the insurer ends up paying the sum insured to his beneficiaries. The amount can be used to pay off the borrowed loan. Anyone who takes out a loan should keep this in mind before doing so.
5. Leave a legacy
When you name a beneficiary to your life insurance policy in his capacity as heir, this person will receive the sum insured upon the death of the policyholder. If the recipient does not need the money, they can donate it to charity. This can be done by giving your name to the charity, which usually means that you will be the owner of that charity and have access to its funds as well as its cash value during your lifetime. You will also be entitled to charitable tax deductions. In the event of death, this tax exemption will not be applicable.