There are savings-oriented life insurance plans, like endowment or unit linked insurance plans, that can help you save and create a corpus for your dream home. Here are some reasons which make life insurance plans a good choice for home planning –
1. Different choices for different individuals
As mentioned before, you can choose from different types of life insurance plans to save up for your home loan’s down payment. For instance, if you want to create a corpus which is not exposed to market risks, you can choose traditional life insurance plans, like endowment or money back plans, to create a safe corpus. On the other hand, if you want to earn market-linked returns on your premiums, you can choose ULIPs and create a corpus over time.
2. Flexibility
You can determine how much corpus you want to create for your home and then align the policy tenure to meet your goal. For instance, if you want to buy a house after 10 years, you can choose a policy tenure of 10 years after which the maturity benefit can help you in making the down payment.
Similarly, you can choose the sum assured and premium payment frequency which align with your financial plan.
3. Life Insurance coverage
Needless to say, life insurance policies offer life insurance coverage during the policy tenure. This provides financial security to your family members that in the event of your untimely demise your family would be financially secure. The death benefit can help your family fulfil your dream of owning a home even when you are not around.
4. Tax benefits
Life insurance plans also offer tax benefits when you save and also when you receive the benefits. These tax benefits help in creating a tax-efficient corpus. For instance, the premiums paid for life insurance plans qualify for a tax deduction under Section 80C up to ₹1.5 lakhs, in case of old tax regime. Similarly, the policy benefits are also tax exempted under Section 10(10D) of the Income Tax Act, depending upon certain conditions.
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