International Day of Families 2023: How important is insurance money for your family?
3 min read . Updated: 15 May 2023, 07:07 AM IST
PremiumFinancial planning is a systematic process that helps evaluate if your current resources and possessions are adequate to fulfil your financial goals.
The International Day of Families is observed annually on May 15th to raise awareness about the vital role of families in society. It is a day to acknowledge the social, economic, and demographic changes that affect families worldwide.
Families serve as the foundation of communities, and this day provides an opportunity for governments, organizations, and individuals to recognize their contributions and promote policies and programs that support their well-being. It is a day to celebrate the bonds that families share through shared experiences and creating memories.
In our lifetime, we have diverse financial objectives and face unexpected situations. We all want to secure a better and safer future for our dear ones, and creating a robust financial strategy can significantly contribute to achieving it.
Financial planning is a systematic process that helps evaluate if your current resources and possessions are adequate to fulfil your financial goals and tackle any unforeseen expenses that may arise.
It serves as a financial safeguard for your loved ones in the event of your untimely death and aids in achieving your long-term financial objectives. A life insurance plan is an essential component of your financial plan due to the following reasons:
- Offers a sense of financial stability
Life insurance offers a sense of financial security to your family. By paying a regular premium to the insurance company, you are covered for the risk of death.
If the unfortunate happens, your family receives a financial payout, known as the sum assured, along with any additional benefits mentioned in the policy. This financial support can help ease the burden of your family's financial responsibilities during a difficult time.
2. Helps in achieving the long-term objective
It is essential to begin financial planning early and have a clear vision of your long-term objectives, such as purchasing a home, and a car, funding your children's education, marriage, and planning for retirement.
Opting for the right blend of long-term life insurance policies, such as endowment plans and ULIPs, can help you fulfil your financial goals. With this approach, your investment will have ample time to grow and contribute to a well-planned and secure financial future.
3. Ease the financial burden on your loved ones
Life insurance policies can also provide risk management benefits when it comes to debts and loans. By selecting a policy term that matches the outstanding repayment period of your loans, you can mitigate the risk of your debts going unpaid in the event of your unexpected death. This ensures that your loved ones are not burdened by the responsibility of paying off outstanding debts and mortgages after your passing.
4. Using endowment plans and ULIPs as retirement and investment tool
Endowment plans and ULIPs can serve as effective investment and retirement tools. These life insurance policies come with a range of cumulative benefits, such as simple or compound interest, bonuses, and rewards, which gradually increase the sum insured over the policy's term.
5. Insurance policies can help save money on taxes
Life insurance policies can be a useful tax-saving tool as the premiums paid towards the policy are eligible for a tax deduction under section 80(80C) of the Income Tax Act of 1961. Furthermore, as per section 10(10D) of the same act, the insurance payout received from the policy is also tax-free.