Role of Life Insurance in Protecting Dual Income Families
Families that have dual income, meaning both partners are earning, may have shared responsibilities. A major part is financial responsibility towards the family. Disruption in any source of income can cause a major financial setback. So, how can a life insurance policy be helpful in this situation? Let's understand:
Risk if One Partner Passes Away
When both partners earn, the financial burden is shared, and it becomes easier to balance expenses. However, if any one of the earning partners passes away, the family can experience a financial crunch. In a family with dual income, the expenses are dependent on both partners.
When you have a term life insurance policy, this financial crisis can be covered to a greater extent. The death benefit paid under the term life insurance policy provides the much-needed financial support in times of need. When you choose a sum assured amount carefully, it can help tackle the financial strain that might arise in the absence of an earning partner.
Joint Planning for India-Based & UK-Based Families
NRIs in the UK may have their family residing back in India. Providing financial security to the spouse or elderly parents in India may also be a major concern for many. If you have families both in India and the UK, joint planning can be a smart decision.
Here’s how you can go about it -
Endowment Plans
Endowment plans also help you create a corpus for your family’s financial goals, but without the risk of market volatility. You can choose participating endowment plans to get bonus additions that can enhance the policy benefits
Money-back Plans
If you are looking for liquidity during the policy term, you can choose money-back plans. These plans, like endowment plans, allow you to build a stable corpus for your family’s needs. Moreover, they pay regular money back benefits that can supplement your family’s income and give you funds at important milestones in your life.
Protecting Children’s Education
In a family with dual income, it may become difficult for one person to suddenly manage the household and the child's academic expenses all alone. To ensure your child doesn't have to compromise because of life's uncertainties, purchasing a child plan makes sense.
Usually, child policies come with a premium waiver benefit, which becomes applicable if the parent who bought the policy passes away. In such cases, the future premiums are waived, but the policy continues without interruption. The insurer company contributes the premium on the parent’s behalf. On maturity, the maturity benefit is paid, which can give your child the much-needed financial assistance for higher education, marriage or any other need even when you are not around.
Conclusion
While dual income can give your family access to better lifestyle choices in the UK, it is equally important to build a financial safety net and plan for your life’s goals. So, use the aforementioned life insurance strategies and secure your and your family’s future in the UK and in India.
FAQs
How can NRIs in the UK pay a premium for Indian life insurance?
NRIs in the UK can purchase Indian life insurance and pay the premium using NRE (Non-Resident External), NRO (Non-Resident Ordinary), international cards, or foreign bank accounts via SWIFT transfer. 2
What are the tax benefits of Indian life insurance?
Indian life insurance provides various tax benefits to NRIs in the UK. These are:
- Subject to eligibility criteria and submission of required documents every year you can wave off the GST if premium paid using NRE account1
- Tax-free death benefit
- Tax-free maturity benefit, subject to specific conditions, under Section 10(10D) of the Income Tax Act of 1961
- Tax deductions up to ₹1.5 lakhs under Section 80C of the Income Tax Act of 1961.
