5 Benefits Of Buying A Life Insurance Once You Start Earning

Posted by Harjot Singh Narula in Business and Economy
February 20, 2017

The feeling of joy and pride after receiving your first salary is beyond words. All the hard-work and effort which you put in the past year, starts looking fruitful. It doesn’t matter how much one earns, but the first salary always remains a memorable moment of his/her whole life. You start feeling more confident, and it feels like your first salary is the best thing that ever happened to you!

After you start earning, the very first thing which generally comes to your mind is how to utilise the money earned in the best possible way. Some people send a portion of their salary back home, while others fulfil their long-awaited dreams.

However, after receiving your first salary, you should also start thinking about building a financially-secure future for yourself. The earlier you start, the better results you will get!

Buying a Life Insurance Policy can prove to be one of the most prudent decisions which you can make after you start earning. It makes your future financially secure by giving you and your loved ones a financial cover against the unfortunate events of life. In addition to this, a Life Insurance Policy also acts as one of the best saving and investment tools.

In this article, we will look at the top five benefits of buying a Life Insurance Policy, so that you can utilise your earnings in the best possible way.

1. Financial Planning

One of the most important things which you need to do after becoming self-dependent is a financial planning for the future. It helps you build a secure future, and keeps you and your loved ones financially secure against events like accidents or death. A Life Insurance Policy acts as one of the most important tools of financial planning as it protects you from the debt trap or loss of huge funds. A good financial planning with the help of life insurance can prove to be very useful in the long run.

So, instead of wasting your earnings on frivolous things, utilise it to build a financially-secure future for yourself!

2. Investment

Investment is one of the most important steps which you need to take when you become financially independent. Ignoring investment in the early stages of your independent life can result in a delay in the accumulation of desired funds to fulfil your future aspirations. With so many options of investment, sometimes it becomes difficult to choose the best option.

The two most important factors which you should check before investing are returns and the risk associated with your investment options. A Life Insurance Policy fits perfectly meets both these factors. Life Insurance Policies, like Unit Linked Insurance Plans (ULIP), allow your money to grow with time and protects you in your times of misfortune.

3. Allows You To Build A Corpus

A Life Insurance Policy also helps you to build a corpus for your future. The sum assured or the coverage amount which you choose before buying a life-insurance policy is paid to you or to your loved ones, in case of death or at the end of the policy term, in the form of policy benefits.

Some plans of Life Insurance Policies, like the money-back policy, give a portion of the sum assured on a periodic basis during the policy term. At the end of the policy term, the total sum assured is given back. It is therefore wise to quickly start building a corpus for your future needs and uncertainties with the help of a Life Insurance Policy.

4. Tax Benefits

You don’t really bother about tax saving till the time you become financially independent. But the moment you start earning, tax saving becomes an important part of your financial landscape. Many people will suggest different tools of tax saving, but you must understand and analyse your needs and situation before choosing a tax saving tool.

A Life Insurance Policy can become one of the best tax saving tools for you. The premium which you pay in a Life Insurance Policy is tax-deductible under Section 80C of the Income Tax Act, 1961. In addition to this, the amount which you receive in the form of sum assured is also tax-deductible under Section 10D of the Income Tax Act,1961.

5. Retirement Planning

Being an early bird in planning your retirement allows you to save more and makes your planning efficient and effective. Retirement planning is something which one should start just after starting to earn. A Life Insurance Plan can act as one of the best measures to keep your life financially safe and secure after retirement. Whether you are thinking of buying a new house or going to settle in a new place, a Life Insurance Plan can help you achieve these goals very easily.

So utilise your earnings in shaping a financially secure future! One of the ways to do this could be by using the money that you earned in buying a Life Insurance Policy. Being financially independent means being able to take decisions on your own – and what could be a better decision than keeping your loved ones financially secure while also building funds for your life ahead!

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