One of the most common misconceptions young people have today is that they don't need life insurance in their 20s and 30s. However, the decision to buylife insurance is a crucial one– not only for themselves but for their loved ones as well. Do you know why? Because life is unpredictable. No matter how much we earn today, no one can reasonably predict what tomorrow holds for us.
An untimely illness or an accident is enough to derail your life's plans and cast a shadow on your family's financial future, especially if you are the sole breadwinner. The emotional loss notwithstanding, in the absence of a life term insurance, the economic instability can quickly push your family to give up on their goals and aspirations.
To keep your family financially immune in times of crisis and help them cope with life's uncertainties, you must buy life insurance. To help you take that leap of faith with life insurance, here are a few points to consider!
1. The Need to Buy Life Insurance
When you buy life insurance, you can rest assured that your dependents (nominee) will receive a monthly income in casesomething happens to you during the policy period. Your family will have afinancial cushion to handle liabilities with more confidence while they cope with the devastating emotional loss. It is as if you are still providing for them, even in your absence!
Insurance plans help you in securing the lives of your loved ones who will be able to pick up where you left off, giving them the confidence and financial support to continue living as if you were watching over them. It is the perfect contingency plan for life's unpredictability.
Another important reason why you need to buy life insurance is the tax-saving that comes with it under Section 80C of the Income Tax Act, 1961. Thus, you can avail tax deductions save up to Rs. 1.5 lakh in terms of the premium paid towards the life insurance plan. Additionally, Section 10 (10D) offers a complete tax exemption on claim amount or bonus.
When you buy life insurance, you can not only avail of the many financial benefits but also give yourself the peace of mind that your loved ones are in safe hands. However, be sure to choose a suitable insurance cover based on your standard of living, current liabilities and future requirements.
2. Building Trust – Finding the Right Insurer
When you want to buy life insurance, the policies are either sold online, directly by insurance companies, or through intermediaries – such as life insurance agents, insurance brokers, and corporate agents.
Clients often believe that life insurance companies and advisors are only there to sell plans. However, that is not true at all. Apart from selling the plan, company advisors also play a crucial role in providing their clients with necessary help and support in planning their financials across the three stages of buying life insurance – pre-purchase, during purchase, and post-purchase.
If you want to buy life insurance, you can do so online. Many reliable portalsallow you to compare, choose, and buy a suitable plan yourself. The best way to choose an insurer is by comparing the benefits provided, payable premium, and claim settlement process. Carefully evaluate these factors to assess the insurance provider and finally select the one that has the highest Claim Settlement Ratio (CSR).
When dealing with the agents/intermediaries, you must only trust an experienced professional whose intention is to assist you in making a well-informed decision to buy life insurance. They help you review your policies and even follow up for premium payments.
However, beware of an agent who tries to oversell a product. Remember that insurance is a long-term contract, anyone that promises you big rewards in the short-runshould not be trusted.
3. Leaving Your Loved Ones in Safe Hands – How Much Insurance Do I Need?
When you are looking to buy life insurance, you must never forget that its objective is to provide financial support to your dependents and family members. Therefore, the life cover should be adequate to help your loved ones manage the financial liabilities with ease after you.
To do this, you would have to make smart and well-informed decisions today. You can do that by identifying your financial goals and then calculating the cover; you will need to meet those goals.
Apart from these simple considerations, it would help if you also kept your current annual income in mind when you want to buy life insurance. Ideally, it should be at least 20 times your annual income. Don't forget to account for financial liabilities, such as home loans, car loans, education loans, as well as financial assets, such as fixed deposits, cash savings, gold, while choosing the sum assured of your financial insurance plan. This will help your family pay the EMIs along with other household expenses in case of your untimely passing. Additionally, assess your financial goals such as children's education and marriage as well as your age when you buy life insurance.
It is also essential to choose the policy tenure carefully. For instance, it may not be ideal to buy life insurance that stops covering you when you reach the age of 60. Life insurance plans from reputable insurers such as Max Life Insurance provide coverage up to 85 years of age or more along with a host of other benefits such as protection against accidental injuries and dismemberment, and life-threatening ailments such as cancer.
Remember, life teaches many lessons - while some are pleasant, others can be quite bitter. One most crucial lesson, however, is that it is your responsibility to hope for the best things to happen in life and prepare for the worst. This is why it is advisable to make sound decisions about important financial instruments, such as life term insurance.