Insurance not only provides security cover to you and your family, but it also works to strengthen your financial portfolio. In the recent past, people have understood its importance and now people are making insurance a part of their financial portfolio. If you have any kind of confusion about insurance in your mind, then know the 5 reasons here, after which you will understand why it should be included in your financial portfolio.

1. Risk Protection

The biggest advantage of insurance is that it protects you from the uncertain risks of life. Whether it is health-related expenses, life protection, or protection of your home and car, insurance reduces your financial loss. Life insurance provides financial security to your family in your absence.

Health insurance is useful in medical emergencies.

2. Long-Term Savings & Investment

Insurance plans not only provide protection from risk, but they also provide investment options. Plans like Unit Linked Insurance Plan (ULIP) give market-based returns. Endowment Plan gives you good returns after a fixed period.

3. Tax Savings

By investing in insurance plans, you can also save on tax. For example, tax exemption is available on life insurance premiums under section 80C. At the same time, exemption can be availed on health insurance premium under section 80D.

4. Retirement Planning

A regular income source is needed after retirement. Financial security can be ensured after retirement through Pension Plans. Annuity Plan becomes a source of regular income. An annuity is an insurance product, in which there is a kind of contract between you and the insurance company. In this, the person has to invest a lump sum. In return, you will be paid monthly, quarterly, or annually in the future. An annuity is used as part of the retirement portfolio. In this, you get a fixed income as long as you are alive.

5. Family's Financial Security

Life insurance works to provide coverage to your life and plays an important role in securing the future of your family. In this, there is a contract between a person and the insurance provider. According to this contract, if any kind of accident happens with the insured person and he dies in it, then a certain amount is given by the insurance company to his nominee or family members as financial help, that is, it helps your family at the time when they need money and support the most. There are many types of life insurance plans and they provide coverage accordingly.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.