The primary benefits of obtaining life insurance are clearly recognised by the majority of people: if you die unexpectedly, your loved ones will be financially catered for, and you will have the peace of mind that comes from knowing they will be able to live on without you. While many of these benefits are applicable to all forms of life insurance, some are exclusive to certain plans and levels of coverage. Women can also benefit from it.
Features and Benefits of Life Insurance in India
In India, life insurance penetration and density are both 2.76 per cent. Despite some development, India’s advancement in this sector has been quite limited. As seen by the low penetration rates, only a tiny fraction of individuals are aware of the benefits of life insurance.
Tragic incidents demonstrate how fragile human life may be and how critical it is to ensure our lives on a systemic level. It’s an essential instrument for safeguarding the safety and security of one’s family.
As a result, it provides security to the insured’s surviving spouse and children. For individuals who do not have life insurance, the bereavement of a loved one is exacerbated by the financial responsibilities of debt, rent, loans, and child support.
Characteristics of life insurance policies
The policyholder is the individual who pays the payments and signs the life insurance contract with the insurance company. The premium is the amount of money that a policyholder must pay to a life insurance company in order to be protected for the rest of his or her life. The life insurance contract comes to an end when the policy term expires, which is known as maturity. The individual whose life is covered by a life insurance policy is known as the insured.
If the insured individual dies, the insurance company is obligated to pay a certain sum to the remaining family members.
Sum If the circumstances specified in the life insurance contract occur, the insurance company will pay a predetermined sum to the insured’s dependents.
Policy Term: The term of a policy refers to the time period during which the insurance company will provide life insurance coverage (as specified in the policy contract) and the contract will be in existence (listed in the life insurance contract).
Life insurance policies in India offer a variety of benefits.
Death Benefits from Social Security
Individuals can use life insurance to protect themselves and their loved ones in the case of the insurer’s untimely death. As specified in the contract, the insurer pays a payment equal to the sum guaranteed plus any applicable incentives. We refer to it as the death benefit.
An investment’s components
Some whole life insurance policies combine insurance and investment advantages into a single policy. The other half of your premium is invested in either stock, debt, or a mix of the two.
You get the best of both worlds with protective covering and high investment returns. Investing in funds that correspond to your investment horizon and risk tolerance will help you make the most of this component. If your goals change, you may be able to switch funds under certain regulations.
Life insurance policies, by giving maturity benefits, may function as both a savings and risk management tool. If the insured lives the policy period without making any claims, the whole premiums paid will be reimbursed when the policy matures. As a consequence, your life insurance policy will function as both a savings vehicle and a safety net.
The Advantages of Taxation
Under Section 80C of the Income Tax Act, investing in specific instruments can reduce a person’s taxable income (ITA). Term life insurance is one of them. Section 80C permits you to deduct up to Rs 1.5 lakh of your life insurance premiums. Furthermore, under Section 10(10D) of the Internal Revenue Code, all insurance payments are free from federal income tax (provided your premium does not exceed 10 per cent of your Sum Assured, annually).
Tax deductions for health-related expenses, such as severe sickness or surgical care, are possible under section 80D of the ITA.