You must have heard this saying, “Life insurance is not an option; it is a necessity.” This saying is so apt because life is unpredictable. And, to protect your family from financial pitfalls in case of an unfortunate death, term insurance plans are a must.
To understand the importance of life insurance coverage, you need to explore what life insurance is. Simply put, life insurance provides a safety net that can ease the burden on your family during difficult times. This makes it important to find the best life insurance of India. You might be surprised to know the range of options available to you when you want to buy life insurance, including term life insurance, endowment plans, ULIPs, and more.
In this blog, we will discuss the importance of life insurance, its benefits, and why having coverage is a crucial aspect of financial planning.
Understanding Life Insurance Cover
An agreement and contract between the insurance company and the policyholder that states clear terms and conditions of the plan, the premium amount that is supposed to be paid periodically, and the sum assured that is to be paid on maturity is a life insurance policy.
The sum assured is the lump sum amount the nominees (usually family members) receive after the policyholder’s death. These insurance policies cover the life of the policyholder (mostly referred to as the life assured) against the premium you pay! The life insurance premium varies from one individual to another, and the main factors affecting the premium amount include age, gender, health conditions, family health history, type and amount of coverage opted for, etc. They pay the sum assured, the cover, to finish the contract between the two primary parties.
Benefits of Insurance Cover
- Financial Security for Your Family
If you are the sole breadwinner, leaving your family behind without any financial support might be your biggest fear. But life insurance has you covered on that one. In case of death, life insurance provides financial security, in the form of death benefit, to the life assured’s family. The death benefits can pay off the loans, outstanding bills, funeral costs, and other financial components.
- Earnings Replacement
Life insurance can act as a replacement for income after the policyholder’s demise. It would be very difficult for the family to cope with the rising financial problems since there are chances that the policyholder was the only breadwinner of the family. But life insurance provides financial assistance by replacing the monthly income with the death benefit amount.
- Debt Repayment
As mentioned above, leaving your family without any financial support is difficult. But leaving them in debt can be even more scary! Life insurance’s lump sum payment can be used to repay outstanding liabilities like loans, EMIs, rent, etc.
- Inheritance and Estate Planning
Life insurance is essential in estate planning. It can assist in the equitable distribution of your assets and fortune to your heirs. As part of your legacy, the earnings from your life insurance policy can be utilised to leave an inheritance to your loved ones or to make charitable contributions.
Conclusion
Life insurance is an integral part of our financial planning. Life insurance cover benefits are not only restricted to risk arising due to unfortunate death, it also acts as an important financial planning tool that helps create wealth, encourage saving and offer tax benefits. It is crucial to include adequate life insurance coverage from a trusted insurance provider to protect your family in your absence.
