5 Tips when considering a Life Insurance Plan

A life insurance plan is basically a kind of a contract between you and your insurance provider, stating that in case of your untimely death and loss of earnings, your family will get financial security. For this financial security, you need to pay a premium on a periodic basis to your insurance provider for a set period of time.

5 Tips - Life Insurance Policy

1. View life insurance is an investment. Apart from providing your family with the financial support, buying life insurance can also be an investment choice. There are several life insurance policies that carry minimal investment risk and provide long-term benefits. Don’t just see it as an expense – life insurance can also give you good returns with low risk.

2. Use it as a retirement income on maturity. There are several life insurance policies that provide a maturity amount if you outlive the policy – this amount acts like a retirement income. The premium is generally on the higher side, but the advantage is that you are assured of a regular income even once you stop working.

3. Take advantage of flexible premiums: Your coverage amount is not fixed and can be increased over time. Life insurance policies come with flexible premium paying options. If at present, you can only afford to pay a low premium, you need not worry. Over time, you can increase your insurance cover by paying slightly higher premiums for better coverage, as your income increases.

4. Use it as a tax saver. The lump sum payable on death is exempted from taxes.As your income increases, so does the tax bracket. Opting for a life insurance plan could also mean saving on tax, as the lump sum payable is exempted from taxes.

5. Start early. Many young people do not think of life insurance or retirement income and postpone it till they are in their 40s or even 50s. Life insurance premiums can get significantly more expensive the longer you wait, and the more health problems you have. The process too becomes more complicated and involves more medical tests etc. It is much cheaper to invest in a life insurance policy when you are young - you pay a small premium while at the same time build a large corpus for maturity.

Why Is taking out a Life Insurance Policy important?

Life is unpredictable, and if you are the sole breadwinner of the family, an untimely demise can potentially put your family in a severe financial crisis. Having life insurance gives you the peace of mind knowing that your family will have financial support even in case of your untimely death. Taking a Life Insurance policy works as a financial buffer to fulfil your family’s financial needs – whether it is for education or marriage expenses or just living expenses, even if you are not around.

Whether you have quite recently begun your career, or are recently married to your partner, or have children, there is nothing like a “best time” to secure suitable coverage. So, go ahead, and buy that life insurance plan that you have been putting off. It can end up being one of the best financial decisions you ever made.