Life insurance helps in providing financial cover in case of emergencies associated with human lives such as death, accident, disability, etc.
If you have a life insurance policy, then your insurance provider would provide your family members or beneficiaries with a sum assured amount in case of your untimely demise. This amount obtained by your family/beneficiaries is known as a death benefit, which is completely tax-free.
Moreover, most of the life insurance plans also come with maturity benefits. So, if the life assured is alive by the end of the policy tenure, the insurer will pay the maturity benefit. But the question is, should individuals buy life insurance policies at all?
Necessities of Purchasing Life Insurance
- Life insurance would ensure that your immediate family has adequate financial support even when you are no longer with them
- A life insurance policy would help you in saving for the future so that you have a constant source of income to lead your life comfortably after your retirement
- A life insurance policy would be helpful if you have financial liabilities or debts such as various types of loans i.e. home loan, car loan, etc. and your family can pay them back by using the sum assured obtained in case of your untimely demise
- Moreover, tax benefits can be availed by the premium paid out for life insurance policies
- Furthermore, you enjoy peace of mind if you have life insurance as you have a backup plan for contingencies coming up in the future.
Individuals and the Purchase of Life Insurance
Usually, the idea underlying the purchase of a life insurance policy is to leave something for your partner or your children. The corpus left behind by you would ensure that your family has a stable source of income for any upcoming requirements in the future. However, a major part of our Indian population does not have a life insurance policy still due to lack of awareness and education. Some of the major factors which would motivate you to purchase a life insurance policy can be
a. Single Today, a Family Man Tomorrow
This is quite obvious; even if you are single today does not imply that you would be single even tomorrow. You would get married and settle down in the future. Each individual should have a life insurance policy to ensure their loved ones are covered later. So, the earlier you buy it, the better it is.
b. Pay Off Debts
You might be having some debts or loans which you would have taken. It can be a car loan, a home loan, or any other items taken on credit. These debts need to be cleared off and if you face an untimely demise then your life insurance policy would help your family members to pay off these debts. You don’t want your elderly parents to suffer the burden of loan repayment. Therefore, the sum assured as obtained by your beneficiary from your life insurance policy can be used to clear off your old debts after your demise.
c. Taking Care of Loved Ones
Life insurance of an individual is always not only to secure the spouse or children but also for securing the future of some other family members who might be dependent on you. Your parents or siblings who are a part of your family might suffer due to your sudden demise someday. Your parents might need some financial aid with their retirement, your sibling might need some help with his education and when you are not around to help them, the sum assured obtained from the life insurance policy would help them. Thus, as an individual, you have to provide for them too. Many people feel if their spouse and kids will be comfortable, they do not see the need for life insurance.
d. Taking Care of Business
If you have your own business or you are an entrepreneur, your untimely demise or any permanent illness can cause your entire business to be derailed. The finances and work both in your company would hamper. Similarly, if you are a partner in a firm or company your company might suffer in your absence. In these scenarios, life insurance is important. The sum assured obtained can be used to keep your business going either a sole proprietorship or a partnership.
e. Lower Premium
There might be some medical history related to your parents such as heart ailments, diabetes, hypertension, etc. You might get diagnosed with any such health conditions in the future. However, you are healthier now and with increasing age, you might have health issues which would lead to an increase in your life insurance premium. Plus, with growing age, the risk of death increases, so the premium. So, it is wiser to purchase your life insurance now when you are young and healthy even though you are single.
f. Retirement Planning
Life insurance can also be considered as a disciplined saving tool. It would help in the creation of a corpus which can help you to have an independent retired life. A life insurance policy would be your support system post-retirement. Through insurance plans, you would be saving or rather investing in a corpus from which you can obtain annuities at specific intervals after your retirement.
Hence, human life cannot be valued but a particular amount of monetary sum can help to minimise the problems faced by the near and dear ones up to a certain extent. Even if you are yet to start a family and have no dependents currently, you have people for whom you care about and it is always good to start your financial planning from a young age itself. You must do proper research about the various life insurance policies available, compare the policies online and purchase the one that would be suitable for your needs.