“Life is uncertain. Eat dessert first.” This humorous quote by American author Ernestine Ulmer highlights the unpredictability of life and the need to enjoy it to the fullest while we can. While this quote brings a smile to our faces, it also reminds us that we need to live prepared for the unexpected. One way to do this is by incorporating life insurance into our estate planning. In India, estate planning is a subject that is often associated with morbidity and avoided due to superstitions and cultural beliefs, which are inconvenient. However, it is essential to understand the importance of estate planning and the role life insurance can play in ensuring that your assets are distributed according to your wishes and that your loved ones are well taken care of.
Contrary to popular belief, estate planning is not a privilege reserved for the wealthy. It is a process of preparing for the management and distribution of your assets and liabilities in case of your death or incapacity. This is for everyone. Without proper estate planning, your affairs may be settled by law, resulting in unwanted consequences for your loved ones, such as higher taxes, legal fees or disputes.
An important component of estate planning that is often overlooked is life insurance. Life insurance is an important component of estate planning as it provides financial security and liquidity to the surviving family members in the event of an unexpected death. other assets like real estateFixed deposits, stocks and gold have their own advantages, but they cannot replace the financial security and liquidity provided by life insurance. Life insurance ensures that your loved ones receive an adequate payout that can help them maintain their lifestyle and secure their financial future.
benefits of life insurance
Life insurance outperforms other assets in estate planning because of its liquidity and tax benefits, Unlike real estate, which can come with legal hassles, stamp duty, capital gains tax and maintenance expenses, insurance payments are made immediately and without deductions.
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Also, while FDs, stocks and gold can attract taxation and market volatility, life insurance policies offer tax savings. Additionally, a life insurance policy can protect assets from creditors and liens because only named beneficiaries can receive payments, while other assets can be seized or attached by claimants in the event of a dispute or debt.
Ahead, Insurance Can help provide immediate funds to your family members that can be used to replace lost income, cover funeral costs and pay off any debts. Life insurance serves three main purposes in estate planning. Firstly, it provides death benefit to the chosen beneficiaries. Second, it provides liquidity which can be helpful with an asset. Finally, it allows loved ones to receive financial support. When you include life insurance in your estate planning, you can rest assured knowing that your loved ones will be well taken care of after your death.
Therefore, take the time to review your options, speak with a financial advisor, and create a plan that works best for you and your family.
The author is Nitin Mehta, Chief Customer Officer and Head of Digital Business at Bharti AXA Life Insurance.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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