You work hard to secure yourself and your family’s future. But to make sure that their lifestyle is intact even in your absence requires much more than just making regular financial investments. Most young people consider investing in mutual funds, stocks, bonds, etc. to double up their returns in a shorter time. They are under the impression that life insurance is meant only for the mid-aged. Which is why it will come as no surprise that only 10% of Indians are insured. But, regardless of how much you earn, your future is uncertain. And it’s best to be prepared in advance for such indefiniteness.
Buying a life insurance policy is one of the most crucial investment decisions that will ensure financial security for your loved ones if anything unfortunate were to happen to you. Besides, there are several benefits that you can avail of through an insurance policy:
- Debt management: As your family undergoes the trauma of a loss, you wouldn’t want them to be entangled in financial liabilities, would you? Investing in the right insurance policy will take care of any outstanding debts such as a home loan, a personal loan, an auto loan, etc.
- Tax-saving benefits: Any life insurance policy serves as a medium to save taxes. The premium that you’ll be paying every month against your policy is exempt from tax up to a maximum of Rs 1.5 lakh under Section 80C. Also, you can avail of tax-free proceeds upon maturity or in the event of the insurer’s death under Section 10 (D) of the Income Tax Act, 1961.
- An instrument for forced savings: Traditional insurance policies or unit-linked policies charge you a premium that is higher than the cost of getting you insured. This additional money is further invested in the market and it gradually accrues cash value. You can either borrow this cash against the policy or choose to draw income from it or can even sell it.
- When you’re younger, insurance is cheaper: From the moment you have dependents or have co-signed a loan with someone, you need to consider investing in a life insurance policy. Whether you are single or have a family, it’s best to begin the process of securing your future from a young age. It’s relatively cheaper to buy a policy earlier than acquiring one when you’re older. The insurance company measures your insurability before rolling out the rates on your insurance policy. The younger and healthier you are, the better your insurability and the lower the insurance rates.
- Assists in achieving long-term goals: Since life insurance policy is a long-term financial investment, it helps you achieve your long-term goals such as planning for your retirement or purchasing a home or any property, etc. Different types of insurance policies come with a variety of investment options that you can choose from based on your specific financial requirements and goals.
Though as youngsters you may feel that you can push this financial liability to a later stage of your life, it’s important to understand that as life progresses your financial responsibilities are going to accrue. Which is why investing early in a life insurance policy will ensure that you have enough money secured for your future.