Insurance offers beneficial financial support. However, not many people in India are aware of these benefits. A report by India’s Insurance Regulatory and Development Authority said the insurance penetration and density rates in India stand at only 2.76 percent. Insurance penetration and density rates measure the insurance market’s levels of acceptance and development.

The low insurance penetration and density rates indicate that it is time for Indians to understand the benefits of insurance. Some of these benefits are as follows.

1. Financial protection. Insurance policies provide the family with financial protection in the event of an emergency. Life insurance policies, for instance, come with a lump sum to support a family in the midst of the policyholder’s sudden death. Some plans even cover family expenses and ongoing financial obligations beyond the policyholder’s death.

2. Investment and wealth creation. Some insurance plans allow the policyholder to invest a portion of the premiums paid in investment opportunities. This gives the insured another income stream. In the long run, insurance may be effective in building wealth.

3. Tax benefits. Insurance plans come with tax benefits. For instance, Section 80C of the Income Tax Act of 1961 allows the policyholder to deduct life insurance premiums from the taxable income of up to Rs. 1.5 lakh per year.