Life Insurance gives financial security to your family after your demise. Read on to know a few situations where you should buy Life Insurance.
Life Insurance is a necessity in this unpredictable world. It provides financial security to the family in the event of the insured person’s death. To understand this better, let us understand the case of Mr. ‘A’, who was married with a daughter. At the age of 30, he had a well-paying job as a marketing manager in a top firm. He felt he was too young to buy a life insurance. But one day, Mr. ‘A’ met with an accident and passed away. His family struggled for survival. To make the ends meet, his wife started with a tough job as Mr. ‘A’ never paid heed to financial security aspect in the event of his untimely death. A life insurance policy would have given death benefit to his survivors which would have helped them in dealing with the troubled times.
There are many others like Mr.’A’ who shy away from buying a life insurance policy as they feel they cannot afford it. In this article, we give you reasons why life insurance policy is a must.
If You Are The Sole Breadwinner
If you are the only member of the family who is earning, then a life insurance policy for you is a must. In case of your untimely demise, a death benefit would give your family/beneficiaries a sum assured that will help them to live the same lifestyle post your demise. If you wish to see your dependents financially secured in your absence then go for a life insurance policy. It is important when you take a life insurance policy, assess the cover size by considering all your existing EMIs, investments, important financial goals like child’s education and marriage etc.
When You Are Young, Hale, And Hearty
When you take a life insurance policy when you are young it would cost you lesser than buying it at the later stage of life. This would also save you from ailments that affect you at a later age and make premium costlier.
When You Plan To Buy Your First House
Life insurance helps a family pay off the debt like Home Loan, if any, through the death benefit in case of untimely death of the policyholder. So, when you plan to buy a new house, you don’t need to go for a mortgage insurance, which pays the lenders if you default due to various reasons, as you would have a life insurance policy to cover for it. Hence, you can avoid going for an extra cover in mortgage insurance.
Cover Yourself With A Life Insurance Policy Even If You Are Covered By Your Company
A group life insurance policy provided by your company will last as long as you work for your organisation. It will lapse once you change jobs or leave the company. If something happens during the switch, you or your dependents won’t be able to claim the death benefit. Hence, it makes sense to have an independent life insurance cover in addition to the cover provided by your company to secure yourself and your family fully.
For Tax Purposes
A premium on Life Insurance will give you tax benefit under Section 80 C of the Income Tax Act. It serves as a great tool to save tax and carry more money home.
For Investments And Wealth Creation
There are many variants of life insurance policies that help you make investments and create wealth. Traditional endowment policy, unit-linked insurance plan (ULIP) and term policy are the popular variants of life insurance policy. The return on traditional endowment policy is not very attractive and you may end up paying a high premium for the life cover. The premium in this policy includes both investment and insurance portions. In ULIP also, you may have to pay a high premium to get life cover. Since this policy is linked to the stock market, the return depends on the market condition. You can even take loans against your life insurance policies.
For Your Children
You can take a life insurance policy to secure your kid’s future as well. The policy can act as a savings tool for their higher education even if you’re not alive.
For The Elders In Your Family
You may take a life insurance policy for elder members in your family to take care of their needs when you are not around.
A life insurance policy should be purchased after a proper research. You should also share the details of the policy with the family members so that they can get the cover amount in case of a need. You should also review the size of the life cover regularly depending on the changes in your income and lifestyle.