May. 31, 2025
3 Min read
Insurance
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Financial insecurity is a matter of grave concern and fear, no matter which generation you may belong to. With 49%, financial insecurity is highest among Gen X, followed by Millennials (44%), Gen Z (42%), and Baby Boomers (33%). During this phase, health complications and death can come as a severe blow to your financial condition. A life insurance policy proves to be the best way to secure your financial future and also that of your loved ones.
When we think about building a secure future, the majority of us think about savings, investments, or even buying a home. However, life insurance is one significant thing that we typically forget. Discover what life insurance is, its types and how it helps you secure your financial future.
Life insurance is an agreement between you and an insurer. You pay periodic premiums (monthly, yearly, or as a lump sum), and the insurer will pay your family a certain amount of money in your absence.
A simple approach to understanding life insurance is that it is a way to safeguard your family and loved ones in the event of your death. A policy helps your family maintain stability during difficult times and manage expenses, as well.
If you’re the primary breadwinner in your family, life insurance guarantees that your family will be able to survive financially even if you are not around. Life insurance benefits, however, go beyond the death and maturity benefit. Having insurance helps with long-term objectives like retirement planning, marriage, and your child’s education, in addition to providing safety.
Although we all always hope for the best, life has its own way around with unexpected and unforeseen circumstances. These circumstances require us to be ready with financial planning and security as they change everything in an instant.
A life insurance policy ensures that your family and loved ones remain financially secure even when you’re not around. Here are all the reasons why life insurance is important for financial security:
✓ It helps your family in paying for day-to-day expenditures such as rent, shopping, education expenses, etc.
✓ A policy helps settle debts or loans, so your family is not burdened by your expenses.
✓ It also provides peace of mind that your loved ones are secure.
From retirement planning and wealth creation to tax benefits and affordable premiums, life insurance benefits help you secure your financial future with ease. A life insurance policy protects and cares for you and your loved ones financially, regardless of what life brings your way. Here are some of the main life insurance benefits:
The main benefit of a life insurance policy is that it provides a safety net to your family and loved ones. If something happens to you, your family won’t be left struggling to maintain expenses. The insurance payout helps them manage daily expenses like food, bills, rent, school fees, and other living costs. This is especially important if you’re the main and only earner in your family.
You must have taken out a home, car, or business loan with hefty EMIs. Life insurance helps your family to settle those loans without having to struggle financially. The claim amount can be used to settle current loans and leave your family with no debt.
Many life insurance policies are eligible for tax deductions under Section 80C of Income Tax Act, 1961. You can save as much as ₹1.5 lakh in taxes annually. If your policy is eligible under Section 10(10D), the premium is tax-free, too. If the policy is issued after 1 April 2012, the premium cannot be more than 10% of the total guaranteed. The 20% restriction applies to older insurance.
Certain types of life insurance policies, such as ULIPs or endowment plans, enable you to invest your money while keeping your life insured. It gives you the dual benefit of insurance + investment.
Knowing that your family’s future is secure and safe even after your death provides you with peace of mind that no bank deposit or investment can give.
Different types of life insurance policy available make it difficult for us to choose the right one that suits our financial objectives. Here are the different types of insurance policies you must know:
Term life insurance is an insurance type that offers protection for a certain period of time, or “term,” often between 5 and 310 years. It is one of the most affordable life insurance plans you can get. You pay a small premium for a big cover.
A pure term insurance coverage solely offers protection. The nominee is entitled to the death benefit (sum assured) in the event the policyholder passes away during the policy’s term. However, no money is disbursed if the policyholder lives out the term (for example, 30 years); the insurance just expires.
Ideal for: High life cover at low cost
As the name suggests, this covers you for your whole life, typically until 99 or 100 years. It comes with tax benefits on the whole life insurance policy and possibly a savings element, too.
Ideal for: Lifetime cover + long-term saving
These are a combination of insurance and savings. You receive a lump sum after a tenure, even if you live through the term. If the policyholder lives through the policy term, a life insurance company pays out a lump sum payment known as a maturity benefit.
Ideal for: Protection + savings.
Unit Linked Insurance Plans (ULIPs) combine a mutual fund investment opportunity with a life insurance policy. In a single plan, they provide both investment returns and life insurance. While some of the money is placed in different market-linked funds to provide for possible investment development, the remaining is utilised for life insurance coverage.
Ideal for: Investors seeking long-term insurance as well as a return based on the market
Money-back plans offer a lump sum payoff at maturity in addition to regular payouts during the policy term, combining protection with investment. Money return plans also provide “survival benefits,” which are installments of the amount promised paid out on a monthly basis, which mainly concentrates on death payments.
Ideal for: Those who require regular payments
Group life insurance is a type of life insurance that offers a death benefit to a group or a number of people, usually employees at a company, under a single policy. It is frequently provided as an employee benefit and is intended to support the beneficiaries of the insured people in the event of their passing.
Ideal for: A basic insurance cover sponsored by your company, but you still purchase your individual policy.
One of the most common questions that an individual asks is, “Can I purchase life insurance if I have diabetes, heart disease, or other health conditions?” The answer is yes, you can. Most insurance companies nowadays provide life insurance for people with health issues, but the premium will be slightly higher. Some will need medical tests or a health report, but you still enjoy the many life insurance benefits.
Premiums: Your health issues directly affect the premiums paid under your insurance policy. Even if an insurer is willing to provide you coverage, you could have to pay a higher premium.
Waiting Period: The insurer uses underwriting procedures to evaluate your health and medical history when you apply for life insurance. A policy insurance company can impose a waiting time before you may access the benefits under your plan.
When it comes to life insurance and securing a financial future, the sooner you buy life insurance, the better. If you are 25 or 45, the time to act is now. Even if you don’t feel you “need” it yet, having a small life cover early in life is better than having no cover at all. Here’s why:
✓ The earlier you buy life insurance policies, the lower the premiums will be.
✓ Your health risks also rise with age.
✓ Don’t delay it and lose out on life insurance because of health problems.
Life is full of surprises, but your family shouldn’t be the one suffering from them. A life insurance policy can open up a healthy, secure financial future. Whether you’re beginning your career or beginning a new family, there’s a life insurance policy waiting for you. Finkeda offers comprehensive life insurance for your family’s financial security. Safeguard your loved ones, save on taxes, and enjoy peace of mind.
It is important because it secures your future and your family; in case something bad happens, your family doesn’t have to worry about the money. It enables them to cover living expenses, pay off loans, and lead a peaceful life.
There are several types of life insurance policies, like term, whole life, endowment, ULIPs, money-back, and group insurance. Some offer simple life cover and nothing else, while others will also help you save and invest. Each will serve a purpose based on what you need and want.
Now is the time, particularly if you’re young and healthy. The earlier you purchase a life insurance policy, the lower the premium and the higher the coverage.
A good life insurance company should:
✓ A high claim settlement ratio (the percentage of claims that they actually settle)
✓ Be transparent with your policy conditions.
✓ Provide quick, prompt, and effective customer service.
✓ Be financially solid and stable.
The rule of thumb is: Your life cover must be 10–15 times your salary. But also keep in mind this:
✓ Any existing loans (home loan, car loan, personal loan)
✓ Future expenses (children’s education, wedding)
✓ Lifestyle and family requirements
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