There are many investment opportunities. Life insurance is a good option to consider as an investment to meet your life stages financial goals.
We have a bucket list. We have life goals. We have relationship goals.
And to fulfil all those, we have financial goals.
But, how do you meet such financial goals?
Until you win a jackpot, you will always try to find some financial vehicles to meet your financial goals – be it a short or long term.
There are various options available to build a corpus as per your needs.
Out of all those, one such way is life insurance.
Is Life Insurance a Good Investment?
A few years ago, a business owner, I knew, had a severe stroke. And within a few hours, he passed away.
How is it relevant to life insurance as a good investment?
A thoughtful question.
Nobody wants to die young. Leaving behind the business for which one has spent life in building-up. No one wants to die and leave debts for the family to repay.
And who wants their family to suffer all alone; to struggle to make ends meet.
It is for this very reason, an investment in life insurance is a must.
Whether you are a single with dependents counting on you for their financial needs, a married person as a primary breadwinner of the family, a middle-aged person thinking to retire worry-free and financially secure – Life Insurance has a lot in store for you.
Yes, it is true you must keep investment and insurance in two different baskets.
That’s the sole reason, “financial advisors” suggest getting a term plan as a pure insurance at a low premium and the rest of the money can be invested as preferred.
Undoubtedly, life insurance provides security. However, there are other benefits of investing in life insurance.
Advantages of Investing in Life Insurance:
1. Providing Security
Life insurance is the only financial tool that provides guaranteed funds from the day of issuance. In the sense, in case of an unfortunate eventuality where the policyholder dies within the period of the policy purchase, the life insurance company is liable to pay the guaranteed life cover to the nominee.
For example, Mahesh purchases a life insurance policy with a sum assured of Rs.10 lakh. And within six months of purchase, he dies due to the accident. The life insurance company will pay the death benefit (sum assured), of Rs.10 lakh to the nominee.
This way, you and your family can be assured of getting financial support in such eventualities.
After all, that should be the sole purpose of this investment to support when needed.
2. Opt For a Bank Loan
Yes, you read it right. You can opt for a loan against the life insurance policy.
Whole Life plans are meant to cover the life assured for the lifetime. Because of which one can take a loan on the withdrawal amount of the Whole Life plan. Moreover, one can also opt a loan against the Surrender Value. The Surrender Value increases over time and it is a better option than mortgaging home against the loan.
So this way:
- You stay covered throughout the life
- You get returns on your investment
- You can opt for a loan to meet your current demands
There are also other life insurance plans like an endowment, money back, etc. that offer loan facility.
3. Meet Your Short-term and Long-term Financial Goals
Short-term goals: With Money Back plans, you can plan your short-term financial goals. Money Back plans offers regular payouts. At equal intervals, you get a percentage of sum assured. At various life stages, you can be sure of receiving assured funds.
Long-term goals: Meet your long-term goals like planning your child’s education with a Child plan. Furthermore, plan your retirement with a Retirement plan or a Whole Life plan. With ULIP and a traditional Endowment plan, you can look forward to wealth creation to meet your 15 to 20 year down the line financial goals.
4. Your Business Has a Chance of Sustaining
With a Term plan, business owners can ensure that the family is financially secured in case of an untimely death of the life assured.
All life insurance company offers a Keyman policy. Keyman policy is a life insurance meant to cover the key person working in the company.
With Keyman insurance policies, you are protecting your business from getting a financial blow. Business may get affected financially without you being around to run the business or any key person. That said, it is essential to cover all the key people working in the organization under the Keyman policy.
5. Tax Benefits
All the premiums paid towards any type of life insurance policy are tax exempted. The premiums paid towards life insurance can be claimed for tax exemption under Section 80C of Income Tax Act, 1961.
Moreover, the death benefit/maturity benefit is also tax exempted under Section 10(10D) of Income Tax Act, 1961.
Related article: Read All About Life Insurance Tax Benefits
6. Mental Peace
All the above benefits give peace to the mind. Because, you know, your family is financially secure, in case of unfortunate eventualities. And you also know, with different types of life insurance you can meet all your financial goals at different life stages.
Your family members are also at peace knowing that they don’t have to worry about finances to fulfil their bucket list and continue living life.
Benefits of Investing in Life Insurance
- Provides financial security
- You can opt for a bank loan
- You can plan strategically to meet your short-term and long-term financial goals
- Business owners have a chance of growing their business even in their absence
- Offers tax benefits
- Assures mental peace
You now know the benefits of investing in life insurance.
The business owner, died unexpectedly. And at a very young age.
But, his business didn’t suffer. Neither his family members faced financial crisis as he had a term plan of a sound sum assured to help his family to maintain their lifestyle.
Now, you may not the same question again, is life insurance is a good investment?
Instead, you may want to know more about different types of life insurance policies or maybe you want to read what type of life insurance you should opt for.
If you have any queries, be free to ask. We’ll be more than happy to help you.
Here's a list that encapsulates the advantages of life insurance
Recommended Read: What Type of Life Insurance Should I Buy?