Life Insurance is always considered as the foundation stone by the financial experts for good financial planning and is an important thing for people to deal with for safe guarding the financial interests of the family as it deals with the after math of unfortunate events. In this article I have tried to cover life insurance basics and also listed out the top reasons why one should purchase life insurance and who really doesn’t need to buy life insurance.
Life Insurance Basics – What is Life Insurance?
Life Insurance is a contract that we sign with an insurance company to protect our loved ones in case of death of the insured person for which the insurance company usually charges premium (read money) depending on the risk profile of the person. In simple terms, life insurance helps you in securing the financial status (including your liabilities, provided you are properly insured) of your family in case of an unfortunate event.
Why Does One Need Life Insurance?
As stressed out, the loss of a person for a family is irreplaceable and if he/she is the breadwinner one cannot imagine the stress that a family have to handle at a time of unfortunate loss, just imagine a family having no/proper income source and have bills/loans/liabilities to handle and you will understand the importance of Insurance and why you should have one.
Life insurance is primarily for those who are the breadwinner of the family and your family is financially dependent on you and it is a must if you have loans/liabilities. For a family who are dependent on a single person’s income, life insurance can help them in replacing the income of the person in case if he/she dies and will help with in handling the crisis.
Top Reasons Why Should Buy Life Insurance
You Never Know the Risk
Every one of us is certain that nothing will happen to us and even I pray for the same but we never know what’s there in store waiting for us, to speak worse it could be an accident, unexpected illness or could be in another form. So it is one’s primary responsibility to fulfill the financial interests of the family and no one wishes our loved ones to face financial stress for handling recurring expenses like food, bills, education, etc., in our absence.
Loans and Liabilities
Loans could be in the form of car, home or personal and your family may not be in a place to handle the debts that you have and your death shouldn’t be debt for your family and it will be an extra burden to carry in addition to the emotional loss which they already have.
You Can’t Buy Life Insurance When Required
Imagine a situation where in you want to buy the insurance but postponing it for various reasons known to you and in the due course if you develop a critical illness with a risk of life (if not immediately but is certain in future) and in that moment even if you wish to buy insurance you may not get it depending on the risk profile you carry, so it always makes sense to buy insurance when you really don’t need it and just in case when you need it will come handy.
Peace of Mind
What else can give you peace of mind other than insurance which gives you protection for the uncertainties that we carry on our shoulders, although no amount of money can ever replace the loss of a person but it gives YOU peace that your family will ever need to suffer in your absence.
Tax Benefits offered on insurance premiums should never be the reason but to make you rejoice or to stress importance of the insurance government is offering tax rebates (under section 80C in India) for the amounts you pay as premiums with ceilings as applicable.
Who Doesn’t Need Life Insurance?
Is life insurance a must have for everyone? NO, if one matches with anyone of the following criteria they definitely don’t need Life insurance:
- If you are single and have no dependents.
- For those whose spouse is earning enough to handle the finances.
- For those who doesn’t have any financial liabilities.
- Your kids have grown and are financially settled.
- For a person whose family is wealthy enough to handle finances even in case of your absence.
In this article I have tried my best to cover the basics of Life Insurance, its importance and role it can play in a person’s life and the essential categories of people who need to buy insurance. In future articles I will cover the kinds of insurance policies offered by insurance companies in the open market and what type of insurance policy you have to choose in case if you are planning to buy one.
Between Us: If you are one already having insurance and have stumbled upon this article please share your views and reasons why you have bought your policy and what made you choose it? Our readers might want to know about real life examples and learn from others, after all sharing is caring.