A life insurance policy can offer various advantages for your loved ones after your passing. These benefits will keep your dependent family members financially afloat in the long run. In this article, we will talk about some of the benefits of a life insurance policy for retirees.
Top 5 benefits of life insurance policy for retirees
- Ease final expenses
Life insurance coverage can help ease several expenses that may follow up after your passing. For example, the cost of a funeral or memorial service can be very expensive and it can turn out to be a major financial burden for your loved ones at the time of grief. However, such expenses can be easily covered with the help of the proceeds from life insurance. This will reduce their financial stress and help them bid a final goodbye without worrying much about the associated cost.
- Offer financial support
In most cases, retirees are dependent on their pension income in their elder years. If you have a partner or dependent members relying on you, they may not receive the same financial support after your death. This can pose several challenges in their day-to-day life due to the loss of a steady flow of income. Life insurance coverage can help relieve this tension by working as a source of income replacement for your loved ones who are financially dependent on you.
- Cover existing debts
Many retirees carry their debts into their senior years, like home mortgages, credit card debt, and so on. No one wants to pass their financial burdens on to their loved ones after their demise and as life is uncertain, taking precautions is the best way to tackle this situation. Life insurance policy coverage can help your family members pay off any existing debts or similar expenses. This will ensure they won’t face any major financial troubles in their life because of you.
- Tax benefits
Another major benefit of having life insurance for retirees is that they can get two types of tax benefits for it. The first one is that individuals who invest in life insurance are eligible for tax deductions for premiums paid against the policy. The maximum annual threshold is up to INR 1.5 lakhs and is applicable under Section 80C of the Income Tax Act. On the other hand, the amount received via maturity benefit can be tax-free under Section 10(10D) of the Income Tax Act, considering the sum assured amount is at least ten times the yearly premium value.
- Wealth creation
Wealth creation is yet another benefit of having a life insurance policy for retirees. There are certain types of plans that allow the policyholder to enjoy the benefits of life insurance coverage, along with some scope of investment. For example, in a unit-linked insurance plan (ULIP), the insurance company utilizes a certain part of the paid premium as an investment in equity funds, while using the rest towards the life insurance coverage plan. This allows you to gain the benefits of life insurance coverage, along with the opportunity of wealth creation in your elder years.
These are just some of the examples of benefits that retirees can get by investing in life insurance coverage. Apart from providing financial peace of mind, it will also help you support your family even after you are gone. Your beneficiaries will be able to pay off outstanding debts, take care of funeral expenses, have a steady flow of income and be financially stable.