Purchasing insurance is an essential financial decision that everyone should make in their life, in order to protect themselves and their family from any unexpected twist life throws at them. Not only does it lend hands to you at crucial times, but also helps the beneficiaries to maintain their standard of living upon the demise of the holder.
It has multiple benefits. However, the perks of insurance haven’t yet reached a critical mass. Many individuals aren’t aware of the potential benefits of holding insurance. According to the article published in Forbes, only 37% of the Indian population have insurance, with the rest of the Indians with zero access to insurance. So let’s learn the benefits of purchasing insurance.
Perks Of Purchasing Insurance:
- Financial Security:
Insurance policies guarantee financial support to the planholder in case of critical situations such as disability, accidents, illnesses, theft, or loss of income. It enables him/her to improve the quality of their life with timely payouts when needed.
Moreover, the insurance benefits are transferable. The holder can nominate anyone – family, spouse, children, sibling, disabled child, or trust – as a beneficiary to help with financial support after their death.
- Death Benefits:
Insurance provides the holder’s family (ie., beneficiaries) with the death benefits upon the holder’s passing. This provides them with a regular income or payouts which can help them to lead their lives stress-free, pay their college fees, or pay off their debts/loans. This way, you can safeguard the future of your family.
- Supplement To The Retirement Pension:
There are such insurance plans that will pay with either hefty payouts or a regular income to the policyholder. This plan can add a supplement to your retirement pension that ensures financial security for the rest of your life.
- Charity Contribution:
You can rest assured that your charity or trust contributions will be carried out even after your death. Certain insurance policies allow you to support your chosen charities or trusts after your death.
- Tax Benefits:
Your children must pay certain taxes on inheriting property. However, the death benefits or income received because of insurance are excluded from the income considered for tax purposes.
Who Needs Insurance?
Insurance is created to provide economic stability to either the surviving individual/policyholder or to the beneficiaries after the death of the holder. So it is not intended for a select few. Everyone can own it depending on their needs and future goals. However, the following people should strongly opt for a plan.
- Parents with minor children or children requiring specific needs.
- Spouses who choose to stay-at-home.
- Elderly citizens who want to secure some money for their adult children.
- Elders who want to be independent after their retirement.
- Adults who jointly own property.
- Individuals living with chronic or deadly conditions like cancer, diabetes, or cardiac issues.
- Business with a Key person or employee.
Two Types Of Insurance:
There are two types of insurance – General and Life Insurance.
Life insurance coverage is crucial for individuals having dependents such as spouses, children, or elderly parents. Life insurance offers various types of coverage, including money-back policies, whole life insurance policies, children’s life insurance policies, retirement policies, and endowment policies. Unlike the general, life insurance comes with a long-term contract along with the advantage of regular premium payment. In the event of the holder’s passing, this policy pays to the beneficiary or the nominee.
General insurance covers all the non-life assets and risks. Hence, under the general insurance you have health, motor vehicle, travel, cyber, home, accident & disability, standalone policies, and more. As it covers non-life related risks and damages, it pays for unexpected events such as accidents, theft, health emergencies, and other related damages. People who own valuable assets must consider this insurance type to cut down the expenses at the time of potential damages or accidents.
10 Things To Look For Before Finalising:
- It is important to read the terms of the policy thoroughly before finalising a policy. Get yourself educated about charges, surrender value, discontinuation procedures, exclusions & inclusions, etc. prior to signing on the dotted lines.
- In the case of life insurance, Don’t hide any information regarding your illness, condition, or lifestyle habits like alcohol, smoking, etc. Because they can jeopardise the claim or even lead to rejection for your beneficiaries.
- In trying to pick the right policy plan, it is advisable to compare various insurance companies and their plans. Take their reputation, plan inclusions & exclusions, premium amount, settlement ratio, policy costs, and related charges into consideration while comparing. You can find the differences that will help you choose the best one.
- Don’t place any blind trust in any individual or agency. Always double-check their credibility with references from your family or online resources like ThreeBestRated® to pick the best agency.
- Have a clear idea about the tax reduction that you and the beneficiaries are entitled to. Also, make sure to include the tax reduction under sections 80C, and 10 (10D). This will save you a significant amount on tax payments.
- Be it general or life insurance, consider purchasing riders – an add-on or additional benefit that is purchased along with the insurance to increase the scope of the coverage. However, don’t forget to read all the terms and definitions related to the rider to avoid any risks in the future.
- Make sure to use the ‘Free Look Period’ – a period typically from 10 – 30 days depending on the insurer – in which the purchaser is allowed to return the policy and claim for refund. Noteworthily, cancellation doesn’t incur any penalties or charges. So use this period to carefully analyse the terms and definitions once again.
- Do not leave any column unanswered. Because it may lead to some regrettable risks in the future. So carefully fill out all the columns given.
- Keep a copy of the signed form along with all the necessary documents for future reference.
- Use the advantage of online premium calculators to find out if the insurance you purchase bears the desired amount as a premium for you.
Owning insurance becomes crucial in the fast-paced world. So purchasing at least 3- 4 different insurance plans can be beneficial to face all the potential disasters you could encounter. However, it is important to be aware of fraudulent activities to eliminate the risks down the road.
