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The Crucial Consequences of Not Buying a Life Insurance Policy

  12/20/23 12:00 PM

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There is no greater responsibility than providing for one’s family. But what happens to your family’s financial wellbeing if you are gone? This is where the importance of life insurance becomes clear. To put is simply, life insurance is a financial contract where the insurance company promises to pay your family a lumpsum amount in case you pass away. This lumpsum amount is called the sum assured and can help you family maintain their standard of living even without your income. In exchange, you just need to make premium payments at regular predetermined intervals.

If you are the sole breadwinner of the house, then it is even more important to safeguard your loved ones. If you are still undecided on whether you need to buy life insurance, here are six consequences that you might have to face in the future without sufficient life cover.

Leaving Your Family in a Financial Crisis

As per statistics road accidents alone claim around 400 lives every day. Beside road accidents, there can be life-threatening diseases, natural and man-made calamities, plane crash etc. that may force you to leave your loved ones forever. If you are the sole breadwinner of your family, your family members will end up in a terrible financial crisis. The biggest consequence of not having life insurance is the financial hardships that your family will face when you are gone. Buying a comprehensive term insurance plan will provide financial security to you and your family members at very low premium rates.

Leaving Your Family in Debt

You would not want your family to be repeatedly harassed by recovery agents in your absence. Your outstanding loans can be taken care of if you buy the right life insurance plan at the right time. Even if you don’t have any outstanding loans, your death may compel your family to take one to maintain their standard of living.  Get sufficient life cover to protect your family from the burden of your financial liabilities.

Being Unprepared for Upcoming Expenses

Your financial goals like starting your own business, purchasing a house, or buying a new car will need funds. These funds can’t be generated in one go! Life insurance plans also cater to your need for saving money. Guaranteed return plans help you save for your future financial goals while also providing life cover that secures your family’s future in your absence.

Leaving Your Child’s Future Uncertain

The education sector in India, as we all know, has faced revolutionary changes in the past few years. On one hand, the quality of education in India has improved. But on the other hand, the cost of higher education has skyrocketed. As a parent, you would wish to send your child to one of the top education institutes in the country. But have you ever thought how insecure your child’s future will be in your absence? Who will look after your child’s educational expenses? The best solution to combat this uncertainty is life insurance. You can look for a child educational plan that will not only help you accumulate wealth for your child’s educational goals but also take care of all the financial needs of your child, even in your absence.

Being Financially Dependent on Your Family Post-Retirement

While retirement brings the golden years of one’s life, it can also be the end your financial independence if you don’t plan for it properly. If you don’t wish to be a burden on your family members, you must start saving for your retirement as soon as possible. Investing in the right retirement plan will ensure a steady income flow for you, and it will also offer substantial life insurance coverage. The right approach towards retirement planning is to invest a certain amount regularly for a longer duration. This will help you grow your money, as it will compound as years pass by. You will also enjoy additional bonuses and tax benefits thanks to your insurance policy.

Not Being Able to Save Taxes

You work hard every day, but when you receive your salary, a huge amount is already deducted. If you want to increase your take-home salary, you must deduct as much income taxes as possible. One of the advantages of buying a life insurance is that it offers Income tax benefits under section 80C of the Income Tax Act of 1961.  Unlike other investment options, even the maturity benefit, which you will receive after the policy ends, is tax exempt under section 10(10D) (provided your policy meets the terms & conditions).

There are various types of life insurance plan available in India. Be it a term planunit linked insurance plan or an endowment plan, life insurance can serve as a solution to all your financial needs. Amongst the various options available, you must choose a plan that best fits your financial needs and life goals.

 

Swati Tumar - Travel & Finance Writer   

Swati is a Writer in the day and an illustrator at night. Among her interests, she is quite fond of art and all things creative. She often indulges herself in creating doodles, illustrations, and other forms of content. She identifies herself as an avid traveler and shameless foodie.

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