Keeping in mind the large number of advantages that Life Insurance provides, there have been a heavy and large number of investments in Life Insurance which has made it one of the fastest growing sectors in India. Owing to this boom, the Indian Government has decided to increase the percentage of Private Organisations and FDI from 26 percent to 49 percent. Life Insurance in India marked its prime in 1956 by Life Insurance Corporation (LIC). Currently, the insurance industry of India comprises of 53 insurance companies out of which 24 are engaged in life insurance investments. There is a range of advantages that an investment in life insurance possesses which makes the Life Insurance investment a great idea. It is always better to go through all the necessary specifics before any kind of investment. If you are planning to invest now, make sure that you are familiar with all the vital information regarding the investment.
THE PERKS OF A LIFE INSURANCE INVESTMENT
Although primarily intended for life cover, the additional advantages that an investment in life insurance provides include tax saving, life stage specific planning and long term savings.
- DEATH BENEFITS
This is the primary and foremost purpose of a life insurance investment. Life Cover is the amount of money that the nominee of a person is paid by the insurance company if any mishap occurs during the tenure of the policy. This helps in securing the future and the lives of the person’s near and dear ones by providing them with a certain amount of money in the absence of the person.
The right amount should be selected as the Life Cover so that the amount of money is sufficient to support the family members after the death of the person. It is advisable to choose a policy plan with the death benefit equivalent to around 10 times the annual income. A serious future planning is highly integral to choose the right amount for the life insurance.
- FORCED SAVINGS
Life Insurance Investment provides a great option for saving up some money for future uses by forcibly taking a part of the cash in hand to stack up the savings. The amount of money that one gets back after the policy tenure is purely dependent on the terms and conditions of the policy. It is a great solution for the younger people who can draw substantial coverage amounts when in need.
- LIFE STAGE PLANNING
Life Insurance helps in a systematic planning of the life goals pertaining to financing. The life insurance also acts as a long term investment for meeting all goals of a person like child’s education, marriage, dream home building or enjoying a hassle free life after retirement. Every person has different goals at different stages of his life which can be met by investing in life insurance.
- TAX CONCESSIONS AND ADVANTAGES
As per the Income Tax Act passed by the Government, life insurance investments can act as measure to save taxation on one’s hard earned money. Section 80C, 80CCC and 80D state that one can receive tax benefits on premium payments. The growth on the money is not taxable as well. One can also get advantage of tax free maturity benefit. However, these days investors get better returns from mutual funds than investing in life insurance. Tax benefits are better in a mutual fund and also make the investment portfolio diverse. Invest now in mutual funds to get best tax concessions.
- EMERGENCY LOANS
Life Insurance also provides options to the insured to draw a certain amount of money as a policy loan in case of financial crises. The maximum limit for the loan amount is decided by the net value of the policy that he is insured in depending on the policy rules.
Life Insurance has grown to be a necessity in everyone’s lives. It serves as the best financial risk management tool which makes a life insurance investment inevitable.