{"id":6357,"date":"2022-01-11T15:05:25","date_gmt":"2022-01-11T09:35:25","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=6357"},"modified":"2022-05-24T10:54:22","modified_gmt":"2022-05-24T05:24:22","slug":"life-insurance-benefits-and-disadvantages","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/","title":{"rendered":"Advantages and Disadvantages of Life Insurance Policy: Pros and Cons"},"content":{"rendered":"\n<p>Life insurance is a policy that primarily covers the risk of premature death. While dying is certain, predicting when you would die is certainly impossible. In the case of untimely death, your family might suffer an unparalleled financial loss, especially if you are the sole breadwinner.<\/p>\n\n\n\n<p>Therefore, life insurance plans are aimed at helping you plan for unforeseen contingencies. While these policies have their fair share of benefits, they have some drawbacks too. Let\u2019s analyse the life insurance benefits and <a href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-is-not-an-investment-heres-why\/?utm_source=blog&amp;utm_medium=article\">life insurance<\/a> cons for informed decision-making.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Benefits-of-life-insurance\" title=\"Benefits of life insurance\">Benefits of life insurance<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Emergency-planning\" title=\"Emergency planning\">Emergency planning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Financial-security\" title=\"Financial security\">Financial security<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Tax-benefits\" title=\"Tax benefits\">Tax benefits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Easily-available\" title=\"Easily available\">Easily available<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Affordable\" title=\"Affordable\">Affordable<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Wide-range-of-plans\" title=\"Wide range of plans\">Wide range of plans<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Drawbacks-of-life-insurance\" title=\"Drawbacks of life insurance\">Drawbacks of life insurance<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Long-term-contract\" title=\"Long-term contract\">Long-term contract<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Technicalities\" title=\"Technicalities\">Technicalities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Limited-benefit-on-premium-discontinuation\" title=\"Limited benefit on premium discontinuation\">Limited benefit on premium discontinuation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Not-enough-liquidity\" title=\"Not enough liquidity\">Not enough liquidity<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Should-you-buy-a-life-insurance-policy\" title=\"Should you buy a life insurance policy?\">Should you buy a life insurance policy?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/blog\/life-insurance-benefits-and-disadvantages\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\" id=\"benefits\"><span class=\"ez-toc-section\" id=\"Benefits-of-life-insurance\"><\/span>Benefits of life insurance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Emergency-planning\"><\/span>Emergency planning<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><a href=\"https:\/\/www.tickertape.in\/blog\/using-and-rebuilding-an-contingency-fund\/?utm_source=blog&amp;utm_medium=article\">Emergencies<\/a> always come unannounced. While you might not be able to avoid them, you definitely can formulate a financial plan in advance to face them. Life insurance is that financial plan &#8211; a policy that covers the risk of untimely death. In the case of such an untoward incident, the policy pays a financial benefit to the family to ensure that they are able to tide over the sudden financial crunch and are able to get back up on their feet.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Financial-security\"><\/span>Financial security<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The objective of life insurance plans is to provide financial security. These plans promise a death benefit in the case of untimely death. As such, you get security in the knowledge that your family would be financially protected even when you are not around to provide for them. Moreover, with the financial assistance provided by life insurance plans, your financial goals can also be met.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Tax-benefits\"><\/span>Tax benefits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Life insurance plans provide attractive tax savings. The premiums that you pay are allowed as a tax-free deduction from your taxable income. You can claim a deduction of up to Rs. 1.5 lakh under Section 80C. Besides the <a href=\"https:\/\/www.tickertape.in\/blog\/what-is-an-insurance-premium\/?utm_source=blog&amp;utm_medium=article\">premium<\/a>, life insurance benefits also enjoy tax exemptions. The death benefit is fully tax-free. The maturity benefit, on the other hand, enjoys tax exemption under Section 10 (10D) subject to certain conditions.&nbsp;<\/p>\n\n\n\n<p>So, life insurance plans can help you create a tax-efficient corpus, all the while providing coverage against untimely death.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Easily-available\"><\/span>Easily available<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>With the popularity and penetration of the internet and smartphones, buying life insurance plans has become quite simple. All it would take is a few clicks to get you and your family insured. The easy availability has drawn the common public more towards getting insured through life insurance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Affordable\"><\/span>Affordable<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Life insurance plans are affordable. They allow you to pick the most suitable premium payment mode depending on your financial lifestyle. You can pay the premiums throughout the policy tenure, for a limited time or even in one lump sum when buying the plan.&nbsp;<\/p>\n\n\n\n<p>Moreover, insurers allow you the choice of the premium paying frequency. You can choose to pay the premium as an annual expense or through the half-yearly, quarterly, or monthly modes. Thus, whatever your budget, life insurance can fit into it as you have the option of a flexible premium payment mode.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Wide-range-of-plans\"><\/span>Wide range of plans<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There are different <a href=\"https:\/\/www.tickertape.in\/blog\/types-of-life-insurance\/\">types of life insurance<\/a> plans, each with its own set of benefits. You can choose different plans depending on your financial goals.&nbsp;<\/p>\n\n\n\n<p>Have a look at how the different types of policies fit different financial needs:&nbsp;<\/p>\n\n\n\n<ul><li>A <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-buy-term-insurance-in-your-20s\/\">term insurance<\/a> plan helps you replace your income in your absence and fulfils the income replacement need.<\/li><li>Endowment and money back plans help you save and get a guaranteed corpus.<\/li><li><a href=\"https:\/\/www.tickertape.in\/blog\/difference-between-ulip-and-mutual-funds\/?utm_source=blog&amp;utm_medium=article\">ULIPs<\/a> help you earn investment returns.<\/li><li>Child plans help you create a secured corpus for your child.<\/li><li>Pension plans help you <a href=\"https:\/\/www.tickertape.in\/blog\/age-wise-retirement-planning\/?utm_source=blog&amp;utm_medium=article\">plan for retirement<\/a>.<\/li><\/ul>\n\n\n\n<p>Whatever be your financial needs, life insurance can prove to be a right fit.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"drawbacks\"><span class=\"ez-toc-section\" id=\"Drawbacks-of-life-insurance\"><\/span>Drawbacks of life insurance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Long-term-contract\"><\/span>Long-term contract<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Life insurance plans are long-term contracts as their primary objective is insurance cover. So, if you are looking for shorter maturity periods, expect large expenses on the horizon or need liquid cash, life insurance policies would not be a good fit.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Technicalities\"><\/span>Technicalities<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Life insurance is a technical concept that comes associated with different terms and conditions. Unless you understand the workings of the policy, you will not be able to unlock its full potential. As such, there is a danger of being misled or mis-sold a policy that does not fulfil your needs.<\/p>\n\n\n\n<p>To avoid this possibility and to buy a suitable plan, you might need to consult with a trusted financial advisor.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Limited-benefit-on-premium-discontinuation\"><\/span>Limited benefit on premium discontinuation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>If you opt for a regular or limited premium paying term, you are required to pay the premium for the specified tenure. If you, however, discontinue the premiums, you will lose out on the benefits. Though the coverage might be allowed under some plans if you have paid a certain number of premiums, the benefits payable on death or maturity would be considerably reduced.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Not-enough-liquidity\"><\/span>Not enough liquidity<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As life insurance plans are long term investments, they have limited liquidity. If you need instant <a href=\"https:\/\/www.tickertape.in\/blog\/health-insurance-emergency-fund\/?utm_source=blog&amp;utm_medium=article\">funds for an emergency<\/a>, this policy might not come to your aid. Though policy loans are available and ULIPs allow partial withdrawals, the facility to exit the policy is limited. Even if available, it involves a considerable loss of investment.&nbsp;<strong>&nbsp;<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"should\"><span class=\"ez-toc-section\" id=\"Should-you-buy-a-life-insurance-policy\"><\/span>Should you buy a life insurance policy?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Given these pros and cons, you must be wondering if life insurance plans are worth buying?&nbsp;<br><strong><em>Well, the answer is, of course, they are!<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The coverage available under life insurance plans is not available under any other investment avenue. Life insurance helps you plan for emergencies and the associated financial loss. By ensuring financial assistance in the case of death, they give financial security. So, assess the pros and cons of life insurance plans and then <a href=\"https:\/\/www.tickertape.in\/blog\/why-should-you-prioritise-investing\/\">invest<\/a> in suitable policies that align with your financial needs.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Want to know if buying life insurance is beneficial or not? Click here to know what is life insurance, what are its pros and cons and choose the life insurance that suits your needs.<\/p>\n","protected":false},"author":45,"featured_media":6359,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"no","_lmt_disable":"no","footnotes":""},"categories":[8,1737],"tags":[960,1167,1168],"acf":[],"modified_by":"Anjali Chourasiya","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2022\/01\/5-1-1.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6357"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/45"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=6357"}],"version-history":[{"count":3,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6357\/revisions"}],"predecessor-version":[{"id":8572,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6357\/revisions\/8572"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/6359"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=6357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=6357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=6357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}