Life is full of surprises. Some of them make us smile, like a promotion at work or a child’s first steps. Other things can catch us off guard – unexpected illnesses, sudden job loss, or the untimely passing of a loved one. These moments are reminders that uncertainty is a certain part of life. While we can’t predict what’s coming, we can definitely try to be prepared for it. One way is through life insurance – a quiet but powerful tool that ensures your family’s financial security when you need it the most.
Safety net for loved ones
Term insurance provides a safety net for your loved ones. In case of an unfortunate event, it provides a payout—known as the sum assured – to your family. This lump sum can cover immediate expenses such as medical bills, EMIs, daily living costs etc.
More importantly, term insurance gives families time to adjust to their new reality without the added burden of financial worry. When a pivotal person is no more, bereaving family members can’t see the proverbial ‘bottom of muddy water’. They require time and support.
To put that in context consider this example – A term insurance plan of ₹1 crore costs about ₹10,000 annually for a healthy 30-year-old. This small annual expense can secure a significant sum for your family, ensuring they’re protected even when if you are not around.
Helping deal with job loss
Today, disruption in jobs has become fairly common. The reasons are varied: evolving technology, global headwinds, and market movement, among others. This brings about the uncertainty of employment as a reality many face. A sudden job loss can disrupt even the most carefully planned finances. Life insurance with built-in savings or investment options, like endowment or ULIP plans, offers a dual benefit.
Endowment plans combine life cover with a savings component, allowing you to accumulate wealth over time. During financially challenging periods, these savings can be used as a buffer.
Similarly, ULIPs let you invest in market-linked instruments while offering life coverage. If you have built a good corpus in the lock-in period of 5 years, these policies can ensure you don’t have to dip into long-term savings or retirement funds during short-term crises.
Health and rising medical costs
In India, the cost of healthcare is rising rapidly. Room rates, consultation charges, medicines, diagnostic tests – these costs have risen for every imaginable healthcare-related service. Thus, a single hospitalisation can cost lakhs, leaving families drained financially. Life insurance policies with critical illness riders offer an added layer of protection. Some of these riders pay out a lump sum, directly on the diagnosis of a serious condition like cancer or heart disease without requiring hospital bills.
To put this in context consider this – Adding a critical illness rider to your term plan might cost an extra ₹2,000 annually. But this small amount can provide coverage worth ₹10 lakh or more, helping you prepare for unexpected medical expenses without depleting your savings.
Education and future goals
For parents, their children’s education is often the top priority. Higher education, whether in India or abroad, is an expensive affair. Life insurance policies like child plans ensure that funds are available when they are needed most, regardless of life’s uncertainties.
For instance, a policy maturing at your child’s 18th birthday can help pay for college fees, tuition, or even living expenses. By planning early, you can lock in affordable premiums and ensure your child’s dreams remain on track, no matter what.
Tax benefits
Life insurance isn’t just about protection; it’s also a tax-efficient investment. The premiums paid up to ₹1.5 lakh per year towards life insurance are eligible for deductions under Section 80C of the Income Tax Act, 1961. Additionally, if you have added a critical illness rider to your policy, you can claim an extra deduction under Section 80D of the same act.
Moreover, the proceeds received are also tax exempt subject to conditions under Section 10(10D) of the Income Tax Act, 1961.
Emotional security
Beyond numbers, life insurance offers something intangible but equally valuable: peace of mind. Knowing that your family will be financially secure, no matter what, allows you to focus on living life to the fullest. It’s not just about insuring your income; it’s about insuring your peace of mind.
Take the case of Sunil, a 38-year-old software professional. He purchased a term insurance plan worth ₹1 crore when his daughter was born. Two years later, Sunil was diagnosed with a critical illness. His policy’s rider provided a payout of ₹15 lakh on the diagnosis, thus easing the financial strain on his family. Today, as Sunil continues to recover, he knows that his policy can secure his family’s future, come what may.
Small steps for big security
Securing your family’s financial future doesn’t have to be complicated. Start by evaluating your needs. Consider factors like your age, income, existing debts, and family goals. Choose a plan that aligns with your requirements and ensure timely premium payments.
For young professionals, starting early means locking in lower premiums and higher coverage. For parents, child-specific plans provide targeted benefits. And for those nearing retirement, life insurance can supplement other savings, offering a comprehensive safety net.
Uncertainty is a part of life, but it doesn’t have to define it. Life insurance offers a way to turn unpredictability into preparedness. By offering financial security during tough times, it allows you to focus on what truly matters – creating memories with your loved ones and living life without fear of the unknown.
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