Before you start searching for a life insurance plan to buy, you need to have a clearly defined objective in your mind.
Your financial goals could be any of the following:
a) Long term financial safety
b) Child goals
c) Retirement goals
d) Wealth building goal
e) Legacy goal
This is the basic purpose of life insurance. There is a death benefit in the life insurance which is given to your beneficiaries if you die within the term. This ensures that your family is safe financially and can take care of themselves if you are not there.
Some life insurance policies such as ULIPs allow you to invest your funds that are linked with the market. Investing in equity funds can give you the possibility to earn higher returns.
Retirement or pension plans allow you to accumulate funds over a period which helps create an income stream for you in the future. Pension plans are low risk and thus provide good safety.
Life insurance products are eligible for tax deductions on premiums paid up to Rs 1.5 lakh under section 80C of the income tax act 1961. Also, the maturity proceeds are tax-exempt under section 10(10)D.
Life insurance products are usually for long-term use. The longer your funds are invested, the more time they get to grow and create a large corpus.
