When you buy life insurance, you are taking a huge financial risk for yourself and your family. It is difficult to think about how your family will function in your absence. However, it is important to take the steps needed to ensure the financial security of your loved ones.
Life insurance is a financial product that provides financial security to the policyholder and their family. When an individual buys life insurance, they are required to pay premiums during the tenure of the plan. In return for the premiums that the policyholder is paying, the life insurance company provides a death benefit. The death benefit ensures that, in case of the sudden demise of the policyholder during the policy, their beneficiary will receive a sum assured by the insurance provider. The sum assured ensures that despite the absence of the policyholder, their loved ones do not face any financial turmoil.
How does life insurance help you stay financially safe?
There are several types of life insurance products available on online and offline platforms. There is permanent life insurance and temporary life insurance. Also, there is pure life insurance and life insurance that has a savings component to it. Irrespective of whichever life insurance you choose, here are some pointers each policy offers that keep the policyholder and their family financially safe:
Offers financial well-being
If the policyholder was a breadwinner, losing their income causes financial stress in the family. In such cases, life insurance acts as an income replacement for the family. It allows them to live a good quality of life by meeting their financial necessities. The death benefit can also pay any liabilities that the policyholder had. Having enough coverage ensures that, along with necessities, the loved ones can also fulfil their goals with the death benefit that they have received.
Keeps the business in the family
If the policyholder had a business that they wished would be carried on within the family in tier absence, a life insurance policy helps here too. This is because, during tough times in the business or in case of any lack of funds, life insurance provides the required financial aid. In the policyholder’s absence, the death benefit that the nominee receives will help to take care of any urgent funds needed in the business.
Fulfilling policyholder’s needs
There is a common myth that a life insurance policy offer benefits only to the loved ones of the policyholders. However, there are several life insurance plans that offer the option of covering the policyholder’s chronic or terminal illness care expenses. Also, if the policyholder has opted for a savings cum insurance plan like a Unit Linked Insurance Plan (ULIP), they receive maturity benefits. After the tenure of the policy ends, the policyholder receives a fund value which includes the amount invested along with the returns. This maturity amount allows them to meet their long-term financial goals.
Paying for your child’s education
The death benefit that a policyholder receives can be used for several needs and goals. This includes paying for the education of the policyholder’s child. Also, different types of life insurance can help the policyholder tap into funds differently. For example, if a policyholder has opted for permanent life insurance that has an accumulated cash value, they can access the cash value through a policy loan or withdrawal, even when the policyholder is alive.
Adds to the retirement corpus
If a policyholder has purchased permanent life insurance, they can access their policy’s cash value through a policy loan or withdrawal for emergencies, and even for their retirement. Life insurance with savings can also contribute to the retirement fund of the policyholder. This is because when the policy matures, the policyholder receives a sum assured, which includes the fund accumulated along with the interest earned on it.
Life insurance is important for the well-being of the policyholder and their family. When you buy life insurance, you secure the lives of your loved ones and yourself, too. With it, you can focus on your other financial goals, as the foundation of your financial health is secure.