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Everyone knows what life insurance is, as it is one of the most commonly bought insurance plans. In case of an unexpected demise of a life insurance policyholder during the tenure of the plan, the nominees receive a pre-decided amount of money. However, a life insurance policy has other benefits that are not known to many people.
Here are six such things you should know about.
1. The money is tax-favored
The life insurance policy come with tax benefits. So, if you buy a life insurance plan and let it build you a little fortune over a certain amount of time, it can be a source of income that is completely tax-free. This money can be used for any purpose like going on a costly vacation or pay the educational expenses of your children.
2. Consider it as invisible money for your family
Buying a life insurance policy is an investment towards building a financially secured future for your family. The premiums you pay towards the policy do not show you any cash for a while, but you know that you are building an impressive amount of fund for the future. This is why it is considered as invisible money.
3. It comes with a premium wave-off option
A life insurance plan is a long-term insurance policy. You have to pay premiums regularly over the entire tenure of your policy. However, some insurers offer a rider with the policy that allows your future premiums to be waived off in certain cases. For example, if a policyholder is permanently disabled due to an accident the rider will be in effect.
4. It can help you grow a retirement fund
The worst part of your life after retirement is worrying about money. It is understandable too, as you can never know what lies in your future. Any life event can cause you to lose most of your savings. However, the life insurance policy can put your worries to rest. You receive a good amount of money when the plan matures. The money can be used to secure your life after retirement.
5. Disability and illness covers provide financial support
A life insurance plan generally provides the benefits only when the policyholder passes away during the tenure of the policy. However, some insurers offer additional riders in insurance that pay the insured a sum assured in case of accidental permanent disability or any critical illness.
6. It can help you get a loan
If you are ever applying for a loan and are unsure about what asset to use as collateral then the life insurance plan can help you. This feature of the policy is not commonly known but it is surely one of its best benefits.
There are many things to know about life insurance that are not common knowledge. However, if you know these features, you can get the best out of your investments.