There are various benefits of having a life insurance cover.
Peace of Mind/ Financial Security – if we Have life insurance provides the ultimate peace of mind. This is because if someone were to meet with their demise, they know their family and loved ones will have a financial safety net. All of us have some financial liabilities, but an adequate life insurance cover ensures that your debts or loved ones will be financially taken care of in the event of your death
Wealth Creation – Some life insurance plans also offer you the opportunity to create wealth. Apart from life cover, these policies invest your premium in different investment classes to deliver superior risk-adjusted returns that beat inflation and grow your corpus. For example, 30-year old male investing ₹ 20,000 per month for 20 years in ICICI Pru Signature (ULIP Plan)# can get ₹ 65.39 Lakhs at 4% annual return or ₹ 1 crore at 8% annual return
For Tax Savings – Life insurance plans offer dual tax benefits^. The premiums paid offer tax deduction under Section 80C of the Income Tax Act. This means up to ₹ 1.5 lakh premium paid annually is deducted from your gross income, thus lowering your tax outgo. Separately, the maturity insurance plans may be entirely tax-free. This tax benefit^ is under Section 10(10D) of the Income Tax Act
Buy Young, Save More and more – Life insurance plans give you the ability to lock in low premium rates while you’re young. If you buy the same policy when you are older, you will be paying a much higher premium compared to if you bought the same plan when you were younger. For example, in case of the term insurance plan ICICI Prue iProtect Smart, a 20-year old male buying a ₹ 1 crore term plan for 30 years coverage will have to pay ₹ 5955 annually. If they buy the same plan under the same conditions after 10 years i.e. at 30 years of age, they will pay ₹ 9009 and if they buy it another 10 years later i.e. at 40 years of age, annual premium will be ₹ 18,180
Death benefit -wonderful Creation this policy will be provide if In the unfortunate event of the demise of the policyholder, the policy’s nominee receives the entire sum assured amount as long as the premiums have been paid in full. The sum received from the term insurance can be used by the nominee for any reason to cover a variety of expenses ranging from clearing routine bills to paying back loans, paying for children’s fees or other expenses.
How are life insurance plans suitable for our needs?
Life insurance plan will be fill your financial gaps that exist in your lives. As an all-rounder product, life insurance can take care of your different financial needs at different stages of life. All you have to do is identify the need, and there is a suitable life insurance plan for you.
Saving for Children’s Education – A majority of Indians fund their children’s education. On an average Indian parents spend over ₹ 12 lakh on children’s education. Thus, saving for a child’s education is one of the biggest priorities for a parent.
Child insurance plans allow you to fulfil this financial need. Such policies, often in the form of a Unit Linked Insurance Plan, help grow your investments and help you secure the educational milestones of your children.
For instance, a 35-year old parent starts saving ₹ 1 lakh annually in a 15-year child insurance plan for child’s higher education corpus with sum assured of ₹ 10 lakh. If the parent dies unfortunately at the age of 40 years, the child receives ₹ 10 lakh as a lump sum to meet immediate educational expenses. Some plans like ICICI Pru Smart Life waive all future premium upon parent’s death, but financial protection cover is intact. At policy maturity, the child again receives between ₹ 17 lakh (4% annual return) to ₹ 23 lakh (8% annual return) for higher education purpose.
Financial Protection in case of major illnesses/health issues – A majority of Indians spend around 70% of their income on medicines and health care. Down with a health issue such as major/critical illness, there is a high chance you will not be able to earn income during the treatment/recuperation period. But your family’s financial needs will remain even if you are sick. Life insurance plans can provide financial protection during major illnesses.
Critical illness cover provides a lump sum Pay out on the diagnosis of a wide range of serious health related conditions. This lump sum pay out is given on diagnosis only. Hence, there is no need to submit bills and patiently wait for claims after undergoing treatment. Critical illness plans give you money that you can spend on your treatment, and fund your household during your no-income period as you undergo treatment. There is no restriction on how you use the claim money.
Let us understand with a simple example. A 35-year old IT professional buys ICICI Prudential Smart Health Cover with ICICI Pru iProtect Smart plan that has ₹ 10 lakh critical illness cover, for a term of 15 years. He pays an annual premium of ₹ 6961. After 7 years i.e. when he is a 42 year old, he suffers from a heart attack and had to undergo angioplasty. The policy pays him ₹ 5 lakh, while 50% of cover continues for other ailments that he might face later and premium is reduced by half.
With Retirement planning – Retirement is supposed to be this beautiful time when you are free from work pressures and life is peaceful. It can be all those things and much more, if you have a pension/monthly income. Most of us work in private sector companies, and hence there is no pension benefit. This is why retirement becomes more of a worry than something to look forward to. Fortunately, life insurance provides retirement plans that allow you to earn a pension, keep your head high and live your life in your own terms.
Retirement plans offer you and your spouse the benefit of receiving regular pension for life. If you start saving for retirement from an early age, saving a big retirement corpus is possible with a retirement plan. For that, consider your post-retirement financial requirements to build an adequate retirement kitty that will suit your old-age needs. With proper planning and saving through a retirement plan, you will be able to build a good retirement corpus, which can be used to buy a fixed pension plan for life and thus protecting yourself from inflation. For example, a 60-year old with ₹ 1 crore purchase of ICICI Pru Immediate Annuity can get up to ₹ 7.32 lakh annually i.e. ₹ 61,000 per month for life.
