Most people often don't think about life insurance in their 20's, but it’s probably the best time to think about it.
Although everyone knows the basic importance of life insurance, we still tend to ignore the reality of what could happen if we were to die all of a sudden with no protection? The results can devastate your family, leaving them with unlimited debts, huge bills, and some worst situations that they can no longer handle.
Life is unpredictable and the last thing you want is your family facing a financial crisis. Life insurance seems to be the only ray of hope to safeguard your dear ones in your absence.
The Major Reason People Buy Life insurance
The financial loss incurred by a family if the bread earner dies is the most important reason for buying life insurance. It is like your Plan B, so that your family’s financial future is secured, no matter what. However, there are other reasons too, like child’s education, retirement planning, business safety, loss of income, etc.
There are quite a few severe consequences if you are not adequately insured. The top 5 ones are listed below.
5 Consequences of not Having Life Insurance
1. Family in Long Term Debts
If you happen to die leaving a debt behind for your family, they will be harassed now and then by recovery agents even after your death. However, if you have made the necessary arrangements for repaying the loan by adequately protecting yourself with a Life Insurance Policy, then your family is safe because the loan can be taken care of.
Tip: Protecting your family with a life insurance policy as loan protection is a must for sound financial planning.
2. Secure the Future of Your Kids
Your dream to let your child study in a prestigious university abroad could be shattered if you don’t plan ahead of time. The quality of education is rising and getting better, and kids are expected to be a part of it. For that, the higher education expenses need to be borne, in order to let them grow and become successful. Thus, with a child insurance plan, you can secure your dream of your child’s higher education so that sudden death wouldn’t let them stop achieving their dreams.
Also, child insurance plans have a waiver of premium benefit inbuilt. This means, if you happen to die within the policy tenure, the life insurance company would waive off the future premiums but would continue the policy as per the schedule and then pay the maturity benefit on time. So that your dream for your child’s higher education is not shattered!
3. Your Ageing Parents need Financial Support
Life is unpredictable. And with COVID, we know that one day you can be healthy and then fall sick the very next day. However, you might be financially responsible for a few in your family, including your spouse, children as well as parents.
If that is the case of yours, you need life insurance without any further wait. In an estimate, it was found that 6.2 million youngsters are caregivers to their parents. So, if this is your case too, ensure you protect them with a life insurance policy so that they are financially independent at the post-retirement period of their life. Compare different life insurance policies and pick one that ideally fits your needs.
4. Your Future Security
Businesses do survive even after the loss of a person, but there could be a financial loss if the key person dies. Your family can also be taken care of if there is no financial worry. The emotional loss can never be compensated, but the financial loss can be, with an insurance policy.
Thus, any form of financial backup can be crucial, at any stage of life. It is necessary when you get married, start or leave your job, start your own business, have children, are in need to pay for medical expenses, or planning your retirement period. Thus, at all phases of life, financial security is a must and can get you off-guard if the same is not planned ahead of time.
5. Think about the Taxes
Hard work pays off at the end of every month with a salary, but getting a huge amount deducted is like a pain. If you wish to secure the money earned, try to save income tax as well. Life insurance gives you a great opportunity with Income tax benefits. The Income Tax Act of 1961 says; premium paid by you is eligible for a maximum tax amount of Rs. 1,50,000 per financial year under section 80C of the Income Tax Act, 1961.
Death Benefit is tax-free in the hands of the nominee under section 10(10D) of the Income Tax Act, 1961. Also, the maturity benefit received at the end of the policy tenure is tax-free under section 10(10)D of the Income Tax Act, 1961, subject to the terms and conditions.
Thus, Life Insurance is a unique product which is tax-free from all aspects. And, for you as an investor, family protector, and income saver, that is a huge reason for purchasing a life insurance policy in India.
Life insurance is a very important part of one’s financial planning and should be taken when you have no worry about it so that it comes handy if something unforeseen were to happen to you. Emotionally you can never compensate for the loss of the near and dear ones, at least the financial woes can be taken care off with adequate coverage in the form of a Life Insurance Policy.