Life Insurance

Life is beautiful, but also uncertain. Whatever you do, however smart and hard you work, you are never sure what life has in store for you. It is therefore important that you do not leave anything to chance, especially ‘life insurance’. As death is the only certain thing in life, apart from taxes, it pays to insure it well in advance.

Let Us Explain

If you were to go by the dictionary definition, “life insurance” is a financial product that pays you or your dependants a sum of money either after a set period or upon your death as the case may be. However, if you were to understand the term clearly and also appreciate its importance in your life, consider “life insurance” as a back-up plan for life. Life insurance in its simplest form means being prepared financially, come what may. It ensures that your family and you receive financial support in case you are not able to bring in the much-needed income yourself (maybe due to an accident, retirement, or untimely demise).

In legal terms, life insurance is a contract between an insurance policy holder (insured) and an insurance company (insurer). Under this contract, the insurer promises to pay a pre-decided sum of money (also known as “Sum Assured” or “Cover Amount”) upon the death of the insured person or after a certain period.

The significance of having a life insurance is to avail the "peace of mind" that it brings along. However, having an adequate amount of life insurance effectively sets your mind free of some important questions like:

Now, in order to have a financially secured future, you (the insured) have to pay the insurer (insurance company) a “life insurance premium”, which is either a regular annual payment or a one-time payment as the case may be.

Types Of Life Insurance - Traditional And Market Linked

There are several types of life insurance plans for specific needs. One of the categories is “traditional insurance plans” such as term insurance (pure protection), endowment and money back plans. Such plans offer multiple benefits in terms of life cover and returns, thus providing safety and security to the insured. These policies are considered risk-free. This is because they provide a fixed benefit (Cover Amount) in case of death of the insured person or at end of the term.

The other category is “market-liked plans”, also known as ULIPs (unit linked insurance plans). These provide both protection and savings combined with flexibility to the covered person. As these products are linked to capital markets, they may have the potential to deliver better returns than traditional plans. However, with high returns there is a risk of low returns as well, which will depend on the market’s performance.

Why You Must Buy Life Insurance

Life, as we know it, can throw a surprise at any moment. Surprises are welcome as long as they are pleasant. Rude surprises completely take us by the hook! A heath emergency, an accident, or sudden death – these are some eventualities that you and your family must always be prepared for. That is where the importance of life insurance lies. In other words, look at life insurance as your replacement as far as income is concerned. Thus, helping your family and you get over any kind of financial problems, if you are not able to take care of them. As simple as that!

Do You Need Life Insurance

Well, it’s like asking – Do you want to leave your family financially comfortable after you are no more? Both these questions have no other answer but an emphatic “Yes!” Having your life insured is akin to promising your family that they won’t ever face a financial problem, whether you are there or not. Buying a life insurance is like buying peace of mind for lifetime at a very small cost (the insurance premium). Some people wrongly consider paying a premium as a waste of money. Their common refrain is – “I will rather speculate in the stock market and earn fast money than pay a life insurance premium!” Some say, “Who has seen the future? So why pay premiums for 20-30 years? “What will I do with the money when I am not there?” is one of the funniest excuses for not buying life insurance. Well, if you have similar excuses for not buying life insurance, you need to realize that you are making a grave financial mistake. To help you get over any confusion regarding the need to buy life insurance, here are our three key reasons to buy life insurance today, in case you haven’t bought already:

Buy Insurance For Protection

Insurance is the only financial instrument that helps you protect your family and yourself against uncertainties the future may hold. In fact, it is this attribute of life insurance that brings peace of mind to the insured – that the instrument will protect the policy holder and/or his family against circumstances such as loss of income due to accident, critical illness or even death.

Buy Insuracne For Savings

Two of the best financial advices for all time are – save money and buy insurance. At whatever life stage you are – young, newly married, or nearing retirement – you might have some goals for which you need to save money. Plus you also have an asset – your life – that you need to insure. But what if you get both these benefits (saving plus insurance), using just one financial instrument? Yes, life insurance plans like “endowment” and “money-back” provide you this very benefit.

Buy Insurance For Create Wealth

Apart from “protection”, an insurance product like a ULIP has a strong inbuilt wealth creation proposition. You may have financial goals where you require a large amount of money after 10-15 years. ULIPs fit these needs very well. Plus, you also get an insurance protection.

Should You Buy Life Insurance

Your responsibilities do not end with you. Your family members / dependants depend on you financially. Hence, it is imperative for you to buy life insurance and ensure a financially secure future for your dependants. Without a doubt, life insurance is one of the best financial steps that you can take for your family and you, today!