Life Insurance Benefits You Should Not Ignore Before Buying a Plan

Let’s say you are driving your little one to school, she looks up and says softly, ‘Papa, my friend had to leave school because her father isn’t there anymore. Will that happen to me?’ 

Questions like these are a reality for many families. And if you’ve been putting off buying life insurance, now is the time to take action.

This article breaks down everything you need to know about life insurance benefits and what to check before choosing a plan.

Why Life Insurance Matters for Indian Families

Before we explore the benefits, let's look at the bigger picture. India's insurance penetration is only 3.0% of GDP (Swiss Re, 2023). This means millions of families remain financially vulnerable.

Let’s take the example of Rajesh, a software engineer in Bangalore earning ₹12 lakh a year. He supports his wife, two children, and elderly parents. Now imagine what would happen if something were to happen to him. The family wouldn’t just lose his income, they would also face immediate expenses like funeral costs, school fees, home EMIs, and day-to-day living. Without insurance, this can push families into debt within weeks.

This is where life insurance steps in. For instance, certain Shriram Life Insurance plans not only provide a monthly payout to replace lost income but also give a lump sum immediately after the policyholder’s demise to handle urgent costs like funeral arrangements. This means Rajesh’s wife wouldn’t have to scramble for money in a time of grief.

5 Life Insurance Benefits You Need to Know

The sudden loss of an earning member means unpaid loans, interrupted education, and mounting daily expenses. Here’s how life insurance secures your family’s future in more than one way.

1. Financial Protection for Your Family

The main purpose of life insurance is financial security. The payout helps your family cover daily expenses like school fees, rent, and groceries.

Families with adequate insurance coverage are less likely to stop a child's education after losing the main earning member.

2. Clears Debts and Loans

Debt forms a growing part of Indian households. RBI data shows that personal loans account for 30.9% of total bank credit (2023). Without life insurance, these debts pass to your dependents.

Consider an example of Amit from Delhi. He has a ₹40 lakh home loan and a ₹8 lakh car loan. If something happens to him, his wife doesn't have to sell their home or struggle with EMIs. The insurance payout clears these debts.

3. Supports Long-Term Goals

Some policies do more than protect. Endowment plans and Unit Linked Insurance Plans (ULIPs) combine insurance with savings or investments. The returns help fund goals like your child's higher education, their marriage, or building retirement money.

4. Tax Benefits

Life insurance helps you save taxes. Premiums paid qualify for deductions up to ₹1.5 lakh under Section 80C of the Income Tax Act. The maturity or death benefits are exempt from tax under Section 10(10D), subject to conditions.

This makes life insurance one of the few financial tools that combines protection, savings, and tax efficiency.

5. Peace of Mind

The biggest life insurance benefit is peace of mind. Knowing your family will be protected allows you to focus on your career, business, or personal goals without constant worry.

Let’s consider a marketing professional, Neha. After buying a ₹1 crore term policy, she sleeps better knowing her 4-year-old daughter's future is secure.

5 Things to Consider Before Buying Life Insurance

Here are key points that help you choose a plan that truly protects your family and fits your budget.

1. Coverage Amount

Your cover should replace your income and account for future expenses. The rule of thumb is 10 to 15 times your annual income.

Adjust for loans, lifestyle costs, and future responsibilities like education.

2. Type of Policy

Life insurance comes in different types:

If your goal is pure protection, term plans are ideal. If you want both insurance and savings, endowment or ULIPs work better.

3. Policy Tenure

Your policy should cover your working years. If you're 30, a 30-35 year tenure makes sense. This ensures your family stays covered until you retire and complete responsibilities like paying for children's education.

4. Premium Payments

Premiums must fit your long-term budget. Most insurers allow monthly, quarterly, half-yearly, or yearly payments. Choose an option you sustain without financial strain.

5. Riders and Features

Riders add extra protection at a low cost. Popular options include:

• Critical Illness Cover: Payout if diagnosed with major illnesses
• Accidental Death Benefit: Higher payout if death occurs in an accident
• Disability Cover: Income support if you lose your ability to work

These features make your plan more complete without needing separate policies.

Your Life With vs. Without Insurance

Your Pre-Purchase Checklist

• Calculate income replacement needs
• Check existing debts and add to cover amount
• Compare policy types (term, endowment, ULIP)
• Decide on tenure covering your working years
• Select important riders like accidental death
• Choose a premium you can pay consistently

Important Facts You Should Know

• Life insurance penetration in India is only 3.0%, far below countries like the US, China and the UK (Swiss Re, 2023).
• Term insurance premiums start at ₹500 per month, making them accessible even for young professionals
• The average claim settlement ratio of top Indian insurers is over 95%, showing high reliability.

Your Next Steps

Life insurance is your family's safety net. It replaces lost income, clears debts, funds long-term goals, saves on taxes, and provides peace of mind. When you evaluate cover, tenure, policy type, and riders, you make a confident choice for your loved ones' future.

Remember Rajesh from earlier? He finally bought a ₹1.5 crore term policy after reading about life insurance benefits. Now, when his daughter asks about school, he confidently tells her she'll get the best education no matter what.

You can start exploring tailored insurance policy options like Shriram Life Premier Assured Benefit. Compare plans, ask questions, and choose what best protects your family's future.

Disclaimer: This information provided is intended for general informational purposes only. For personalised recommendations, please consult a certified insurance professional.

ARN:SLIC/Elec/Sep 2025/1130