When 50-year-old Vandana Maheshwari could not bear the persistent pain in her knees anymore, she requested her daughter to consult an orthopaedic doctor. The doctor advised her to undergo knee replacement surgery. The first thing that crossed Maheshwari’s mind was the cost of the surgery. Fortunately, her daughter had a health cover provided by her employer. The insurer paid the 450,000-rupee bill, in addition to various post and pre-hospitalisation expenses. If not for the insurance cover, the medical bill would have singed Maheshwari’s savings.

Not everyone is fortunate enough to have an insurance cover when needed as most people have come to see insurance policies primarily as tax saving instruments. The premium paid for life insurance qualifies for deduction under Section 80C of the Income Tax Act, 1961. Similarly, health insurance premiums are eligible for deduction under Section 80D of the act. It is a fallacy to consider insurance as just a tax saving instrument. Having an insurance cover has many other benefits.

Secure Your Family

With rising incidents of accidents and serious diseases, life has become unpredictable. Your family is dependent on you for their needs, ensuring a secure future for them through a life insurance plan. A proper life cover is the most important insurance plan a family needs. It will take care of your child’s educational needs and your wife’s financial needs if you are not present.

Helps in Long Term Goals

Insurance policies come in a lot of hues, some are for a fixed tenure, while some pay a lump sum amount after maturity. You can achieve your long term goals such as buying a home or your child’s education by investing in a suitable insurance policy. People with an aim to receive regular dividends can buy an investment-linked policy. Insurance companies provide several investment options that come with different types of policies.

A Tool For Saving

Investing in insurance saving plans or unit-linked policies can provide flexibility in returns. Buying a traditional policy at a young age promotes saving as the monthly premium is more than the amount required to insure. The extra money is invested and it can be used to draw an income.

It Could Be Too Late

Looking at life insurance just as a tax saving instrument results in many people delaying it. When people start earning, most are in a salary bracket that is exempted from tax. Therefore, many people don’t think about getting life insurance when they are young. Life insurance premiums are low when you are young and free from illness. If you suddenly fall ill, then the premium increases and in many cases, you may not be eligible to get a life cover. It is always better to get a life insurance policy when you are young and healthy. If you have insurance, you can always enhance the policy.

Supplement for Retirement Goals

Many people do not plan properly for life after retirement. With life insurance policy you can ensure a regular monthly income after retirement. In case you outlive your savings, schemes like annuity can come to your rescue. An annuity is a type of contract with an insurer, whereby you agree to pay a certain amount either through lump sum or instalment. The insurer will pay you in staggered amounts in the future, which essentially become a reliable source of income later. Future Generali Immediate Annuity Plan is a good option for those who want a secure income at a later stage in life.

Takes Care of Debt

Life insurance policies don’t just secure your family’s financial future, they also take care of your liabilities. It ensures that your family doesn’t have to deal with various creditors when a crisis strikes. If you have taken loans for home, car or personal needs, a proper life insurance policy will take care of all the liabilities, and protect your family.

Peace of Mind

An untoward incident can leave your financial plans in disarray. With the rising cost of medical treatment, it is prudent to get health insurance before bad luck strikes. A costly hospitalisation can become a burden in no time. Similarly, it is better to draw a line of protection around your family with life insurance. According to the thumb rule, you should have an insurance cover of ten times your annual earnings. Buy a policy and live a tension-free life.

Conclusion

Looking at insurance policies through the narrow lens of a tax saving instrument is a fallacy. It is a dynamic instrument, it can act as a cover, and it can be used as a savings tool or for a supplemental income. Buying an insurance cover at a young age is desirable but you should always conduct proper research before investing. A policy bought early on could turn out to be out of sync with your financial goals later.