When you purchase a life insurance policy, you are safeguarding the financial stability of your loved ones. It is especially vital if you are the sole earning member of your family. Getting the right policy is beneficial to avoid financial hurdles but also cultivate a habit of saving.
Are you unsure what makes life insurance policies so lucrative? Read on to unlock why life insurance is important for you and your family.
Financial security is the number one reason to get an insurance policy immediately. This financial assurance is not just for your loved ones but can help you achieve long-term goals. Here is the objective of life insurance and some life insurance benefits to help you with your decision.
Maybe your son or daughter has dreams of studying abroad. Or you and your wife are planning to save up for a house. Regardless, life insurance means that you are always working towards these goals. In the event that you succumb to a fatal condition or an accident, you can rest assured that your family will be financially secure to fulfill their goals.
Some debts may not go away even after your death. During circumstances like these, the financial burden could be challenging for your family. When you buy life insurance, you can rely on your beneficiaries receiving the amount of the policy to comfortably pay your debts and live a stress-free life.
Perhaps the most attractive incentive for choosing life insurance plans is the tax break, both on the premiums and the payout amount after maturity or death. According to the Income Tax Act of 1961, life insurance is a tax-free investment, and there are no deductions to any amount paid towards or withdrawn from such policies.
It is natural to wonder about the life insurance benefits for your future. Purchasing the correct type of policy per your requirements can assist you in staying secure against unforeseen circumstances.
You can name one or more beneficiaries to receive the lump sum of the face value of your life insurance policy. What this ensures is that your family has a reserve of funds to fulfill both short-term and long-term needs. The main purpose of having life insurance is to let your immediate dependents, like your spouse or children, lead a comfortable life without worrying about financial hurdles.
If you pay regular premiums to honour your commitment to the policy, the surplus amount directly goes to your beneficiaries after your death. Most insurers pay the death benefits within a period of 30 days of the claim. The sum awarded during death benefits is also exempted from taxes.
The different types of life insurance in the market mean you can invest according to your long-term goals. Specific policies offer a death benefit, but endowment life insurance provides death plus maturity benefits. The latter is ideal if you want a tax-free method to grow your money.
Maturity insurance schemes usually have a fixed period after which you can avail of the lump sum as per the policy’s value. In case the policyholder passes away before the maturity period, the surplus amount is awarded to the beneficiaries.
During their lives, an individual might take credit for various reasons, like purchasing a home or a new car. But in case of untimely demise, these might linger and remain unpaid. When you get a life insurance policy, you stay prepared to deal with liabilities and prevent unexpected expenses from derailing your family's financial stability.
The significant tax respite in life insurance policies makes them an attractive option for building long-term wealth. If you are trying to save up for a particular goal, few investment options are as efficient as these. The purpose of life insurance is to help you fulfill long-term objectives without a chunk of your income consumed by taxes.
If you look for the definition of life insurance, you will find many sources describing it as a contract. The contract defined here is a written agreement backed by the law. The rights of both parties of the contract are safeguarded by Indian law.
Here are some salient features that make up the nature of life insurance contract.
All life insurance policies define an insured and an insurer. The insured is the person who promises to pay a pre-decided premium semi-annually or annually, according to the conditions mentioned in the contract. The insurer is the other party who promises the award of a lump sum according to a predetermined value chosen by the insured.
The insurer is liable to pay the amount in case of the policyholder's demise or the expiration of the maturity period, provided the insured was regular with the payment of the premiums.
In legal terms, an insured party is an individual or group of individuals officiated to receive insurance payments in case of a loss. The beneficiaries are counted among the insured parties for a life insurance claim.
The insurer is the individual or organisation that underwrites the insurance risk. If the policyholder passes away, they have to pay the compensation.
Given the nature of the contract, a life insurance policy is considered a binding agreement. It compels both the parties to fulfill their end of the promise without the need of a mediator to enforce the contract.
Life insurance plans operate on a risk-sharing mechanism, where your premiums are collected and stored in a pool with the premiums of other users. It is based on the premise that every user shares a risk. For instance, if one policyholder in the pool passes away, then the life insurance premiums of all the users are allotted to their families.
Life insurance policies are offered in several types and differ based on the face value, duration, and premiums. To choose the best policy for your needs, you have to assess the following factors in detail.
The reason for purchasing the policy plays a huge role in making the right decision. Do you only need a life cover? Do you require additional benefits like medical coverage? Depending on the problems you are worried about, you can look for companies that offer a policy covering various aspects.
Are you thinking of retiring in 15 years? Beginning to plan an early retirement in 10 years? Having clarity on your maturity period will help you select a policy that caters explicitly to your needs. The policy tenure should be based on your long-term financial goals and affordability.
To assess the perfect premium payment for you, you need to gain an estimate of your disposable income. If you are looking to investing in life insurance, analyse and ascertain how much of your disposable income is used in other avenues. Calculate the leftover annual income to ensure that the premium payments do not make you suffer undue financial stress.
The credibility and reliability of an insurer can be gauged through its claim settlement ratio. Higher ratios indicate that the company proactively addresses and processes claims without significant hassle.
Settlement ratio = the number of claims settled/ total number of claims in the year.
Financial security is achieved when the future of you and your loved ones is in safe hands. But why do we need life insurance for financial security?
Life insurance policies are valuable instruments as they help your family stay secure in the erratic financial market. They help you feel assured that your family's future is in safe hands and that they will successfully fulfil all their monetary needs.
Having complete control over your financial situation also helps you make more informed
decisions. Life insurance policies act like a safety net to safeguard you and your family and assist them in getting back on their feet if faced with an unexpected crisis.
So, shed all second thoughts and buy a life insurance policy as soon as possible!
The main benefit is that a life insurance plan helps provide the appropriate compensation to the policyholder's beneficiaries in the event of unexpected demise. It pays a lump sum account that is not deducted by taxes.
Life insurance is a perfect option for all kinds of individuals. If you have a family, it acts as a financial safeguard for them in case of sudden death. Individuals without families can use this as a tax-saving option and choose maturity periods to avail of the benefits.
Life insurance acts as an agreement between the insured party and the insurer. The insured party pays a fixed premium during the tenure of life insurance, and the insurance company awards a payout to their families during the policyholder's demise or allows them to withdraw the sum after the expiration of the maturity period.
The type of life insurance depends on your long-term financial goals and the premiums you can pay every year. Based on these factors, you can choose an insurance company that offers life insurance policies and helps you build tax-free wealth.
When you avail of a life insurance plan, you get the following features:
Disclaimer:
The aforesaid article presents the view of an independent writer who is an expert on financial and insurance matters. PNB MetLife India Insurance Co. Ltd. doesn’t influence or support views of the writer of the article in any way. The article is informative in nature and PNB MetLife and/ or the writer of the article shall not be responsible for any direct/ indirect loss or liability or medical complications incurred by the reader for taking any decisions based on the contents and information given in article. Please consult your financial advisor/ insurance advisor/ health advisor before making any decision.
PNB MetLife India Insurance Company Limited
Registered office address: Unit No. 701, 702 & 703, 7th Floor, West Wing, Raheja Towers, 26/27 M G Road, Bangalore -560001, Karnataka
IRDAI Registration number 117 | CIN U66010KA2001PLC028883
For more details on risk factors, please read the sales brochure and the terms and conditions of the policy, carefully before concluding the sale.
Tax benefits are as per the Income Tax Act, 1961, & are subject to amendments made thereto from time to time. Please consult your tax consultant for more details.
Goods and Services Tax (GST) shall be levied as per prevailing tax laws which are subject to change from time to time.
The marks "PNB" and "MetLife" are registered trademarks of Punjab National Bank and Metropolitan Life Insurance Company, respectively. PNB MetLife India Insurance Company Limited is a licensed user of these marks.
Call us Toll-free at 1-800-425-6969, Phone: 080-66006969, Website: www.pnbmetlife.com, Email: indiaservice@pnbmetlife.co.in or Write to us: 1st Floor, Techniplex -1, Techniplex Complex, Off Veer Savarkar Flyover, Goregaon (West), Mumbai – 400062, Maharashtra. Phone: +91-22-41790000, Fax: +91-22-41790203.
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As your trusted life insurance partner, PNB MetLife is with you amidst the current COVID-19 outbreak. Our policies also cover COVID-19 Claims. In case of a Death Claim, kindly submit the signed Claim Intimation Letter mentioning the policy number, brief of the insured event and other claim documents on the email mentioned herewith. Please write-in to us at claimshelpdesk@pnbmetlife.com or indiaservice@pnbmetlife.co.in. You can also call us on 1800-425-6969 for death claims intimations and for any queries on Monday - Saturday between 10:00 am - 7:00 pm.
PNB MetLife Insurance, amongst the trusted Life Insurance companies in India, aims to provide a wide range of Life Insurance products that suits the needs of an individual at every stage of his life. Life Insurance Plans range from Term Life Insurance Plans, Term Plan, Protection Plans, Long Term Savings Plans , Retirement Plans & Child Education Plan.
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