Life insurance should be a mandatory investment, and here is why

The all-important Life insurance plans are one of the biggest investments people often make and are on the first, which are made at an earlier age. There are so many benefits of a life insurance term plan that investment in life insurance should be made a mandatory investment. Life insurance plans are meant to be a very big benefit for the family in case of the early death of the policyholder. Here are some reasons why life insurance should be made a mandatory investment

The strong reasons why

The first and foremost benefit is derived by surviving the policy term and getting the maturity benefits as a monthly income. Many life insurance term plans offer annual increments in the monthly income, which can be a huge financial support and act as a retirement income booster and a pension.

The next benefit is the huge savings on income tax. The amount paid as a premium is exempt from income tax upto a limit of Rs 150000 every year. Not only that, the entire maturity and death benefits are exempt from income tax under section 10D of the income tax act.

Another great benefit is protection to the family in case of the policyholder's untimely death. Life insurance policies are committed to paying all death benefits, including the sum assured to the family and next of kin in case of death of the policyholder. Death is unpredictable, and a family can land in serious financial trouble if the family's sole breadwinner were to die suddenly. A life insurance policy with a good term plan and high sum assured will be paid to the family either as a lump sum amount or as a monthly payout with annual increments for upto 15 years or more. This is a very big support and a great boon for as family and is one of the most important reasons why investment in life insurance should be made compulsory.

A young, healthy individual qualifies for a low premium and a high sum assured. This is both a blessing and an opportunity as a person may not qualify for a term life insurance policy is found to be unhealthy and with a diseased body. The benefit is that a person of 30 years of age and a healthy body can apply for a life insurance policy with Rs 1 crore sum assured and pay a premium of only Rs 1000 every month. The lower the age, the lesser the premium and an opportunity to apply for a high sum assured. Hence, every person should apply for a life insurance term plan while they can.

A term insurance plan can be an important investment document and help an individual apply for important loans such as home building and education. Many banks and financial institutions accept a term life insurance policy as a collateral document.

A life insurance policy taken early inculcates habits of savings, and most people who take a life insurance term policy do not have extravagant activities and are generally not in debt. If the debt is unavoidable due to unforeseen necessary expenses, the survival and maturity benefits can go a long way in paying debts.

These are some of the reasons why investment in life insurance should be made mandatory. In India, there are about 400 million people with life insurance plans. This sector is growing at 12%, and this means that a large chunk of the population does not have life insurance.

And why not…..

The logic of making life insurance plans mandatory is much like vehicle insurance which has become mandatory in India and in many countries. The government has taken it upon itself to make vehicle insurance mandatory, so that vehicle owner are protected from huge unforeseen expenditure in the unfortunate event of an accident or unexpected damage to their vehicle. There are heavy fines imposed in India for vehicles that do not have insurance or the policies not renewed. The same logic holds true for life insurance. A life insurance policy is the best legacy a person can leave for his or her family.