What is Life Insurance?

Based on the arrangement, in the event of the death of the policyholder or, if the policy matures, the insurance provider shall pay the person or his family a lump sum amount, after a certain amount of time. There are different types of life insurance policies to suit the individual needs and requirements of the policy buyers.

What Are the Benefits of Life Insurance Plans?

Once you are aware of life insurance meaning and its types, there are 3 main advantages of getting a life insurance policy that you should know about. Following are the 3 primary benefits of life insurance policy:

1. Financial Security

Life is unpredictable and can be full of uncertainties. It is difficult to reduce the possibility of an unfortunate event like death. In such a scenario, the family faces financial constraints arising from the lack of a steady income.

Investing in a life insurance policy early on in life acts as a safety blanket during such eventuality. The life insurance provider is obliged to pay the nominee or beneficiary the pre-defined sum assured. As a result, even in the policyholder's absence, his family stays protected.

Also Read: Benefits of Term Insurance Plans

2. Long-Term Savings

If one wants to make long-term investments, it's important to think about life insurance. Such insurance plans help you make systematic savings and create a corpus, which can be used for several reasons, such as building a new home, financing quality schooling for your child, and funding a child's marriage expenses.

What's more, some life insurance policies often offer monthly pay-outs in the form of annuities, which is an ideal way to aim at and achieve retirement goals.

3. Investment Options

Life insurance providers offer Unit-Linked Investment Plans (ULIPs), which are mainly investment instruments based on market linked returns and life insurance cover.

These market-linked life insurance products provide significant gains during maturity, therefore making them ULIPs a reliable investment tool.

4. Tax Benefits

With life insurance plans, you also get tax benefits under prevailing laws as per Income Tax Act, 1961. The life insurance premium paid can be availed as a tax deduction under Section 80C of the Income Tax Act, 1961. You can avail deduction up to Rs.1.5 lakh under Section 80C