Can We Consider Life Insurance a Smart Investment?


Generally, people consider life insurance a product that can provide a sum assured to the policyholder’s family in case of his/her untimely death. However, life insurance can also be a good investment tool.

In this article, we will explain why life insurance can be a smart investment option.

Most people look for various investment instruments in order to build a substantial financial corpus. One of the tools that can help in achieving this target is life insurance. Most of the time, people don’t consider life insurance an investment option. They believe that life insurance can only help in providing financial aid to the dependents of the policy holder in case of his/her untimely death. While that is true, it can also provide various other benefits as well.

There are various types of life insurance policies, such as term insurance, whole life insurance, ULIPs, etc. All these plans differ from each other. For example, a unit-linked insurance plan (ULIP) is a unique policy that offers the benefit of life insurance as well as investment. One part of the premium is invested for insurance cover, and the other part is invested in different investment instruments. Whereas term insurance provides life cover to the policyholder.

Here are some benefits that life insurance can provide-

  • Can Provide Financial Assistance

One of the most important benefits that life insurance provides is the death benefit. The insurer offers a sum assured to the policyholder’s beneficiaries. The insurance company provides the sum assured in case of policyholder’s untimely demise during the policy term. 

The financial strain on the policyholder’s family can reduce significantly with the help of the death benefit. Therefore, it is recommended that every person should purchase a life insurance plan.

  • Investment Benefits

Insurance policies like ULIPs provide life cover as well as investment benefits to the policyholder. With the help of such plans, the policyholder can safeguard his/her family and earn returns on the investment. By investing in a life insurance policy, a person can build a significant corpus.

  • Can Help You Plan for Retirement

In order to ensure that life after retirement is easy, you need to accumulate funds. A life insurance policy can help you build a substantial retirement corpus. Policies like endowment plans, pension plans, etc. are great tools that can enable you to live a stress-free life after retirement.

  • Tax Benefits

Apart from providing life cover, a life insurance plan can also offer tax benefits. By investing in a life insurance policy, you can reduce your tax liability. Under Section 80C, the premium paid for a policy is eligible for a tax deduction up to Rs. 1.5 Lakh.

Secure Yourself with Life Insurance

Life insurance offers a lot of benefits compared to other investment instruments. For example, a life insurance plan provides life cover, returns, and tax benefits. Generally, you won’t get such benefits in one plan. Therefore, to secure yourself, you should consider purchasing a life insurance policy. It can help you plan for retirement and provide financial assistance.