There is a famous saying, “as there exist only a few things with have only one side, the discussion of mine has its pros and cons.” Life insurance is made to help an individual in case of an emergency and to protect their loved ones. But on the other side of this coin, there are certain advantages and disadvantages of life insurance of purchasing a life insurance plan.
The cost of premiums plays a Vidal role in making life insurance the best or worst for any individual. If you want a clear view of life insurance’s pros and cons for purchasing it, then you are reading the right lines. You must keep in mind that there are many disadvantages of term insurance. Let’s talk about the advantages and disadvantages of life insurance.
Life Insurance Advantages
There are several advantages and disadvantages of life insurance but firstly let’s discuss the advantages of life insurance.
1. Peace of Mind
Death is a bitter truth, and everyone has to face death at some point in their life. But if a person dies, people dependent on them are deeply emotionally and financially shaken. For example, if you only earn in the family, then after your sad demise, your insurance plans for family get money from the insurance company to fulfill their requirements. This is the primary life insurance advantage.
2. Financial Security
This is another life insurance advantage. Anything can happen to anyone at any time in this world. Suppose you are covered under life insurance. Then, if any mishap occurs with you and the source of income is completely shut off, the insurance company will pay your family to cater to the basic requirements.
3. Tax Exemption
Under section 80C of the Indian constitution, the premiums paid for life insurance are tax exempted to a certain limit. You can get a tax deduction of a maximum of Rs. 1.5 lacs. The tax exemption under life insurance advantages attracts many people.
Term life insurance gives you additional coverage called riders. These riders include coverage against accidents, loss of income due to a disability, serious illness, etc.
5. Loan Availability
Loans can be sanctioned against the term life insurance up to a certain limit to meet your expenses like fees, purchasing of property, etc. The loans sanctioned by a financial institution will not be more than the total sum assured to you.
6. Retirement Income
People can also use life insurance to get a regular income after retirement. If you take the annuity policy, you will get monthly capital to cater to your expenses after retirement.
Disadvantages Of Life Insurance
As discussed earlier there are many advantages and disadvantages of life insurance and we have already talked about the advantages of life insurance. Let’s talk about the disadvantages of term insurance.
1. High Premiums for Aged People
The premiums paid for getting life insurance coverage are directly linked to the person’s age. The greater the age, the greater the premium to be paid. So, it is advised to get life insurance coverage at an early age which will prevent you from paying high premiums. This is the most significant disadvantage of term insurance.
2. Return Calculation
A term life insurance policy’s return depends on the market performance. So the returns on the life insurance are difficult to calculate, unlike any other fixed deposit schemes or PFF.
3. Complex Policies
Especially in India, insurance companies make their policy so complicated that it creates confusion in the customer’s head. They do this so that they are not liable to pay the coverage amount in every scenario. So, it is advised to read and understand the terms and conditions of the policy before purchasing it. While buying the policy you must keep in mind these disadvantages of term life insurance.
4. Hidden Clauses
Financial products listed in the market have some hidden clauses. It is all your responsibility to find it. For example, insurance companies do not cover the family if the insured’s death is a suicide attempt.
Every scenario has two faces, but the most glowing face judges it. Work has positive and negative outcomes, but the result is good or bad. If the positive effects are more, the work is considered good, same in negative cases too. In India, there are many life insurance advantages. Anything can happen at any time with anyone.
You don’t want your family to suffer in case of a mishap. In that case, term life insurance can help you in greater ways. In a hard time like COVID-19, health insurance provides ease of mind in the toxic running environment that at least my family is secure. Now you know the advantages and disadvantages of life insurance, you can plan wisely about your life insurance.
Advantages and Disadvantages of Life Insurance Plans – FAQs
What is the most significant advantage of term life insurance?
Ans. The most significant advantage is that you can get a tax-free amount after claiming the insurance.
What are the most significant disadvantages of term life insurance?
Ans. The most significant disadvantage of term life insurance is that you have to pay a monthly, quarterly, half-yearly, or yearly premium. Moreover, in case of non-payment of premiums, the policy can expire after a certain amount of time.