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  • Writer's pictureSahastha

Importance of Life insurance

Updated: Oct 4, 2023

Do you know the significant role life insurance plays in your life? Yes, Over the past few months, the unpredictability of life has made itself more evident. The global pandemic has made us acknowledge the importance of protecting our loved ones. A reliable way to ensure that they are secure even in the face of a crisis is to invest in life insurance. Be ready with your proactive response to deal with anything happens in your life.

If you are earning and have dependents, it is crucial to plan for your family against unforeseen circumstances. You cannot put price on life, but you can ensure that your family isn’t burdened with expense in your absence. Life insurance has the solution to cater to all your financial worries. It will provide your loved ones the financial support they need in the time of emergency.

Make a wise decision for your family future

Your family deserves a future where they can live peacefully and reach their aspirations. As someone responsible for their well-being, it is crucial to evaluate the long-term goals to find a suitable life insurance plan. When it comes to the security and happiness of your loved ones, there should be no room for mistakes. You need to check various aspects before deciding which insurance policy is right for you, also calculate required amount according to survival expenses of your family, child education expenses and other important expenses. However, many people ignore the need to check sufficient amount, which is a huge mistake.

How to buy a suitable plan?

Term insurance is the simplest form of life insurance plan. Easy to understand and affordable to buy. It provides death risk cover. It is a pure risk cover plan that offers high coverage at low premiums. There’s an option to add riders to widen up the coverage. It can offer you that much-required inflow of cash to meet your financial obligations and prevent the drain of your investments in dire situation.

  1. Option to avail a waiver of premium in case of disability or disease.

  2. Accidental cover benefit.

  3. Life-stage protection.

  4. Riders are add-ons to the existing life insurance policy. It provides protection against a list of life-threatening diseases. Since the costs of medical treatment are rapidly rising, such a rider can be immensely valuable.

  5. Flexibility to increase your life coverage through top-ups.

Why Term Life Insurance Plan is a fundamental part of a sound financial plan?

The following are common areas in which life insurance can play an integral part of your financial plan

It is a major source of financial support in the form of sum assured amount to family financially after loss of breadwinner of the family. Dependent wife, kids and parents need to take care of their regular expenses, having enough life insurance in your financial plan prevent your family to liquidate your existing financial assets or downgrade your present lifestyle.

As we know the education cost are increasing rapidly. If you find you are struggling, set aside money for child education while you are alive. How your spouse manages in your absence? You can leave your children the gift of education by factoring educational expenses in to your life insurance policy death benefit.

If a disability or critical illness strike, life will obviously not be the same. Depending upon the severity of the situation you might or might not be able to go back to work. While your medical insurance will take care of the hospital bills, there will be added costs too and your financial goals still need to be met. Having a rider on Life insurance policy for disability/critical illness will eliminate this financial stress.

Also prevent your family to repay the existing financial liabilities like home loan, auto loan, personal loan, or a loan on credit card without your income.

A Real life example

Well I want to share an example. We advised a client, who was 40 years old, with a term plan 8 years ago, after taking a year of financial advice, he didn’t continue with us. Few years later, he called us for a reunion. At that time, there was no significant savings because he had left the job and wanted to start business. All his savings and EPF amount were utilized for his business. But he continued a term plan and home loan insurance as per our recommendation. The very next week after our reunion, he passed away due to brain stroke. Now his family financial situation would have been very difficult without these insurance plans. The family received the sum assured amount. These pay-outs helped the family pay for the home loan with home loan insurance, other personal finance with the term insurance amount. Still his family had 80 lakhs in hand. They will invest this money and generate good income periodically for their regular expense and also for child’s education. So, family doesn’t have to bear the additional burden of financial vulnerability and instability.

Peace of Mind

It is rightly said that without your peace of mind, everything else seems futile. There is nothing more significant than gifting the promise of support to your loved ones for when they need it the most. So, if you ignore it, unforeseen circumstances in life can disrupt the growth of your financial portfolio just like a small hole can sink a great ship. Make sure that your family does not have to go through that trouble. Take expert advice, select right plan to ensure your financial plan does not get disrupted.

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