People often get confused about what to gift to their loved ones on Christmas. It’s always the best idea to gift your family a secure future, says Harjot Singh Narula
When it comes to giving gifts on Christmas, gifting a comprehensive financial protection for your entire family is a wise move. You need to make sure that your family is completely protected in your presence and even when you are not around.
Ensuring financial cover for your family is of prime importance and is not restricted to allocating money towards one financial investment. Rather a 360 degree holistic financial protection is imperative.
Investing in plans which help you to build wealth, offer financial protection and optimum returns help you achieve your life’s goals as well.
If you wish to be your own Santa this Christmas, here’s what you can gift to your family.
Ensure you have a life insurance policy for your family
Buying a life insurance policy offers you the life cover. A life insurance policy provides financial security for your family and loved ones, even after your death.
An amount equal to the sum assured is payable to the family, upon your demise during the policy tenure.
You have the option to choose the sum assured that can fulfill all the needs of your family. Getting an adequate life cover ensures your family’s financial future.
With the help of a life insurance policy, your family can lead a financially independent life, even after your unfortunate and untimely demise.
Along with offering financial protection, life insurance policies also offer tax benefits to reduce your tax liability.
- The premium paid for a life insurance policy is eligible for tax deduction up to Rs 1.5 lakh under section 80C of the Income Tax Act, 1961
- Tax exemption on the policy proceeds is also available under section 10 (10D) of the Income Tax Act, 1961
Ensure you gift a health insurance policy to combat growing health care costs
Illnesses may strike to anyone and medical expenses incurred due to any hospitalisation or medical treatment will burn a hole in your pocket.
In case, you are not covered by a health plan, you need to pay the medical bills from your pocket and it may drain your existing savings. It is thus essential to get a health insurance cover.
Having a health insurance plan helps you to take care of medical costs incurred. To avail the benefits of health cover, you only need to get hospitalised for 24 hours.
You can buy a family floater plan that provides coverage against health care expenses for your entire family. You can also enhance the health cover by choosing add-ons such as critical illness cover, hospital cash cover, room rent waiver, etc.
If purchased already, an individual health plan can also be enhanced to provide the health cover for your entire family with the help of a top up or super top up policy. A health cover ensures that your family is financially protected in the event of a medical emergency.
In addition to the health coverage available against medical expenses incurred, a health insurance policy also offers significant tax benefits.
- The health insurance premium paid for immediate family (self, spouse and dependent children) can claim tax deduction up to Rs 25,000 under section 80D of the Income Tax Act
- If you are buying health insurance for your senior citizen parents, you are eligible to claim an additional tax deduction of Rs 30,000.
ULIPs can be considered for wealth creation
A ULIP (Unit Linked Insurance Plan) is a market-linked plan that helps an investor to build his/her wealth.
A ULIP plan is a mix of investment and insurance component, under which a small amount of the premium goes to ensure life cover and the rest of the premium amount is then invested in funds available that will help you to grow the money.
This investment plan helps you plan the future of your family and you can achieve your and your family’s dreams and aspirations such as higher education for your child, going for a dream vacation abroad, your child’s marriage, etc.
In addition to providing investment returns, a ULIP plan also offers tax benefits.
- The annual premium amount under a ULIP policy is eligible for a tax deduction up to Rs 1.5 lakh under section 80C of the Income Tax Act.
- The maturity proceeds are tax free under Section 10 (10D) of the Income Tax Act. This tax exemption is applicable, provided the annual premium payable is less than 20 per cent of the sum assured.
- For pension ULIPs, the commutation amount (one-third of entire accumulated corpus) is tax free under section 80 CCC of the Income Tax Act.
Bottom line
People often get confused about what to gift to their loved ones on Christmas. It’s always the best idea to gift your family a secure future.
Buying a life insurance and health insurance ensure a complete financial preparedness against odd events. Having a ULIP plan helps you create wealth that you can utilise to fulfill various financial goals.
Not only financial backup, insurance plans also offer tax benefits. Thereby, you can save money on taxes by buying insurance.
Be your own Santa this Christmas and gift a worry free future to your loved ones!
Photograph: Anderson W Rangel/Unsplash
Harjot Singh Narula is founder and CEO, ComparePolicy.com
