Indians’ disposable income has risen in tandem with consumption during the last decade. As a result, the manner that which the ordinary Indian household spends money has changed. People’s financial ambitions have shifted, and they now spend up to 25% to 60% of their income on their aspirational requirements, compared to 10% to 20% in 2009.
The growth in lifestyle inflation necessitates precise financial planning that may help you avoid expenditures, develop wealth, and save enough for critical milestones like your children’s schooling and retirement. Purchasing life insurance as soon as you begin earning money should be one of your top financial goals. It provides a solid safety net to cover your family’s costs and maintain their existing lifestyle even if you are not around.
How Can Life Insurance Help You Save Money?
Let’s look at some of the additional reasons why life insurance policy should be included in your financial plan:
Affordable Premiums
A life insurance policy is only insurance with no investment component. It is the most affordable type of life insurance accessible. This means you may choose a higher-sum-assured policy that provides greater protection for your dependents and removes the future risk for a lower price. The lesser the premium you pay for a term policy, the sooner you acquire it. On average, just 1% of a person’s annual salary is spent on acquiring life insurance for the remainder of his or her life.
Financial Security
If you are the sole breadwinner in your family, your absence might put your family in financial jeopardy, especially if you had taken on extra debts while alive, such as a loan or mortgage. Your loved ones will be financially secure and free to pursue their goals and desires with the help of life insurance.
Riders
You may customize the insurance to meet your family’s needs by adding riders to cover any additional risks you see. When added to an existing life insurance policy, riders such as critical sickness benefits, accidental death benefits, and partial or complete disability benefits cost a small fee and give additional coverage.
Tax Benefits
Most paid people want to invest in choices that provide better returns while also allowing them to save money on taxes. This is an essential component of their financial planning. Not only may you deduct up to 1.5 lakh in taxes for premium payments toward term insurance maintenance under Section 80C, but the amount provided to your beneficiaries as a death benefit is also deductible under Section 10. (10D). Furthermore, selecting a health-related rider (for example, a critical illness rider) can help you qualify for extra deductions under Section 80D of the Income Tax Act.
Customizable
Your life insurance plan may be tailored to your specific requirements and aspirations, as well as those of your family. You have three options for coverage: level, growing coverage, and decreasing coverage depending on your needs. You have many possibilities for payout: (a) a lump sum payment (b) a lump sum payment and a monthly income payment, or (c) a monthly income payment.
Conclusion
Remember to report any health concerns, lifestyle diseases, or habits when purchasing a term coverage to avoid having your claim denied. Pure life insurance that eliminates risk, helps you prepare for future uncertainties, and is also cost-effective is essential for future financial planning.