Five Creative Uses of Life Insurance Policy You Never Thought Of
Most people in India buy a life insurance policy to provide their loved ones with much-needed financial security while they are not around. There are other ways to use life insurance, read on to find out how.
For most people in India, buying a life insurance policy is one of the most important aspects of financial planning for the future. Not only does it ensure financial protection to the loved ones in the event of the untimely death of the breadwinner, but also it serves as an inheritance. Let us look at some of the more creative ways you can use your life insurance policy.
Take care of your loved ones’ expenses
You may work hard all through your life to provide for your loved ones and ensure that all their needs are met. However, have you thought what will happen to them, if something were to happen to you? Do you have any plans or financial provision for them, so that they will be able to live the lifestyle they are used to? This is where having a life insurance cover can be a big boon. In case any untoward incident results in your untimely death, your family or more specifically, the appointed nominee will get the death benefit, which can be used for meeting the general expenses.
As the head of the family, you would surely want to leave behind a significant sum of money for your family. Also, you would want to reduce your tax burden. Having a life insurance cover can help you with both. If you have invested in a term life insurance, the insurance company will pay a lump sum amount as the death benefit to the appointed nominee. The nominee can use the money for meeting the expense like paying off the dues, pay for the child’s education fees. The best part, the inherited money is subject to a tax deduction.
Create an alternative source of income
During your active working life, you may have to incur various important expenses like mortgage, Credit Card dues, medical emergency. However, this can have a significant impact on your savings; you may not be able to have a significant saving for the future. Not to mention, you cannot be working all through your life, you would have to retire at some point. You would want to create a corpus for your post-retirement life. There are many life insurance plans like the savings-cum-protection plans that allow you to get valuable returns every month and build a corpus fund for retirement. Make sure that you do your research well about the various insurance plans available in the market and choose the one that best suits your needs and has a premium that is affordable for you.
Reduce the tax burden
As a working professional in India, you are liable to pay taxes on the income you earn. However, there are certain ways by which you can save your tax burden and enjoy the benefit of tax deduction. As per the Indian Income Tax Act, the money you pay towards your life insurance is liable to tax exemption. Thus, investing in a life insurance policy gives you dual benefits of protection as well as tax savings.
This is one of the lesser known uses of life insurance. You can buy a life insurance policy and appoint a charitable organisation that you support as the beneficiary. This will not only help you accomplish your philanthropic, but the benefits of the policy will be provided to the charity that you hold so dear.
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