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Bima Seva Kendra

The Benefits of Life Insurance Beyond Death Benefit: An Investment Tool for Financial Growth

When most people think of life insurance, they picture a safety net for their beloved after their passing. But life insurance can be so much more- It can be a powerful investment tool for financial growth.

How? Let us explore the multifaceted benefits of life insurance.

1. More than just a safety net: an investment tool!

Traditionally, life insurance is seen as a policy that pays out a death benefit to your beneficiaries. However, permanent life insurance policies- whole life, endowment, and unitlinked insurance plans (ULIPs)- offer an investment component that can help grow wealth.

Forms of Life Insurance Policies available in India are -

  • Whole Life Insurance
  • Term Life insurance (with the return of premium or critical illness rider)
  • Unit Linked Insurance Plans
  • Endowment plans
  • Moneyback policy
  • Child Insurance Plans
  • Retirement Plans
  • Group life insurance
  • Pension plans

2. Life Insurance: The Investment Side

  • Whole Life Insurance provides lifelong coverage and includes a cash value component that grows over time.
  • Endowment Plans provide life coverage, a lump sum amount on maturity or passing away, and cash value accumulation through savings.
  • Unit-linked Insurance Plans (ULIPs) integrate insurance and investment, allowing you to invest in equity, debt, or a mix of both, potentially increasing your cash value based on market performance.

3. Benefits of Life Insurance other than Death Benefits

  • Growing your wealth with Cash Value
  • Tax-Free Payouts
  • Planning for Retirement
  • Additional benefits through riders

Let's cover them in detail.

  • Growing your wealth with Cash Value: A standout feature of permanent life insurance policies is the cash value. Part of your premiums goes into a savings account that grows over time, tax-free.
  • Tax-Free Payouts: Deductions of up to Rs 1.5 lakh can be claimed on premiums under Section 80C of the Income Tax Act 1961. Additionally, the money received upon maturity or the death benefit is exempt from taxes under Section 10(10D) of the Act.
  • Planning for Retirement: By leveraging the cash value, you can create an additional income stream during your golden years. Borrow against or withdraw from the policy’s cash value to enhance retirement income.
  • Additional benefits through Riders: Customise your policy with riders (critical illness rider, waiver of premium rider or accidental death benefit rider) to enhance your coverage.

4. Making the right choice

Selecting the right life insurance policy is key to maximising its benefits. But how do you achieve it? That is where Bima Seva Kendra comes in.

For any and every question, consultation, insurance claim-related issue such as Delay in claim process or insurance rejection-related issues such as unjust claim rejection due to Mis-selling of insurance policy, they are there for it all.

So do not hesitate to reach your very own subject matter expert- Bima Seva Kendra. Help is but a click away.

5. Conclusion

Life insurance is more than just a safety net for your family. It’s a versatile financial tool that can help you grow your wealth, plan for retirement, and secure your legacy. Understanding and leveraging these benefits can make life insurance a cornerstone of your financial strategy.

Unlock the potential of life insurance and see how it can work for you—not just after you’re gone, but throughout your life.