Insurance as a Social Security Tool: 5 Reasons You Should Have It & Your Top 5 Choices
Insurance as a social security tool is underrated. Can you think of financial tools that protect you and your loved ones against the worst times? You will probably not be able to think of anything beyond life insurance. Yet people fail to see its importance.
With a host of benefits like providing financial independence, social security, and a standard of living to your loved ones in unfortunate times, life insurance is by far the best way to contribute to a secure and stable future. To understand the ins and outs of insurance, let’s take a look at the benefits of insurance and why you should opt for it.
When a person starts earning, the first obvious step in his financial planning journey is to get life insurance. It helps risk to be managed and aims to cover life at considerably low savings and low investments in the long run. So, what does this contract between you and the insurance company look like? There are different aspects to it. Let’s examine insurance as a social security tool closely.
What is Life Insurance?
The textbook definition of life insurance is A financial contract between a person and an insurance company wherein the insurance company agrees to pay an assured sum to the beneficiaries upon the death of the deceased (policyholder).
What Are the Different Aspects of Life Insurance?
To be more educated on life insurance, let’s take a look at the economic, social, and legal aspects of life insurance:
- From an economic viewpoint, life insurance can help your family manage debt or mortgages in the unfortunate situation of you not being around. Risk is managed better with insurance especially when the sole breadwinner in a family passes away. This contributes to the overall economic capital stability of households.
- Insurance is equally as beneficial for businesses. Owners of businesses who offer insurance to their employees are likely to maintain a high retention rate because the families of the insured employees find a personal safety net with being insured. Besides entrepreneurs and business owners use life insurance for their selves so that they can provide funds for succession planning and to cover members at key positions within their business.
This is what life Insurance as a Social Security Tool means to people in the economic sense of the term. Let’s look at what it means socially.
- Life insurance is often thought of as a socially responsible tool used by people. Some insurance policies allow for policyholders to name charitable organisations as beneficiaries which helps promote noble causes and encourages altruism.
- The death benefit feature of life insurance helps individuals feel more secure in life with their families covered and managed financially. Besides, the social safety net for them ensures that the already strained social support system in the country is not strained further. This social capital contributes to the overall well-being of communities.
These social benefits are clubbed with legal benefits. Read on to find them out!
- Life insurance policies, essentially binding contracts, hinge on adherence to terms, a crucial commitment for both you and the insurance company. Your rights as a policyholder are safeguarded, right from enjoying a grace period for premiums to contesting denied claims.
- Beyond the legal realm, tax considerations play a pivotal role, with provisions often granting tax advantages, such as tax-free benefits for your beneficiaries and tax-deferred growth in cash value.
Now that you know the social, economic, and legal aspects of insurance as a social security tool, let’s hop on to how insurance will help you contribute to your financial security in the long run.
Insurance as a Social Security Tool: 5 Reasons Why You Need It
Now it’s time to talk about the 5 solid reasons that should compel you to get covered. So, let’s get ready!
1. Keeps Your Finances Secure
Life insurance is a top tool to make your family feel secure in their finances in case misery befalls them. With the total sum payable your family will be able to maintain their standard of living, cover ongoing expenses, and meet financial obligations. It will provide financial stability to your loved ones without going through any legal complications. In challenging times, insurance serves as a robust social security tool for policyholders’ family members.
Life insurance is a great retirement planning option too. It helps manage risks in older age as a person gets more exposed to the fragilities of life. Moreover, life insurance is a great retirement planning option too. As individuals age, the need for financial security becomes even more critical. Planning for retirement involves safeguarding against uncertainties, and life insurance offers a reliable way for risks to be managed during the later stages of life. It can contribute to building a financial safety net, ensuring a comfortable and secure retirement for you and your family.
2. Helps Community Stay Steady
If we take the individual to the societal level, we could conclude that insurance helps even the community stay secure and better managed. It contributes to the stability of communities by preventing financial crises among families. When individuals are adequately insured, the community as a whole becomes more secure. A policyholder’s family can navigate unforeseen circumstances without relying extensively on the public support system. This fosters a self-sufficient and interconnected society that is better equipped to handle economic challenges collectively.
3. Supports Investments and Business
Life insurance can be instrumental in supporting investments and business efforts. With life insurance, beneficiaries inherit a lump sum that can facilitate them to continue business or help fund investments. It helps finances to be managed better. This infusion of capital can prevent the disruption of entrepreneurial ventures and contribute to economic growth within the community, promoting financial stability on a broader scale.
4. Shields Your Belongings
Beyond personal financial safety, life insurance can make you feel secure about your assets. It makes sure that beneficiaries receive a financial cushion to protect their homes, businesses, or investments. This actively avoids the forced liquidation of these assets to cover debts or expenses, preserving individual and family wealth and maintaining the economic capital of the community. This is another point that goes on to prove Insurance as a Social Security Tool.
5. Offers Chances for Employment:
Though not in a direct way, life insurance helps sustain employment opportunities. How so? Life insurance helps business owners and their families feel secure about their finances and how their assets will be passed down. With this surety, businesses and enterprises continue to thrive. This environment helps them run smoothly, which in turn, ensures that the number of employment opportunities is kept up! Therefore, life insurance plays a role in sustaining employment opportunities and fostering economic vitality on a big scale by providing the necessary capital for business continuity.
With this, you now have 5 big reasons to get life insurance. If you feel convinced of getting it, jump on to the next section to find a list of options to choose from.
Top 5 Life Insurance Policies
Check out this table to find top 5 insurance policies, their providers, and their key features.
Aditya Birla Sun Life
Aditya Birla Group and Sun Life Financial Inc.
HDFC Life Click 2 Protect Plus
SBI Life eShield
Future Generali Care Plus
Future Group, Generali Group, ITL
Aviva Life Insurance
By now, you have seen Insurance as a Social Security Tool. You are equipped with information on the economic, social, and legal aspects of insurance, reasons why you should get it, and your top 5 options. Regardless of your age or background, you need to be educated on life insurance. Whether you’re approaching retirement or you’re starting to earn your bread, you must get life insurance. To be better managed with your finances, keep checking out this space!