Life insurance is essential at all times because it offers protection to the insured and their loved ones. It becomes all the more pertinent at a time such as this; the pandemic has taken a toll on not just the health and lives of people but on livelihoods as well. Having a ring of protection such as life insurance can ensure you cope better.
In the wake of COVID-19, the life insurance industry has become all the more significant. More people work from homes, there is uncertainty and fear about contracting the disease and the expenses that follow. However, the life insurance industry has ensured that people can buy life insurance policies online and take assistance with the insurers on phone, making it convenient and seamless. Forms can be filled online and any doubts clarified via video or phone calls.
Documentation has become efficient and easy, making it convenient to get life insurance now. Also, while many insurers make medical tests mandatory, some insurance plans can be availed without medical tests, based on factors like your age, sum assured etc.
There are various types of life insurance policies. You can buy life insurance for various reasons, and depending on the reason, you can pick a plan. There are term insurance plans, unit-linked insurance plans (ULIPs), participating endowment plans or whole life insurance plans -
• A term insurance plan offers life protection to the policyholder for a specific term wherein death benefit/sum assured is paid to the nominee upon the death of the policyholder during the policy term.
• A ULIP provides both life cover and an investment opportunity.
• A whole life insurance plan offers life insurance cover to the policyholder for a lifetime, up to a maximum of 100 years. The sum assured is paid to the nominee if the policyholder passes away. If the policyholder survives, maturity benefits are provided.
• A participating endowment plan offers life insurance protection apart from savings to the policyholder. Such a plan offers a sum assured and a bonus (if any) as death benefit to the nominee if the policyholder expires. If the policyholder survives, the bonuses (if any) are paid at maturity.
Here are reasons why you should buy life insurance now –
• Meets life goals
An important benefit of buying a life insurance policy is that it helps in meeting life goals. The death benefit that the nominee receives in the unfortunate event of the policyholder’s demise or maturity benefit upon survival can help the family meet their life goals. This helps in the time of a sudden health crisis, for instance, the pandemic, as the surviving family members can continue to meet life goals such as education of a child, marriage or buying a home.
• Gives peace of mind
This is an intangible benefit but an important one. Having a life insurance policy during a pandemic means you can focus on other aspects of life rest assured that your loved ones are taken care of, even in our absence.
• Provides tax benefits
In the case of ULIPs
Life insurance plans are good for tax saving. Premiums paid towards ULIPs are eligible for deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961, if the premium is less than or equal to 10 per cent of the sum assured and for policies purchased post April 1. 2012. ULIPs also offer tax benefits on maturity as per section 10 (10D) of the IT Act, 1961, provided the annual premium is less than or equal to 10 per cent of the sum assured for the entire term (for plans bought after April 1, 2012). In addition, ULIP plans allow you to invest in equity funds without attracting long-term capital gains tax.
In the case of term plans
Premium paid towards a term plan is deductible from taxable income under Section 80C of the Income Tax Act, 1961. In addition, the death benefit or maturity offered by term insurance is deemed tax-free under Section 10 (10D) of the Income Tax Act, 1961.
The above mentioned tax benefits/e are subject to provisions of Income Tax Act, 1961, as amended from time to time.
• Generates wealth
If you are buying a unit-linked insurance plan (ULIP), there is the opportunity to generate wealth as well. Buy a life insurance policy such as a ULIP and you can contribute towards your investment for your future goals. There are child plans and pension plans that help you in future planning.
• Increase cover or riders to boost coverage
If you buy a term plan, you get the flexibility of boosting coverage based on the life stage you are in or you are stepping into, for instance, marriage or birth of a child. You can also boost protection by way of riders, which are essentially add-ons that cover accidental, permanent disability, critical illness or return of premium and can be purchased at a nominal extra cost.
It is important to buy life insurance under any circumstance but all the more so when there is a pandemic that has underlined the importance of planning for any financial exigencies. It is never too late to buy a life insurance product, be it a term plan or a ULIP, depending on your requirements. There is no better time than now to get yourself a life insurance policy and keep your loved ones safe as the pandemic continues its grip on the country.