A death in the family is emotionally draining. But it can also disrupt the finances and lifestyle of surviving family members. Life insurance financially safeguards your family and loved ones when you are not around. You also get to enjoy the peace of mind that comes with the knowledge that you have done your best to ensure your family is taken care of even when you are not around.
Financial security for your family: Individuals make financial plans to achieve goals for their families – bigger homes, comfortable retirement, children’s education. Life insurance ensures that your plans for your family are fulfilled even if you aren’t around.
Cover for debts: Home loans, car loans, personal loans… people accumulate many debts over their lifetime. After their death, the liability falls on the surviving family. Sufficient life insurance ensures that your debts are taken care of, and your family does not go through any financial stress.
Leave an inheritance: While many people buy life insurance to financially secure beneficiaries, you can also think of it in terms of leaving behind a substantial inheritance for your family and heirs.
Enjoy tax savings: Get tax benefits under Section 80C of the Indian income act when you buy life insurance. Moreover, life insurance payouts are tax-free.
Retain employees: An insurance policy for your employees can work as an excellent retention tool. Premiums paid on these policies are tax-deductible (as they can be shown as expenses). Providing employees with life insurance will also help create goodwill.
Life insurance comes in many variants. You must choose one that is aligned with your needs and financial goals.
Term insurance policy: A term insurance policy offers pure risk cover. It’s among the cheapest life insurance plans available (you can get a higher sum assured at lower premiums).
Savings plans: These insurance policies offer a mix of risk cover and investment. Savings plans include whole life insurance, endowment plans, child plans, pension plans and others.
Unit-Linked Policy or ULIPs: ULIPs provide the benefit of investment and insurance in one product and offer you a way to create long-term wealth while also covering against the unexpected.
JM Financial Services Limited offers an array of life insurance policies across leading providers. Our experts will help you screen policies and find the right one for your needs.
FACTBOX
A life insurance product is designed to provide financial cover for your dependents in the event of your death. A life insurance policy is a contract between an insurance company and an individual (the policyholder). The individual makes regular payments called premiums to the insurance company, and the insurance company agrees to pay the beneficiaries nominated by the individual a sum of money on their death.
One of the benefits of life insurance is that it provides security and financial cover for your loved ones if something were to happen to you. Here are some of the key benefits of life insurance:
- Financial security for your family: Dealing with a financial setback and the emotional stress of losing a loved one can be challenging. If you are an income earner and contribute to the family's expenses, your demise could result in a loss of income for your family and impact their life and goals.
- Peace of mind: A good life insurance policy gives you peace of mind because you know that your family will be taken care of even if you are not around.
- Maturity benefits: Some insurance policies combine investments and risk cover, which means that if you survive the policy term, you will receive a pay-out, which could be as a lump sum, a pension, or a combination of both, depending on the plan you select.
- Tax benefits: You can claim tax deductions on premium payments up to ₹1.5 lakh towards life insurance policies.
- Cover your debts: A life insurance policy can help you cover any debt you may have accrued in your lifetime – such as a home loan. Even if something happens to you, the debt burden is not passed on to your family as the insurance can cover the loan amount.
Anyone whose income contributes to a family's lifestyle and expenses should buy life insurance to provide financial security for those they leave behind. Besides using life insurance as pure risk cover, many individuals combine insurance with long-term investments through ULIPs and other savings, pension and investment plans.
There is no standard answer for this. But do consider the following factors: the size of your family and number of dependents, your income, your age, your debts, your financial goals like children’s education etc and most importantly the premium you can afford to pay, etc.
A policyholder makes regular payments called premiums to the insurance company. In return, upon the death of the policyholder or the maturity of the policy's term, a sum of money is paid out to the individual or their nominees. The terms of the contract are detailed in the insurance policy.
Here are some of the documents an insurer will ask you:
- Filled up proposal form
- Photograph of the proposer or policyholder
- Age proof
- Identity proof
- Address proof
- Medical reports (if needed)
- Income proof
- PAN Card
That depends on your policy. No funds are paid out in certain cases (term insurance policies). In other cases, the fund value or maturity amount is paid out to you (these are typically investment cum insurance plans).
There is no maximum age. However, most insurers have an entry age cap of 65 years.
You must change your nominee by making an application to the insurer. If the named beneficiary is not alive at the time of the policyholder's death, then it is paid out to the heirs of the policyholder.
It is safe to purchase a life insurance policy online if you buy the policies from trusted websites and disclose all the necessary information required by life insurance company.
