Common Questions Answered About Life Insurance
- What is Life Insurance?
Life insurance is a contract by insurance company to take care of the financial needs of your family when you are not around.
- Why you need it?
If you have a spouse or kids or dependent aging parents, life insurance helps with the following: – Replace your salary, to take care of family members, to pay back any debts or loans, to cater to any other immediate financial needs. 8 in 10 consumers who have had a positive experience with life insurance say “life insurance plays an important role in life”.
- How much do you need?
The following things should be kept in mind while calculating how much insurance you need:
- Total debt, current salary, retirement goal, financial security or survivors.
- What is the tax liability?
- Premiums eligible for tax saving and if surrendered before maturity then all premiums taxable.
- Traditional policies & ULIPS: Death of the insured is tax exempted and surrendering before maturity. At maturity tax is exempted.
- Pension Plan: Death of the insured tax is exempted, surrendering before maturity (1/3rd income taxed as regular income, 2/3rd has to be reinvested in annuity). At maturity (1/3rd income tax exempted, 2/3rd has to be reinvested in annuity). Pension received is treated as regular income and taxed according to individual’s tax slab.
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