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Benefits of taking a life insurance policy at a right age

Life Insurance

With a changing life style and uncertainty in life, Life Insurance is becoming an important lifesaving method to secure your family to meet their regular expenses, education and other basic needs. Life Insurance is one of the most sought-among tax-saving vehicles, especially by the serious investors with sound financial and fiscal discipline. Are you confused about why is this happening? Keep your mind calm and read on. Life insurance is not for old folks anymore.

  • What is Life Insurance?

Taking a Life Insurance cover in your early age is perhaps one of the best financial decisions you’ll ever make in your life. Life Insurance is a contract or agreement where the insurance company, also known as the insurer, offers the borrower, also known as the insured, with complete or partial financial coverage for life and complete financial security in exchange for a small monetary payment over a period of time, also known as premiums.

Due to any uncertain event or the untimely death of the policyholder during the policy tenure, the insurance company gives a lump sum amount to the beneficiary or nominee (generally the family member) of the insured. This lump sum amount is known as the sum assured.

  • What are the benefits of Life Insurance?

What can be better than ensuring that you and your family is financially stable in life. Buying a Life Insurance policy offers a herd of benefits and features that serves you and your family when you are alive and even when you are not. Borrowing an insurance policy at a right age is a way to provide the financial freedom of your family even after any unfortunate circumstances such as an accident or your untimely death. The basic and most primary objective of a Life Insurance policy is to safeguard you from such sudden situations.

Besides providing sufficient financial coverage to all the family members of the policyholder in case of his/her sudden demise, Life Insurance policy makes it invulnerable that you become financially capable and handle the rising expenses of healthcare.

Additionally to cover the risk, Life Insurance companies promote long-term savings for the policy holder. It is one of the most effective financial instruments when it comes to plan for the retirement. Life Insurance policies provide a stable source of income to the insurance borrower after the retirement.

Do you have any idea that you can also avail a loan against your Insurance Policy? This will help you to meet the unexpected and unplanned financial requirements in every stage of your life without disordering the benefits of your policy.

However, this completely depends on the agreed terms and conditions of the policy but the situations such as temporary or permanent physical disability resulting in loss of job, temporary or critical illness can also be covered in the life insurance policy.

  • What are the tax benefits under Life Insurance coverage?

If you already have a Life Insurance policy, you can always enjoy the attractive tax benefits offered under IT sections and save a considerable amount of money. Are you confused? Read on.

You can easily avail the tax benefits on the premiums paid towards your Life Insurance policy. Under the Section 80C of the Income Tax Act, 1961, allows tax exemption of up to Rs. 1,50,000 every year.

This is not all. Tax deductions are also allowed on the payouts of a Life Insurance policy under the Section 10(10D) of the Income Tax Act, 1961. This means that the nominee or the beneficiary who receives the sum of money as a death benefit or the amount that that policyholder receives on maturity of the policy during survival is also exempted from tax under Section 10 (10D).

  • Tax deductions under Section 80C 

  1. The Hindu Undivided Families (HUF’s) and Individuals can enjoy tax-saving benefits under Section 80C.
  2. The Life Insurance policies issued before 31st March 2012, the deductions are allowed only when the total premium paid in the particular financial year is 20% or more of the sum assured amount.
  3. In case, if the policy was issued after 1st April 2012, the tax deductions are applicable on the premium paid in that particular financial year and it should be 10% or more of the sum assured.
  • Tax deduction under Section 10 (10D)

There is no limit on the deductions under this section. Any amount received by the beneficiaries under a Life Insurance policy benefit qualifies for the deduction under this category. Under this section, the tax benefit is also offered on maturity depending if the premium paid towards the policy is not more than 10% of the sum assured.

The amount that the beneficiary receives can be a sum given as a bonus, a maturity benefit, survival benefit, the surrender value or a death benefit. Amount received or any extra gains received from a Unit Linked Insurance Plans (ULIP) also qualify for this deduction.

Important points to be kept in mind: The tax benefits you have claimed will be reversed in case, if your Life Insurance policy is terminated or discontinued by you within 2 years of the commencement of the policy. This applies to all the Life Insurance policies other than ULIPs.

Tax deductions you have claimed under ULIPs will be reversed if the policy has been terminated or discontinued within 5 years of its commencement.

  • How to purchase a Life Insurance policy online in order to save taxes?

If you do not have a Life Insurance policy yet but wish to get one, following are two ways in which you can get yours.

The not-so-easy way

This is nothing new but the conventional way of getting a Life Insurance policy. This includes listing down all the names of the Life Insurance companies along with the different plans which they offer. Once you’re finally done, compare the plans individually or contacting an insurance agent to suggest you the best among your choice and then purchase the preferred plan but this might not prove always to be a good idea because no one can have a better idea of your needs rather than you, yourself!

The super easy way

All you need to do is check online. There are different portals that provide you the information about various sites and compare at the same time for you too. After this, you only have to check your eligibility by submitting your basic details. This further will fetch quotes from top insurers that fit best to your exclusive needs.

Once you receive options of different Life Insurance plans that are perfect for you, you can move ahead by comparing the policy details, inclusions, deductions, fees, exclusions, extra charges etc.

Once you are done, all you need to do is to purchase an insurance cover and sort your financial protection that very moment.

We promise that the technological force will be on your side!

Hold on before you go on cloud 9! You must know this too. If you want a range of different financial products with top-notch service, easy application process along with other important information, make sure to check us out at . We have everything related to finance in your finger movements.


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