Perfect Cover
Invest in insurance to secure not just your life and savings but the future of your children
As women, we are used to playing multiple roles. While the responsibilities may vary, the essence of being a nurturer is retained in every role. Therefore preparing for family emergencies (financial or otherwise) and planning for long-term security are important for both working women as well as homemakers. The recent mandatory financialisation of savings is a boon for most women who would have otherwise left their savings lying idle. Opening a bank account and saving regularly is the first step towards taking control of your finances, followed by investments depending on your individual needs and risk appetite.
From the varied options of financial savings instruments to choose from, here are 10 reasons why life insurance is important to invest your savings in. Replacement for loss of income
Life insurance can act as a provision for replacement of your monetary contribution to the family, in your absence. You can do this through a term plan; they are simple and can be easily purchased online. Life insurance provides a financial safety net to your entire family. In case something happens to the sole breadwinner, the proceeds of the term insurance plan could help to cope with liabilities such as loans. Planning for your child’s future
Life insurance products enable you to save over the long-term towards goals such as your child’s education or even their wedding expenses. You can build a corpus to fund your child’s future dreams, even in the absence of one or both parents. Retirement plans
With improved longevity, you and your spouse need to build a nest egg to manage your expenses after retirement. This can be done through retirement planning. Regular investment or a one-time investment in a chosen retirement or deferred annuity plan, followed by purchase of an annuity will ensure that you receive guaranteed payments for life. Annuities help transfer the risk of living long to the insurance company. Funding medical treatment
With rising instances of diseases such as cancer and heart ailments, the cost of treatment can wipe away savings. Prepare for medical emergencies by purchasing health plans that cover critical illnesses and provide hospitalisation income benefits. Power of compounding
`10,000 invested every month at 8 per cent per annum for 20 years would give you `60 lakh. But if you invest for 26 years, it will give you `1 crore. This is the magic of compounding over the long-term. Life insurance enables you to reap long-term benefits of compounding with an added benefit of protection cover. SIPs
By purchasing life insurance plans (both traditional and unit linked insurance plans, ULIPs), you can create an SIP through regular, disciplined savings. Additionally, the life cover gives you financial protection like no other. Making the most of market movements ULIPs provide a facility called ‘switch’ which enables you to transfer all or part of your units into different funds (equity or debt) to optimise your investments. For example, to safeguard against value erosion of your funds in the event of a falling stock market, transfer the units from equity into debt. Once the market starts to rise, you can choose to switch your units back to equity. Tax benefit on regular premium payment
Life insurance products provide tax benefit under section 80C of the Income Tax Act. Tax free maturity
Payouts from your life insurance plan on maturity or in the case of a claim are tax free under section10(10) D of the Income Tax Act (provided the sum assured is more than 10 times the annual premium.) Of course, the greatest benefit is financial independence with the security of protection and long-term savings.