Whether you are earning or not, you may have a few worries about your family and loved ones on your mind. This is especially true if they are dependent on you in any way. You may worry about their future and their ability to fulfil their dreams in a situation where they don’t have you to depend on. It may be quite heartening to know that you do not have to bear these worries all alone. There are solutions to it, such as buying a life insurance plan.
How does buying a life cover help?
To begin understanding the answer to this, one must first acquaint oneself with the meaning of life insurance and what it has to offer. There are various types of life plans available today in the Indian market, e.g., term insurance, whole life plans, ULIPs, endowment plans, and more. Each of these has some unique benefits that allow them to stand apart from other plans.
However, the primary benefit offered by each of these life insurance plans is the death benefit. This is the benefit that allows you to enable your family to face any financial distress in a future where you are not there to support them. You can choose a sum assured that you think would suffice for your loved ones to fulfil any financial obligations you may leave behind, as well as allow them to meet their expenses. Ideally, a sum assured worth 10x the income of the life assured is advised.
Now that you understand the meaning of life insurance, let’s consider some of the reasons why you should get a life cover.
- If your family members are dependent on you today in any way, especially financially, they may end up going through some sort of distress after you are gone. They may find it difficult to fulfil their routine requirements and it may put them off track to pursuing their dreams. Life insurance allows you to make provisions today for their future financial stability.
- Suppose you have a financial obligation to fulfil, such as a loan that you will be paying off for the next 10 years. If you were no longer around to take care of this, the responsibility may fall on your family member. To save them from this burden, you should consider taking a life insurance plan if you have any financial obligations.
- Life insurance plans offer more than the fundamental death benefit. Plans such as ULIPs offer market-linked wealth creation opportunities. On the other hand, endowment plans and whole life plans offer maturity benefits. Hence, your insurance plan can also become a way for you to create some savings for your future. A relevant life insurance calculator can help you get estimates for the sum assured as well as returns on your policy.
- If you have opted for the old tax regime, your life insurance plan may also become a tax-saving instrument for you. You can claim tax exemptions on the premium paid as well as some of the benefits received. You may consult your tax advisor to understand tax rules better and see how they benefit you.
When is the right time to buy a life plan?
Many consumers may wonder about what the right time to buy a life insurance plan is. One factor to consider before buying a life cover is the cost of premiums. Commonly, the younger you are, the cheaper your premium rates tend to be. Premium cost increase as you grow older. You can use a life insurance calculator to understand how age may affect premiums. When such is the case, it may be advisable to buy a life plan as soon as you can, preferably when you start earning.
Another aspect to consider when buying a life cover is the reason behind buying it. For example, if you have dependents or are expecting to have any soon, it is better to not make any delays in buying a life cover. Moreover, if you have financial obligations, there is a reason for you to consider a new life plan.
Remember, life insurance gets more expensive with age. If you see yourself being responsible for someone else now or in the future, it is ideal to get a life plan as soon as possible. You can also choose a low sum assured term plan now, which would be relatively affordable, and later switch to a higher sum assured or a different plan.