Benefits of Life Insurance
Many of us do not know what is life insurance or what are the benefits of life insurance? As a result, we remain ignorant about this without knowing it and we do not leave the world without making some savings for our future generations. In today's blog we will try to discuss in detail the basics of life insurance and why you should have life insurance.
Many of us think, why do life insurance? Why bother so much. But think about it, maybe your family is dependent on you alone. You can die at any time by accident or any fatal disease. What will happen to them in that case?
So life insurance is a solution to thousands of other potential problems. Life insurance allows you to leave a sure savings for your family in case of any unforeseen event.
What is life insurance?
Before you know the "benefits of life insurance", do not know what it is basically? Generally speaking, this is a type of savings where you will deposit a certain amount of money every month and the insurance company will give you the promised amount in case of any accident or loss later on.
Got a little hard to understand? Usually when we open a savings account in a bank, we deposit some money for a certain period of time in exchange for a certain dividend every month. After a certain period of time, we do not raise that money at interest. But not so with insurance.
Suppose you have a life insurance of 5 lakh. Where you have to pay a premium of 3 thousand rupees per month. But the insurance company will not give you any profit for this 3 thousand rupees. Instead, if you die in an unintentional accident or illness, they will hand over the Rs 5 lakh to your family which will be a financial help for your family.
Simply put, life insurance is a contract or guarantee arrangement where you enter into an agreement with the insurance company to pay compensation to your family after your death in any unforeseen accident by depositing a certain monthly amount.
Benefits of Life Insurance
Since you get special help in case of emergency, there are many "benefits of life insurance". As a result, you and your family may be prepared in advance to deal with an unforeseen disaster. There are several benefits to life insurance. It is mentioned below.
1. Post-death benefits
If an unforeseen event occurs to the insured, resulting in loss of their family income, the insurance company compensates them in the form of death benefit. The recruited candidates get the promised full money and bonus deposited within the stipulated time.
In addition to providing death protection, many life insurance plans offer monthly income benefits. This type of insurance is an excellent benefit for people who have reached retirement age and whose income is declining.
However, when getting life insurance, you need to be careful to evaluate the features and benefits of several plans and choose the best one for your needs to provide the best protection.
2. Receipt on investment
Eminent financial advisers suggest that everyone should invest in a life insurance policy. Not only to provide financial security to the family when you are not there, but also to get a good return on investment.
In addition, life insurance is a safe financial instrument compared to other investment options. The money you have invested in insurance at the end of the term or after the death of the insurer will be paid to you in full as guaranteed money.
3. Tax benefits
A significant life insurance benefit is the tax benefit. If you are a salaried employee and have purchased a life insurance policy, you may be eligible for a discount.
4. Loan facility
When your money is needed in an emergency, you can take out a loan against life insurance coverage. Almost all major insurance companies now offer loan benefits to policyholders against insurance.
Depending on the terms of the policy, you can borrow a certain proportion of the sum insured or the sum insured. So before you sign a contract for insurance, get acquainted with the policy of taking a loan from the insurer.
5. The right decision of financial planning
It is important to plan your financial decisions carefully as you go through the steps of life. Life insurance can help you in this case. You can use the benefits of various term life insurance to provide financial support to the family in case of your untimely death.
Not only will this help them to fulfill their financial responsibilities, it will also enable them to lead a financially independent life without interrupting their livelihood. It will be of great help in various important occasions such as marriage of children, payment of school fees for fifteen children and building a dream house for a life after retirement.
7. Guaranteed source of income
Another of the benefits of life insurance is the guaranteed source of income. Your family feels financially secure in your presence. Because you earn regular income to meet their needs. What you are earning helps pay off debts (if any), house rent, daily bills, children's education and other household expenses.
But what if you suddenly leave this world? Some life insurance policies offer regular pay-outs, which can offset loss of income due to the death of an earning member of the family.
8. Business security
There are currently several life insurance companies that offer a benefit with their insurance policy. If you bought the policy and run the business, your business partner may purchase a portion of the policyholder after the policyholder dies.
In this case, the business partner has to sign a contract with the life insurance company and the proceeds from the sale of shares will be paid to the nominee of the policyholder. It must be remembered that policyholders or nominees do not acquire any stake in the company.
9. Life Insurance Payouts Are Tax-Free
If you have a life insurance policy and die while your coverage is in effect, your beneficiaries will receive a lump sum death benefit. Life insurance payouts aren’t considered income for tax purposes, and your beneficiaries don’t have to report the money when they file their tax returns.
10. Your Dependents Won’t Have to Worry About Living Expenses
Many experts recommend having life insurance that's equal to seven to 10 times your annual income. If you have a policy (or policies) of that size, the people who depend on your income shouldn't have to worry about their living expenses or other major costs. For example, your insurance policy could cover the cost of your children's college education, and they won’t need to take out student loans.
11. Life Insurance Can Cover Final Expenses
The national median cost of a funeral that included a viewing and a burial was $7,848 as of 2021. Because many Americans do not have enough savings to cover even a $400 emergency expense, having to pay for a funeral can be a substantial financial burden. If you have a life insurance policy, your beneficiaries can use the money to pay for your burial expenses without having to dip into their own savings or use credit.
Some insurers offer final expense policies. These policies have low coverage amounts and relatively inexpensive monthly premiums.
12. You Can Get Coverage for Chronic and Terminal Illnesses
Many life insurance companies offer endorsements, also known as riders, that you can add to your policy to enhance or adjust your coverage. An accelerated benefits rider allows you to access some or all of your death benefit under certain circumstances. Under some policies, for example, if you are diagnosed with a terminal illness and are expected to live less than 12 months, you can use your death benefit while you’re still living to pay for your care or other expenses.
13. Policies Can Supplement Your Retirement Savings
If you purchase a whole, universal, or variable life insurance policy, it can accumulate cash value in addition to providing death benefits. As the cash value builds up over time, you can use it to cover expenses, such as buying a car or making a down payment on a home. You can also tap into it if you need to during your retirement years.
However, a life insurance policy should not replace traditional retirement accounts like a 401(k) or an IRA. What's more, cash value life insurance is considerably more expensive than term life insurance, which has no savings component but simply a death benefit.
How to do life insurance?
If you know about the benefits of life insurance, then let's find out how to do it. If you want to buy suitable life insurance, you need to understand what kind of need you have and how much money you want to buy premium insurance. This is because the higher the premium, the higher the amount you will receive after maturity or at the time of compensation.
But remember, just because the amount of money you receive is not enough to make you profitable. There are several other things you need to consider, such as premium policy, return policy, tax policy, nominee policy, maturity benefits, etc.
First of all you have to decide how many years term insurance you want and how much premium you will pay per month. There are currently two types of life insurance you can get. One is term insurance and the other is life time insurance. You will also find out about policy coverage and other benefits.
Remember, this is an asset you are doing for the family. So don't be seduced by the advertisement of an insurance company or the words of an agent and research yourself which company is giving you the best offer. Decide not to take insurance from any local insurance agent by contacting the insurance office directly.
After making the final decision, pack your own documents such as National Identity Card, Driving License, Passport, Proof of Income Source and Nominee Papers. Finally sit down with the insurance agent or officer, fill out the form with the required information and pay the first premium.
Life insurance fraud
You may be thinking of the near future and saving a premium every month from hard earned money. But all of a sudden you find out that your insurance agent was a fraudster and that he is a fan of many more premium money like you.
Such incidents are happening every day in our Bangladesh. By pretending to be an insurance agent or opening a fake insurance company, many fraudsters are taking away people's hard earned money by showing greed for more benefits at a lower premium.
So before buying any insurance, look at their background, authenticity, agent authenticity, office authenticity, company reviews and their website. It is best if you can see for yourself everything on the spot. Don't lose everything for the sake of glamorous advertisements or greed for more profit.
