Insurance is rightly termed as the foundation of all investments. Investment experts believe that at least 10-15% of your annual salary/income should go towards insurance before putting your surplus in any other investment. This not only ensures your family’s security but also provides you peace of mind.

Reason 1
Opening up of the insurance sector
The opening of the sector has not only brought in various players in the market, but has also brought a variety of innovative products on display. Though Life Insurance Corporation (LIC) is the leading insurer till date, not many of its products are popular. The new breed of private insurers have rolled out many products that can be designed to meet your specific requirements and provide you the comprehensive solution in one plan. The plans of the private insurers will try to outperform LIC in terms of premiums, service as well as the bonuses provided to the customers.

Reason 2
If you have not purchased insurance in last two years:
At every stage of your life, your life insurance needs should be analysed and reworked to determine whether you have adequate insurance of the right type (term, endowment, whole life, pension). As a thumb rule you need to assess this every two years with reference to your requirements and the products available in the market.

Reason 3
Taxation
Taxation season has set in and insurance is the ideal product that provides you the maximum tax benefit. Under section 88, you receive 20% tax benefit up to a maximum amount of Rs 60,000 paid by way of premium. The amount received on either claim or maturity is entirely tax free under section 10 (10D).

Reason 4
Safe investment
Endowment, money back, single premium and other investment-related insurance plans have a bonus component that accumulates over the tenure of the policy. In a way, these plans are forced savings that the individual may not have done otherwise. Investments are regulated by IRDA (Insurance and Regulatory Development Authority) and the risk is mitigated to a large extent.

Reason 5
Planning for retirement
Another reason you need to look at insurance is to plan for retirement. Post-retirement, a lot of people end up depending on their relatives and friends for subsistence. This is mainly due to the fact that they ignored saving for retirement in their working years. Insurance calls for more discipline than other investments like fixed deposits and mutual funds, which have a lower lock-in period thereby giving investors the freedom to encash the proceeds.

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