Why Everyone in a Family Requires Life Insurance

Life Insurance is financial security for a contingency associated with the life of everyone in a family. This contingency may be an accident, disability, death, retirement etc. But believe it or not, only 10% of people in India are insured under life insurance. It means they may be financially dependent on others in the event of uncertainty.

Why does everyone in a family require life insurance?

Our life is prone to risks of death and disability owing to accidental or natural causes. When the breadwinner in your family loses his/her life or becomes disabled permanently or temporarily, there is a loss of income to the household.

Do you know many people die prematurely every year from illness or accident? A lot of people have died during this pandemic at their mature age. Assume the life of a family whose sole breadwinner passed away due to COVID-19. The family might have devastating consequences – paying household expenses, children tuition fees, debts and maintain their standard of living.

No doubt, human life cannot be valued, but financial help could be determined based on the loss of income in future years. So, the least you can do is to secure the financial future of your family by buying a life insurance policy. Never underestimate the importance of life insurance especially if you are young.

How Life Insurance Works in Everyone’s Life

Under a life insurance policy, if the policyholder or the insured person meets an unfortunate death, then a death benefit equal to the total sum assured is paid to the beneficiary of the policy. In other words, in life insurance, the Sum Assured paid is by way of a ‘benefit’.  It provides a pre-determined amount of money if the life insured passes away due to any reason, including coronavirus during the term of the policy or becomes disabled on account of an accident. However, the beneficiary needs to claim the amount and receive the benefit.

Why Everyone Should Buy Life Insurance:

When it comes to the economic value of every family member’s contribution to the family, even housewives need life insurance cover. Children need life insurance in view of their future income potential being at risk. Taxpayers need insurance to save tax. With life insurance cover, every individual member in the family can fulfill their dreams without being financially dependent on others. They can enjoy the lifestyle they tend to live.

What else is that every one of us is facing the risk of dying too soon and living too long. In both situations, life insurance is very helpful. Explore why it is required for everyone:

  • For financing the education of your children and fulfilling other needs
  • For ensuring that your immediate family will not have to face financial problems. They should instead have some financial support in case you die
  • For having a savings plan in the future so that you do not depend on others after retirement and you have a constant source of income after you retire
  • For having an extra income in case your earnings are reduced due to an accident or serious illness
  • For saving taxes with the insurance policies. The Premium you pay on the life insurance comes under tax exemption benefit under Section 80C and for tax-free proceeds on death/maturity under Section 10 (D) of the Income Tax Act, 1961. The maximum benefit under section 80C will Rs. 1.5 lakh.

An effective financial tool for your business – A life insurance policy is also an effective financial tool to protect your business if something bad happens. For example, if you start your own business with a partner who dies prematurely. Do you think you will be able to manage the funds required to buy his or her shares and continue growing this business? No. this is where life insurance plays a major role in everyone’s life in a family.

Conclusion

Life insurance is important in everyone’s life. There are certain factors that need to be considered when deciding on life insurance amounts. These factors are the kind of lifestyle you want to provide to your family, the amount of money you need for your children’s education, your different investment needs and much more.

It is advisable to seek the help of a broker or an insurance agent to understand your life insurance needs and understand the right type of cover for you.

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