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Life insurance is an important aspect of personal finance. It can be useful not only in providing a cover in case of emergency situations but also in maximizing the retirement benefits.

Three ways in which a life insurance can help you in your retirement plans are as follows:

1. Risk management

A life cover provides for the medical insurgencies and also take care of the required income in the old age. It can supplement the retirement needs by withdrawal or policy loans. Many banks and non-banking financial companies (NBFCs) provide a loan against a life insurance policy. Some policies provide long-term benefits in the form of medical cover and investments, which could be used in the later years of your life.

If the policy is structured correctly keeping in mind the long-term needs, it can cater to multiple needs during the old age. This would shield you against the medical risk and risk of running out of money after retirement.

2. Alternative pension

In case of the policyholder’s demise, a life cover would provide for the income for the surviving spouse. Although traditional insurance schemes mainly provide death benefit, there are a number of life insurance plans that cover the income during the later years of life.

The policy would supplement your income during the golden years. It would cover for your medical expenses and at the same time provide with the money required to sustain. There are a number of pension plans which also provide of life cover.

3. Transfer of legacy

Such insurance plans have tax benefits. A life cover can be used to transfer a sum of money to the next generation. This would be a tax-free asset for the beneficiary.

Some policies can also be used to pay estate taxes and ensure continuity in the family income.

A life insurance trust could also be established to avoid estate tax. This would reap benefits to the grandchildren.

These are the three ways in which a life cover helps you in the later years of your life. A comprehensive insurance plan keeping in mind the needs of your later years may give significant benefits. Thus, it is advisable to avail of a life cover and protect yourself from the unknown insurgencies that may arise in the future years.