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Things You Would Wish You Had Known Earlier about Life Insurance

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November 07, 2016
Yes, you know that life insurance is an important component of your long-term financial plan. But there remains a great deal you may not know about the finer nuances when it comes to this type of insurance. This could be due to the perceived complexity of such policies, our preference for avoiding the discussion of our demise, or merely the way term insurance is presented by those who sell them.

Here are some things that you'd wish you knew earlier about life insurance:

1.Life insurance can cost you less when purchased early in your life

When it comes to buying life insurance, the younger you are, the lower the cost will be to insure you against life's uncertainties. Another way to save money on your life insurance premiums is to keep up your health. So if you do not smoke and are in good health now, you can get a life insurance policy relatively cheaper. If you decide to get it later when you are older with greater risk of ill-health, it may be difficult to obtain insurance at an affordable cost.

2.Life insurance is not an investment

Even though some life insurance plans come with an inbuilt investment feature, life insurance is not an optimal investment option. The basic function of a life insurance policy is to compensate the surviving family members (or other beneficiaries) for the financial consequences that inevitably follow the demise of the policyholder. In other words, it helps those left behind cover any outstanding debts, lost income and planned future expenses. Life insurance is not for your family to grow rich, but to ensure your family is not poor when something untoward happens.

3.Life insurance can give living benefits too

Do you think that life insurance only gives financial support if the policyholder is no more? That's not always the case. While term policies are pure protection plans that offer financial security against unforeseen circumstances, a whole life policy builds cash value-generally equal to sum assured-over time which is available for withdrawal or surrender. You can receive this cash value if you are alive at the time when the policy matures. If not, your nominee will receive the sum assured. Even term policies can be bought with riders that give returns of premiums on maturity.

4.Life insurance can help you save on tax

The premiums that you pay on your life insurance policy are eligible for deduction under Section 80C of the Income Tax Act. However, the entire life insurance premium that you pay is not tax deductible. The deduction amount is 20 per cent of the sum assured if your policy was issued on or before April 2012. For policies issued after this period, 10 per cent of the sum assured is eligible for tax deduction. What also matters is who you are buying the policy for. So if the life insurance policy is bought in your name or those of your spouse or children, you can claim tax benefits under Section 80C. But if the policy is bought in the name of your parents, siblings or in-laws, the deduction cannot be claimed.

Life insurance is not all that complicated, but most people think it is. Irrespective of your personal situation, it is important to make life insurance a part of your financial blueprint. Plans such as HDFC Life Click 2 Protect 3D Plus can help you stand strong against life's uncertainties with its financial coverage against death, disability and disease. So it makes for a good choice if you are looking for legacy planning with a whole life cover or even an income replacement option to ensure that the needs of your loves ones are met if you are no more.

Whether you are looking at periodic or lump sum payments, this insurance plan offers you complete flexibility. Additionally, if you are unable to continue paying premiums, its waiver option of premiums on account of critical illness and accidental permanent total disability means that your policy won't lapse.

As a policyholder, you are also eligible for tax benefits under the Income Tax Act. All you need to do is pay that little bit extra in the form of premiums, and HDFC Life Click2Protect 3D Plus can serve as a financial cushion for your own dreams and those of your loved ones.

Make insurance a part of your sensible financial plan. Buy Now!

 
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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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