A life insurance plan is a contract between a person and an insurance provider represented by a policy. The policyholder pays a long-term premium and gets a substantial lump sum of money at maturity. In the event that the policyholder dies due to unforeseeable circumstances, it is transferred to the nominee. The life insurance cover proceeds are distributed to the legal heirs if no nominee is named.
Benefits of Life Insurance Plan
Many times, policyholders are the family's only earners. In such instances, a life insurance plan ensures the family's financial security. All of the benefits of life insurance cover are discussed below:
1. Income Replacement
The insurance money serves as a source of income for the dependent family. It replaces the income of the policyholder who died unexpectedly ensuring financial independence for the family of the deceased. Further, it also provides relief from liabilities like loans, credit card bills, rent, EMIs, etc. that the insured could have borne as these are covered by the insurance money.
2. Achieve Goals
Short-term objectives may also be met using insurance money. Life insurance plans, such as pension plans and endowment plans, aid in achieving long-term goals like higher education for children, marriage for children, and income source after retirement.
3. Savings and Investments
Except for term life insurance plans, all other kinds of plans are a combination of investment and savings. As a result, they may assist in acquiring a significant quantity of corpus when the term is through.
4. Tax Benefits
Life insurance plans often provide tax advantages under Section 80C of the Income Tax Act. You are free from paying taxes up to Rs. 1.5 lakh (total of all investments and payments under this section). The premium should not be more than 10% of the total covered.
5. Discount while paying online
An individual's payment mechanism for a life insurance premium influences the premium of a life insurance plan in various ways. The insurance company's administrative costs are significantly reduced if the premium is paid online resulting in the policyholder getting premium savings.
6. Business Benefits
The life insurance firm provides this advantage to policyholders who operate a business. As a result, if the insured dies, his business partners may easily acquire the policyholder's shares. It is an agreement-based alternative in which the stakeholders sign a bond that allows them to own the insurance but legally commits them to pay the share price to the decedent's dependents.
Best Life Insurance Plans That Can Be Your Saviour
1. iSelect Smart360 Term Plan Offers Critical Illness Cover Benefit
Canara HSBC Life Insurance Company has introduced a new term insurance plan. The iSelect Smart360 Term Plan, a flexible term plan that promises to provide complete protection with a slew of features aimed to assist policy purchasers and/or insured with financial security. The Term Plan offers a critical illness cover benefit, which protects you in the event that you are diagnosed with a specified critical illness during the policy term, providing financial peace of mind even at a difficult time.
2. Bajaj Allianz iSecure
Available with flexible policy periods, the guaranteed sum is less than Rs 20 lakh. You can even receive discounts on premium plans, demonstrating ways to considerably decrease spending. While purchasing a policy online, you should carefully read the terms and conditions.
3. ICICI Prudential iProtect Smart Plan
This plan is offered in three variations and provides advantages such as death coverage, terminal illness coverage, premium waiver benefit, accidental death benefit, tax benefits, surrender benefits, and so on.
4. Tata AIA iRaksha Supreme
The Tata AIA iRaksha supreme policy is appropriate for you as it has a life-stage choice feature that expands your coverage. When you choose a greater level of protection, you will receive a discount.
5. SBI Life-eShield
The policy provides four plan alternatives. It is a great term life insurance coverage for your family, and you can apply for it online without any hassle. This insurance provides features like renewability, a minimum sum promised of 20 lakhs, surrendering capability, and so on.
Wrapping It Up
Life insurance cover relieves the family's emotional burden if a family member dies. What happens if one of the family members is killed in an accident? Who will pay the bills if someone dies? Such notions often persist in the mind. As a result, a life insurance plan provides an answer to such questions.
Obtaining such coverage is always a safe bet and a step forward in protecting the family's future. The family will be protected regardless of whether the covered individual survives or dies. Furthermore, plans that pay out at maturity may assist with capital development or retirement corpus, as well as tax exemptions.