It is important to make your money work for you, as it aids in providing financial security and stability. The intention is to invest for a bright future so that you can improve the quality of life for yourself and your loved ones. Individuals are always seeking improved ways that can help them in boosting their wealth.

There are several options available in the market but life insurance is one such investment vehicle that can help in accelerating the money-saving process. People need to understand the importance of life insurance, as it helps in building a rock-solid wealth-building plan.

What is Life Insurance?

Life Insurance is a contract between the insurance company and the policyholder. The insurer (or insurance company) promises to pay a certain sum of money, in exchange for a premium after a set period (as mentioned in the policy document) or upon the passing away of the insured person. It is the best investment vehicle to provide financial protection to your family, as it offers benefits on your survival of the policy term or your premature death.

Here are some of the primary reasons why Life Insurance should be an integral part of the wealth-building plan:

Tax Benefits

Investment in a life insurance policy not only offers life cover but also helps in availing tax benefits on the premium amount paid. Under Section 80C, 80CCE, and 80CC of the Income Tax Act 1961, you can avail of a maximum deduction up to Rs1.5 Lakh.

Life insurance is effective in securing your future by investing in a life cover. It is also one of the ideal investment vehicles for reducing your tax liability.

Risk Cover

The COVID-19 pandemic served as a wakeup call regarding the unpredictability of life. No one has the power to predict the future but you can work on safeguarding your future. As life is uncertain, life insurance is the best way to provide financial support to your family, in case you (i.e. the policyholder) meet with any untoward incident.

Life insurance is a risk cover and the benefits that come along with life insurance ensure that your dependents do not have to suffer in the event of your premature death. You can get good returns with life insurance by investing in the right policies that are offered by the best life insurance companies.

Illness Protection

Life cannot be taken for granted and you can no longer be complacent with your health. Physical fitness does not necessarily mean that you will remain disease-free all your life. Fast-changing lifestyle and unhealthy eating habits can take a toll on your health.

Premature heart diseases are a growing concern for the younger generation. Some life insurance policies also offer cover for serious ailments such as heart attacks, cancer, etc. Life insurance policies that offer cover for such critical ailments can be extremely helpful during the later stage of your life.

Futuristic Planning

Life insurance is a good long-term investment option, many policies help in meeting the important financial goals at key stages of your life. Many life insurance policies offer you survival benefits every few years, which helps in building a good future for your loved ones, planning a good retired life, amongst others. Life insurance plans also reap benefits even when you survive the complete term.

Better Coverage

Life insurance companies offer their customers numerous options (or add-ons) that they can choose over & above the standard life insurance plans. These add-ons help in providing higher coverage. The insurance premium that you pay will rise when you opt for such riders but it also helps with higher coverage.

Apart from critical illness rider (which we discussed earlier), some of the other common riders are personal accident rider, waiver of premium rider, and more. Choose the best-suited rider, so that you can get the benefits from your life insurance policy.

Apart from these benefits, Unit Linked Life Insurance policies are well suited for working professionals, as the policies let them invest in equity and debt markets.

To summarize, life insurance plans offer numerous benefits that aid in building a formidable wealth-building plan.