It’s a myth that buying an insurance plan provides you only protection. Most of the time people are reluctant to buy an insurance policy because of this one criterion only. It is, however, not the case. A life insurance plan gives enormous benefits like wealth creation, tax benefits, etc. However, protecting yourself should be the priority while buying an insurance plan and then you should try to avail the various other benefits.
It protects your dependents
Most of the families have only one bread earner. Taking an insurance plan will protect those who are dependent upon you. It is necessary to protect your financial liabilities before investing or taking a loan for any of your financial goals. It is best to have a term insurance plan at an early stage of life which will provide you with a bigger cover by paying a smaller amount of premium.
It protects your wealth
Life insurance secures liabilities towards your financial goal. Suppose you have planned for your child’s education for the next 15 years and in between something happens to you. Then who will build the corpus for your child’s education? Yes, a protective plan always secures your finances during a miss-happening or any uncertainty which may happen at any point in time.
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It helps in tax saving
Life insurance provides you with a dual tax benefit. You can claim the maximum amount of deduction for up to Rs.1.5lakh under section 80C of the Income Tax Act, while any sum or the bonus received under the life insurance policy will be tax exempted under section 10(10D) of the I-T Act 1961.
It helps in creating wealth
Insurance is a secure way of creating wealth. Plans like ULIP’s not only provide you protection but also help you in building a corpus for your financial goals. Other insurance plans like endowment schemes also provide an advantage of survival benefit for the customers who take the plan and survive even after the end of the policy. Moreover, the sum insured also acts as a security against which you can take the loan if you are in need to buy something urgent.
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It limits your liabilities
Most of the time when people buy a house for themselves, they have the liability to repay the loan for a longer time period, say, 15 years or more. Mostly, in such cases, joint home loans are taken. What if the payee of the home loan dies? Taking an insurance plan becomes necessary because you can limit the liability by getting an insurance cover and if something happens to you, the other person can repay the loan by claiming the insurance amount from the insurer.