As financial year ending is coming close, people are going to run after tax saving instruments? Life Insurance is one of the most widely used such tax saving instrument. Many of us wonder “What is Life Insurance?” The reason I am saying this is because many of us end up buying life insurance policy which we don’t understand. So just to give a broad idea about life insurance and how it works, we will ask ourselves.
What is life Insurance? And to know and understand it, we first need to understand risk and value of an object which in case of life insurance is ‘Human’. In today’s fast pace life, there are millions of risks to our life, from diseases to road accidents; there is always some kind of risk to a human life. And as there are many who depends on that, they will suffer not only the emotional loss, but also financial loss if the person who dies, is the bread earner of the family.
What is life insurance is a question which we should ask but along with that, we should also ask “Do I need life insurance?” if you consider most of the facts, then you will realize that there are too many risk in our life and in case something bad happens to us, we will leave our family struggling to survive in today’s world.
So the purpose of life insurance should not be to save income tax, but it should be to cover the risk and protect your family. In today’s insurance market, you can find variety of insurance products, to name few
- Term Life Insurance
- Whole life insurance
- Unit linked insurance policy
These are just few types of life insurance policies. There are many more. In order to protect your family, you need to go for insurance which should be able to fund your family’s basic need and future responsibilities. If you go for any other you will end up paying extremely high premium for availing high face amount policies. So, it is always better to go for Term Insurance Plans. They are economical and offer high coverage amount.
What is life Insurance is a good question to begin with, but we also need to answer it.
About akhilendra
Although the primary purpose of Life Insurance is not to save on taxes, you can still save a little on taxes using Life Insurance with a little effort and old-fashioned elbow grease.
~Alice Williams
~chartered accountants