Life insurance is a need for everyone, but unfortunately, it is usually ignored in India, considering it a waste of money. People don’t appraise it as a valuable investment option because they are unaware of the advantages of life insurance. When any mishap happens, and people pay expensive medical bills, they understand the advantage of life insurance.
Young people like to invest in high-risk reward investment products like equities and other commodities. Even the Millenials are also focusing more on FDs and mutual funds. Life insurance is the last thing on the mind of investors in India. It is because they don’t know the advantage of life insurance in India.
However, there is no doubt that the advantage of life insurance is long-term. After you understand the advantages of life insurance in detail, you will surely love to buy one for yourself and your loved ones. It is also one of the vital parts of your retirement planning.
Life insurance advantages make it one of the vital financial tools for everyone. It provides you an opportunity to build wealth and provide financial security to your loved ones in your absence. The advantage of Life insurance also offers you various facilities to invest in your retirement life security.
Here, we will talk about the advantages of life insurance in detail and also learn about various life insurance companies in India.
Let us start with the basic understanding of life insurance.
What is Life Insurance?
Life insurance is a commitment between the insured person and the insurance company. The contract mentions the promise of the insurance company to pay the lump sum amount in return for the premiums paid by the policyholder, in case of the sudden death of the policyholder.
After buying life insurance, you have to pay premiums for a specific term, and you get the life cover. The life cover is the amount that acts as financial security for your family in case of your untimely demise. Some life insurances provide you a lump sum amount at the policy maturity, in case you survived the term.
Life Insurance in India is of 2 types depending on the features and the advantage of life insurance:
- Pure protection life insurance plans.
- Protection and saving life insurance plans.
Advantages of Life Insurance
Besides your family’s financial security in your absence, there are various other advantages of life insurance that most people are unaware of.
Here, we will disclose all the advantages of life insurance that will help you to invest in life insurance without any doubt.
Let’s talk about the life insurance advantages:
1. Death benefits
When the insurer is the sole earner of the family, his/her sudden demise can leave the family member in big hardship for survival. Here, the insurance company provides compensation to the family members as death benefits.
Many life insurance policies offer the option of monthly income where the family gets a fixed monthly amount rather than the whole sum assured at once. While choosing the life insurance policy, you must consider all the options available and select the one that fulfills your requirements. This advantage of life insurance provides financial security to your family in your absence.
2. Valuable return on investment
Many life insurance policies offer a high return on the investment as a bonus over a period of time. The returns are higher than those offered by any other investment product. The life insurance advantage makes life insurance an essential investment for individuals. Financial advisors also advise their clients to buy life insurance policies due to this advantage of life insurance.
It is also one of the safest investment products as the money you invested is returned as the sum assured at the term end or after the insured person’s demise.
3. Tax benefits
It is also one of the advantages of life insurance which offers various tax benefits to the insured person. If the insured person is a salaried employee, he can claim a maximum deduction of Rs. 1.5 lacs under Section 80C.
It reduces tax liability. If a person buys life insurance at a younger age, he can get a life insurance advantage and enjoy a reduced tax burden in future
4. Loan availability
When you get stuck in any emergency where you need money urgently, you can get the life insurance advantage of a quick loan. You don’t have to borrow money from your family or friends, it’s easy to take loans from an insurance company. Insurance companies offer loans up to a certain percentage of the policy amount, depending on the policy provisions. Ensure to check if your policy provider is offering features or not before buying the life insurance. This advantage of life insurance works as your support during financial hardship.
5. Ease financial planing
The advantage of insurance is that it eases financial planning during different stages of life. You can leverage the life insurance advantages and plan for your family’s financial support. The advantage of life insurance helps family members to live independently without facing a financial crisis. The life insurance advantages also help you to plan finances for your child’s marriage, education, dream house, post-retirement life, etc. Ensure to buy life insurance after checking all the advantages of life insurance policy.
6. Guaranteed income
The income-related advantage of life insurance provides a regular income to your family, which helps them to pay the bills, rents, loans, educational expenses, and household expenditures without facing any issues. Life insurance policies provide the life insurance advantage of regular payouts to compensate for the loss of the death of the bread-earner of the family.
7. Additional coverage
Life insurance advantages offer you additional coverage depending on the type of plan. Many advantages of life insurance are present by default in the policy, and the rest you need to buy using the riders. The riders allow you to increase the life insurance advantage according to your needs. The additional life insurance advantages include accident coverage, premium waiver, critical illness coverage, tax benefits, etc.
8. Security of business
Few insurance companies provide business security advantages of life insurance, where, if you are a businessman, your partner is allowed to buy a share of the life insurance plan after your demise. To avail of this advantage of life insurance, your business partner needs to sign an agreement with the insurance company, and the nominee gets the amount after selling the share. However, the nominee doesn’t get any stake in the company.
9. Low premiums
One of the primary advantages of a life insurance plan is that you can get it by paying much lower premiums. The premium depends on age, medical condition, sum assured, etc. If you buy the policy at a young age, you can get this advantage of life insurance to pay a low premium.
10. Good growth of money
Another advantage of life insurance is that it provides enough time for the money to grow. As a result, death and maturity benefits are high if you buy the policy at an earlier stage of life. For example, If you buy the plan at 25 years of age and pay premiums until you are 60, your money gets the whole 35 years to grow and increases the cash value of the invested money.
Best Life Insurance Providers in India
There are various life insurance companies in India providing many Life insurance advantages. The table below contains the top 10 life insurance companies and their claim settlement ratios.
|S.no||Life insurance Company||Claim settlement ratio|
|1||Aditya Birla Sun life insurance company||98.04 %|
|2||Aegon life insurance company||99.25 %|
|3||Ageas Federal life insurance company||95.07 %|
|4||Aviva life insurance company||98.01 %|
|5||Bajaj Allianz life insurance company||98.48 %|
|6||Bharti AXA life insurance company||99.05 %|
|7||Canara HSBC OBC life insurance company||97.10 %|
|8||Edelweiss Tokio life insurance company||97.01 %|
|9||Exide life insurance company||98.54 %|
|10||Future Generali India Life insurance company||94.86 %|
Why is Life Insurance Important in India?
Life is always unpredictable and subjected to risks of sudden death due to causes like a natural disaster or any sudden medical condition. The advantages of life insurance minimize the risk of the financial crisis that the family faces after the demise of the breadwinner of the family. Life insurance is one of the essential investment tools in the market due to the various life insurance advantages.
The sudden deaths and financial crises that people have witnessed during the covid-19 have made it mandatory for everyone to buy life insurance to face such situations in the future without financial losses.
How to Buy/renew a Life Insurance Policy Online?
The process of buying a life insurance plan is simple and easy. You need to visit the online website of the insurance company you wish and follow the steps mentioned below:
Step 1: Enter your details like gender, income, medical conditions, habits like tobacco, smoking, etc., Date of birth, contact details, etc.
Step 2: the agent will call you and explain various plans. You can compare different plans, in terms of coverage, premium payments, claim settlement, etc.
Step 3: Now, select the life insurance plan according to your needs and pay the premium to the insurance company before filling out the proposal form details.
There are various advantages of life insurance plans that provide security to your family and many benefits to you also. You must buy the policy at the earlier stage of life at 25 years, as it offers you many life insurance benefits like low premiums and high returns. Various life insurance companies are offering life insurance benefits. You must compare and contrast all the plans before buying one.
While buying the life insurance plans, always look what all the life insurance advantages it is providing, and which rider you must choose to enhance the benefits. The selection of the wrong plan can lead you to compromise the advantages of life insurance. Life insurance is a smart investment that everyone should consider, especially the sole earner of the family.
Advantages of Life Insurance – FAQs
Are the life insurance advantages provided only after the demise of the policyholder?
Ans. It depends on the type of policy you are buying. Many plans offer life insurance advantages only after the policyholder’s demise, while others provide benefits during the insured person’s life.
Is it possible that the claim gets rejected?
Ans. Yes, the life insurance claim can get rejected if you provide any wrong information to the insurance company.
What are the advantages of life insurance regarding tax exemption?
Ans. under section 80C of the income tax Act, the premium paid during the financial year is deductible from the investor’s income. You can claim it for premium amounts up to Rs. 1.5 lacs. If your annual premium is Rs. 1 lacs, you can claim the whole amount as a deduction.
What are the top companies for buying life insurance that provide the best life insurance advantages?
Ans. the companies that provide the maximum advantages of life insurance are HDFC Life, Max Life Insurance, Life insurance corporation, etc
Do all the plans provide life insurance advantage of critical illness coverage?
Ans. No, all the plans do not provide the advantage of life insurance regarding critical illness coverage. You need to compare different plans and find the one providing this life insurance advantage.
What are the factors responsible for the premium amount of the life insurance policy?
Ans. The factors responsible for the premium amount of the policy are Age, Gender, Income, Medical history, and the eating habits of the policyholder.
What are the primary advantages of life insurance?
Ans. The primary advantages of life insurance are death cover, tax benefits, loan availability, critical illness cover, etc.
Is term insurance and life insurance different?
Ans. The term insurance is the pure form of life insurance that does not offer any other benefits than life cover. On the other hand, various life insurance offers many benefits with the life cover like critical illness cover, return benefits, regular income, etc.