A life insurance policy is a type of insurance cover that provides monetary benefit to the family of the insured in case of his/her/s unfortunate demise. Apart from being an important source of saving tax (premiums paid towards a life insurance plan are eligible for tax deduction under Section 80C of the Income Tax Act, 1961), a life insurance plan will help your family with the needed financial assistance in your absence.
Should you buy a life insurance cover? Well, this depends on your financial dependents. If you are the sole breadwinner of your family with children, spouse, and parents, a life insurance plan must be a part of your investment portfolio.
In addition, if you want to regularly save taxes of up to Rs. 1,50,000 per year, a life insurance plan is a good option for the same.
Here are the top 10 benefits of buying a life insurance policy:
The primary function of a life insurance policy is to provide a death benefit to the family of the policyholder in case of the untimely death of the insured. The death benefit is the sum assured payable in the form of a lump sum or at regular intervals, as selected during the time of policy inception. The death benefit acts as a replacement of income for the family members of the insured.
A life insurance policy is an important source of financial stability in case of any uncertainty in the near future. You along with your family are well protected from the dangers of the future with the maturity proceeds of a life insurance cover.
The death benefit received can also be utilized to pay-off the existing/ongoing debts of the policyholder post his/her/s demise. There are multiple instances where the legal heirs of the policyholder are able to pay the existing debts of the policyholder. This will ensure a stress-free life.
A life insurance plan can be utilized for meeting future expenses for your children’s foreign/higher education. If you invest in a life insurance plan (a child plan) when your child is born, you will acquire a significant corpus amount by the time your child reaches the age of 18 years; provided you stay invested. The same can be done to meet the wedding expenses for your children.
A life insurance policy is an ideal low-risk investment scheme. If you are a first-time investor who does not want to undertake a significant risk, a life insurance scheme is a suitable option for a beginner level investment. Note: a life insurance scheme comes with a long term investment option. Make sure you stay invested by paying your premiums regularly in order to avail the desired returns.
If you do not have a pension plan in hand, it is advisable to invest in a life insurance product. You should start investing when you are young and the premiums are low. You can invest as a lump sum amount or at regular intervals; monthly, quarterly, semi-annually, and annually. You can avail of the maturity benefit or survival benefit as the policy matures.
The most common factor for buying a life insurance plan is to save tax. Premiums paid towards a life insurance scheme is eligible for tax deduction of up to Rs. 1,50,000 and the maturity proceeds obtained are also tax-free as per Section 10(10D) of the Income Tax Act, 1961.
Rider options are additions to your life insurance policy at an additional premium. They help provide additional cover over and above the sum assured of the life insurance plan. Examples of life insurance riders are; accidental death benefit, critical illness cover, waiver of premium, partial disability cover, income benefit cover, and much more.
You can achieve your long-term goals for children’s education, buying a second house, a new car, children’s marriage, a foreign vacation, and much more with the proceeds of a life insurance policy.
You might want to secure a good future for your children and dependents. You can do so with a life insurance policy. Upon your demise, the proceeds from the life insurance scheme will be inherited by your legal heirs.
Now that you are aware of the importance of life insurance. It is advisable to look for a suitable life insurance scheme. To help you with the same, we have created a list of the top life insurance cover policies in India for 2020.
| Best Life Insurance Plans in India for 2020 | Entry Age - Min/Max | Policy Term - Min/Max | Sum Assured - Min/Max |
|---|---|---|---|
| Aditya Birla Sun Life Shield Plan | 18 years to 65 years | 10/20/30 years | Rs. 25 lakhs/no such limit on the max amount |
| Aegon Life i-Term Plan | 18 years to 75 years | 5/40 years | Rs. 10 lakhs/no such limit on the max amount |
| Aviva Life Shield Advantage Plan | 18 years to 55 years | 10/30 years | Rs. 35/Rs. 50 lakhs/no such limit on the max amount |
| Bajaj Allianz iSecure | 18 years to 70 years | 10/30 years | Rs. 20 lakhs/no such limit on the max amount |
| Bharti AXA Life Premium Protect Plan | 18 years to 65 years | 10/15/30 years | Rs. 25 lakhs/no such limit on the max amount |
| Canara HSBC iSelect+ Term Plan | 18 years to 65 years | 10/30 years | Rs. 25 lakhs/no such limit on the max amount |
| Edelweiss Tokio Life Simple Protect Plan | 18 years to 65 years | 10/40 years | Rs. 25 lakhs/no such limit on the max amount |
| Exide Life Smart Term Plan | 18 years to 65 years, 60 years | 10/12/30 years | Rs. 5\10 lakhs/no such limit on the max amount |
| Future Generali Flexi Online Term Insurance | 18 years to 55 years | 10/75 years | Rs. 50 lakhs/no such limit on the max amount |
| HDFC Click2Protect Plus | 18 years to 65 years | 10/30 years | Rs. 10 lakhs/Rs. 10 Crore |
| HDFC Life Sanchay | 30 years to 45 years | 15/25 years | Rs. 105673/no such limit on the max amount |
| ICICI Pru iProtect | 20/75 years | 10/30 years | Rs. 3 lakhs/no such limit on the max amount |
| IDBI Federal Income Protect Plan | 25/60 years | 10/30 years | NA |
| India First Life Plan | 18/60 years | 5/40 years | Rs. 1 lakh/Rs. 5 Crore |
| Kotak Life Preferred e-Term Plan | 18/75 years | 10/40 years | Rs. 25 lakhs/no such limit on the max amount |
| LIC Jeevan Amar | 18/65 years | 10/40 years | Rs. 25 lakhs/no such limit on the max amount |
| LIC Tech Term | 18/65 years | 10/50 years | Rs. 50 lakhs/no such limit on the max amount |
Disclaimer: The above information has been sourced from the official website of the respective insurance company. (last updated on 26-10-2020)
In Simple Words, If you are looking to save taxes, grow wealth, and avail life cover, all at once. A life insurance policy is your best option. Plus, you can buy all of the policies mentioned above online on Coverfox.