Life insurance is in for exciting times as a long-term savings tool. with optimism around a stable government and revival of the stock market, overall sentiments have been positive.
This coupled with the prospects of a better economic future has increased the confidence level of Indians leading to higher appetite for savings and investment products.
India offers a bouquet of savings and investment options from bank deposits, mutual funds, provident funds, pension funds and of course insurance, to name a few. The question is why do you need to give greater attention to life insurance products during 2015?
Life Insurance offers an attractive range of products to serve various life-stage needs. While Ulips have undergone a complete makeover with lower charges, traditional products too have been overhauled to deliver higher value to customers. Both have been redesigned to yield better long-term outcomes for the customer.
Guaranteed product solutions from life insurance are the only financial instruments that truly offer long-term guaranteed returns and income streams, which can help support a family's long-term planning for liquidity and life-stage events.
Similarly, the revised pension plans from life insurance come with inbuilt capital with compulsory annuitisation providing a steady stream of income in old age. It has been observed that post-retirement income is seen as one of the primary needs fulfilled by life insurance. However, most Indians postpone this need to their 40s and beyond.
While it is suggested to start planning for retirement right from the beginning of the career, life insurance offers solutions for late starters as well. And then of course, with life insurance companies providing their expertise in managing both life-expectancy risks and investment risks, world over life insurers play an important role in providing annuities to retiring population.
One of the most attractive features of life insurance is the ability to provide stable returns along with adequate risk cover and underlying income tax benefits. This is particularly true of traditional products and multiple consumer research confirms, this is what the majority of Indian consumers are looking for. The overall products mix of the life insurance industry with share of traditional products that stood at 93% in 2013-14 is also a reflection of customers' preference.
In the Union Budget 2014, the income tax benefit has been improved through initiatives like increase in 80C limits from Rs 1 lakh to Rs 1.5 lakh, increased exemption up to Rs 2 lakh on interest on loans pertaining to self-occupied house and an increase in personal income tax slab from Rs 2 lakh to Rs 2.5 lakh. This change offers an opportunity to reduce tax burden by investing in long-term savings through life insurance.
So as 2014 comes closer to its end, it is time to build the habit of disciplined savings to ensure that small sacrifices today help you ensure bigger happiness for you and your loved ones in the future.
Rajesh Sud is the CEO and Managing Director of Max Life Insurance