Life insurance is an investment you make betting that you are worth more dead than alive because the apparent value of life insurance is the death benefit it enables. Why invest in something whose powers get activated only when you are dead? In human cases, you don’t come back from the dead. You stay dead. So the superpowers (aka. Insurance money) go to your kin, and this ensures their financial aid even after your demise.
If this isn’t convincing enough, then read below for additional benefits of life insurance!
To an extent, life insurance for the insurer is an expense and not an asset. The asset aspect of life insurance concerns the dependent after the death of the insurer. Upon the event of your death the policy that you own results in your beneficiary receiving a payment called death benefit that replaces the income you provided in life. This makes it so that the family is financially empowered and capable of handling expenses after the insurers’ death. The expenses could vary from funeral costs, mortgage, debts, and loans, etc. The insurance money the family attains gives them a sense of stability to deal with the situation. Hence the lack of life insurance could lead to the financial ruin of your loved ones in the event of your untimely death.
Peace of mind
Think of it this way you are paying the premiums’ for the peace of mind that comes with knowing that you are capable of looking after your family from beyond the grave as it enables you to provide financial security for your family in the event of your unfortunate death.
Life insurance can help you save, too. Life insurances also have a component called whole life insurance that enables you to save while you are still on coverage; your premiums get split to pay for your life insurance policy and an interest-bearing account. If you meet your death while the policy is still applicable, your beneficiaries will receive the cash or if you decide you want to redeem the cash while you are still alive, you can.
You can save on tax with life insurance. Under section 80C of Income Tax Act, 1961, the maximum amount that can be exempted from taxation is Rs.1,50,000. Also, Life insurance premium paid by you for your wife/husband/child’s policy qualifies for tax benefits under the same section. But if you stop premium payments of your policy, it leads to discontinuation of the policy and the tax benefits.