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Find out what makes life insurance a good investment
Life is full of uncertainties, and no one can be sure of what tomorrow holds. While we cannot predict our future, we can surely protect it by taking decisive steps today. Life Insurance allows you to provide financial assistance and security to your family in case of any unfortunate adversities. An unfortunate, untimely demise of the sole bread earner of the family can cause severe financial distress for the family. While no amount of money can ever replace a person, life insurance creates the necessary peace of mind, knowing that the family will have the right financial support to continue living in case of your absence.
A big fear for the primary breadwinner of the family is that in case anything untoward happens to him/her, the surviving family members may not be able to cope up financially. Life insurance has the unique ability to guarantee the delivery of financial security at the time when it is most needed. It offers peace of mind through immediate financial protection for dependents.
It is a long-term financial instrument that works as the financial backbone to fulfil your family members’ daily needs as well as serves as a financial support at important milestones, even in your absence. Most importantly, it allows the family to pay off any loans, liabilities, medical expenses or any other commitments so that these liabilities don’t cause an additional burden to them. It is therefore important, to choose an insurance policy that allows your family to enjoy the same kind of lifestyle and live comfortably, thereafter.
Life insurance can double up as investment tools and help you generate wealth for your future goals. Going beyond providing peace of mind to your family and yourself by way of guaranteed life protection, life insurance plans offer multiple benefits, such as, tax savings, assured income, market and non-market-linked returns, etc., that help you prepare for various goals such as child’s education expenses, retirement planning, paying off debts, medical expenses, home purchase, emergency funds, and more. The biggest advantage of using life insurance for investment purposes is that you can pick options based on your risk appetite and investment budget.
There are two components of financial planning. The first is to generate higher returns through fund growth, the second is to maximise these earnings by lowering the tax output.
In most insurance policies, you can claim an income tax deduction on your life insurance premiums under Section 80C of the Income Tax Act, 1961. Pay-outs on most life insurance policies are tax-free under Section 10(10D) of the Income Tax Act, 1961. Also, as your income increases, the tax bracket also widens. Therefore, the best method to save your hard-earned rupee is through investment in insurance policies.
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