It is easy to overlook the importance of insurance. After all, it does not give you any tangible benefits. It is not like buying a car, for example. Insurance becomes useful only during emergencies—after an accident, an illness, or a death in the family. At such times, insurance is crucial for safeguarding your finances. Let us look at how insurance can be helpful for you.

Insurance gives you peace of mind and security

Insurance cannot protect you against tough times, but it can soften the financial blow. Life and health insurance provide you with a deep sense of assurance. You know that good medical care is within your reach. You rest assured that in the event of your untimely demise, the life insurance payout will support your family.

Take the case of Gaurav who died in an accident, leaving behind a dependent wife and child. He also had a personal loan to pay at the time of his death. Thankfully, the life insurance he bought from Bajaj Finserv paid out the death benefit. This allowed Gaurav’s wife to pay off the loan and gain some financial support in the short term.

Insurance helps you prepare for the future

Rising inflation is a drain on your finances. Prices keep going up and there is no end in sight. Even the prices of basic commodities are rising continuously. So, why should the costs of education remain stagnant?

Child insurance policies and money-back insurance policies help you prepare for your children’s future needs. You can use such schemes to save for your children’s education costs. Typically, the returns on insurance products are on the lower side. But the annual premiums over a period of time help you to accumulate quite a bit. Thus, securing your child’s financial future becomes easier with insurance.

In fact, you can use annuity plans to remain financially independent after retirement. By planning correctly, you can get a steady stream of cash every month for as long as you live.

Insurance gives you access to better services

Tanya paid a one-time insurance premium for a Bajaj Finserv health insurance cover of Rs 2 lakh. Later, the insurance covered the cost of a surgery worth Rs 13,000. Two months later, Tanya needed an emergency follow-up surgery that cost Rs 1.3 lakh. Once again, the insurance claim covered the costs.

Tanya did not have to cut corners with her healthcare. Through her insurer’s hospital network, she had access to good doctors and facilities.

This holds even in the case of comprehensive motor insurance. In case of severe damage to your car after a collision, the insurer takes care of most of the costs. You just need to turn up at one of the network repair centres. Without insurance, you would be stuck with a hefty repair bill.

The bottom-line

An insurance policy encourages the habit of saving. Every time you pay a premium of Rs 2,000, it is an investment in your future.

Besides, some insurance premiums are tax-deductible. Under Section 80C of the Income Tax Act, your annual life insurance premiums may be tax-exempt up to a limit of Rs 1.5 lakh. Section 80D gives you exemptions on health insurance premiums of up to Rs 25,000 (Rs 30,000 for senior citizens).

You cannot predict the future, but insurance helps you be prepared. So choose a diverse insurance portfolio to secure the future of your finances.