Why does every Family need a Life Insurance Savings Plan?

Life insurance is like a protective guardian in the world of finances for families. It goes beyond just numbers, becoming the heartbeat of financial security. Life is full of surprises, and life insurance acts like a vigilant sentinel, watching over your family's financial future. It's a safety net, ensuring that even when life takes unexpected turns, your loved ones are protected from the potentially harsh financial impacts.

Having a good mix of financial plans is essential in a world where living costs are increasing. A life insurance savings plan is a great addition to your financial strategy, offering you and your family many benefits.

When there is a sudden demise of the primary breadwinner, it can have a big impact on the family’s financial status. The family will be handling an emotional loss, and they will also have to battle the financial burden. However, if there is life insurance, it will at least help them financially. They will not have to handle the financial stress.

Types of life insurance 

Life insurance is available for everyone and is tailored according to everyone’s needs. 

Term Insurance

Term insurance is a type of life insurance that provides coverage for a specific period or "term." During this period, if the insured person passes away, the policy pays out a death benefit to the beneficiaries. 

Term insurance is designed to offer straightforward financial protection for a set duration, making it a more affordable option for obtaining a higher amount of coverage during the chosen term. Term insurance is popular for its simplicity and cost-effectiveness in providing a financial safety net for loved ones.

Non-Linked Savings Plan

Non-Linked Insurance Plans are traditional types that aren't connected to the stock market. They offer safe, guaranteed returns with maturity amounts and bonuses. Examples of non-linked insurance policies include Term Insurance or endowment policies.

Unit-Linked Insurance Plan (ULIP)

A Unit Linked Insurance Plan (ULIP) is a versatile life insurance product that combines insurance and investment. With ULIPs, you, as the policyholder, will pay regular premiums. Some of this money goes towards life insurance coverage, while the rest is pooled with funds from other policyholders. 

This pooled amount is then invested in financial instruments like stocks and bonds, similar to mutual funds. Investing in ULIP allows you to be financially protected during emergencies and also provides an opportunity for your money to grow.

Benefits of having a Life Insurance

Financial security

Many people buy life insurance to ensure their family's security when they're not around. It can help maintain financial stability, support children's education, or pay off family debts. Additionally, it gives you peace of mind that your family is financially protected. 

Importance of complete coverage

Having life insurance is crucial, but having the right amount of coverage is even more critical. If your coverage is not enough, it can leave your loved ones financially at risk. When choosing life insurance, consider future expenses, any debts, and your long-term goals. Consider these factors to pick a plan that gives you complete protection.  

For example, if you're a young family with responsibilities like children's education, loan payments, and the need for a comfortable retirement, you'll need comprehensive coverage. Comprehensive coverage ensures that your family's expenses are taken care of now and in the future.

Life Insurance for your child’s dreams

Every family has dreams like owning a home, providing quality education for kids or retiring peacefully. Life insurance ensures that even if the main provider is no longer there, these dreams stay safe from financial troubles. Imagine the dream of sending your kids to top-notch universities for a great education. With life insurance, this dream stays alive, and your children's goals can keep growing without any financial challenges that might come with the absence of the main earner.

Tax benefits

A life insurance plan comes with tax advantages. The money you pay as premiums for a savings plan can be deducted from your taxable income up to Rs. 1.5 lakh per year, according to Section 80C of the Income Tax Act, 1961. 

This deduction helps reduce your taxable income and save money for several years, depending on your policy's duration. Additionally, suppose the nominee receives the insurance benefit due to the policyholder's unfortunate death. In that case, it is also exempt from income or capital gains tax, following the same act's rules in Section 10(10D).

Guaranteed returns

Unlike investments tied to the market, life insurance savings plans promise certain returns when the policy period ends. Because of this guaranteed payout, you can be confident in reaching your goals as intended. The amount you'll get as a maturity benefit is revealed when you buy the policy, providing clear information to help you plan your finances better.

Retirement planning

Life insurance brings you peace of mind and financial stability. It helps fulfil your child's dreams even during your absence. Life insurance allows you to create a financial fund for you and your spouse after retirement without relying on others.

How can you invest in an Early Cash Plan?

What is an Early Cash Plan?

Shriram Life Insurance offers the Early Cash Plan, a non-linked, participating individual savings life insurance plan that gives you both insurance coverage and savings benefits.

With the Shriram Life Early Cash Plan, you get life insurance protection and cash bonuses guaranteed at a minimum of the sum assured. These bonuses are paid throughout the policy term, starting from the first policy anniversary. The plan also provides minimum assured benefits upon maturity, the option to accumulate cash bonuses at compounding rates, and more.

Sometimes, we sacrifice small pleasures in life to save for big goals, and in the process, we may lose sight of our major financial objectives while managing day-to-day responsibilities. However, you don't have to make that choice with the Shriram Life Early Cash Plan. 

You can save for the future and work towards significant financial goals while receiving early cash income. This cash can handle daily responsibilities like running the family, paying for health expenses and covering children's school fees.

Additionally, the Early Cash Plan serves as an investment that allows you to plan for holidays or festivals. You can use the funds to organise trips and enjoy vacations with your family.

Bonus Options

Early Cash Option

The Early Cash Option ensures regular income throughout the policy, starting from the first policy anniversary. This income comes in the form of annual cash bonuses. Additionally, when the policy matures, you get a lump sum, including the sum assured and a terminal bonus, if declared.

A terminal bonus in insurance is a lump-sum bonus paid to the policyholder upon completing the entire policy term or a specified period set by the insurer.

You are guaranteed a minimum Cash Bonus of 3.5% of the sum assured. This assured income can cover your planned recurring expenses, and any extra bonus, if declared, can be used for little luxuries that bring joy to life.

When you reach significant life milestones that require substantial financial commitments, such as your child's education, buying a home, or a wedding, the lump sum received at maturity and the terminal bonus act as a financial cushion to tackle increasing expenses.

Super Growth Option

Super Growth Option gathers the yearly Cash Bonuses announced from the first policy anniversary, compounding annually at the declared cash bonus rate each year. It provides a lump sum at maturity, comprising the sum assured, accumulated cash bonuses, and any declared terminal bonus.

The guaranteed minimum cash bonus, set at 3.5% of the sum assured, is declared annually throughout the policy term. Significant financial commitments, such as a child's education, home purchase, or a wedding, become more manageable with this option, as it helps accumulate a larger fund by compounding Cash Bonuses. Cash Bonuses are declared based on the Sum Assured and accumulated Cash Bonuses. 

Conclusion

Investing in life insurance is a wise choice as the years go by. Buying life insurance at a young age is recommended because the premium rates are lower. This investment can be utilised for your child's education, repaying debts or funding your marriage plans.

Life insurance offers guaranteed benefits, providing peace of mind and financial stability. It's crucial to select a plan that suits your specific needs.

FAQs

1. What are the factors to consider while purchasing a life insurance plan?

The following should be considered while purchasing life insurance.

• Plan’s features
• Policy term
• Premium and other costs
• Does the plan fulfil your requirements?

2. What is the right time to buy life insurance?

It is recommended to purchase life insurance when young, as the premium is less.

3. Who can invest in a life insurance plan?

Life insurance offers you financial stability and gives you peace of mind. It also safeguards you during tough situations like sudden demise or illness. Individuals, married couples, parents who wish to provide good education to their children and children who wish to provide for their parents.

For more details on risk factors, terms and conditions please read the sales brochure carefully before concluding a sale. 

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