“You don’t need to pray to God anymore when there are storms in the sky, but you do have to be insured.” Bertolt Brecht
Uncertainties such as accidents, illnesses, theft, and natural disasters can strike at any moment, putting you and your loved ones at risk. Life insurance offers a safety net, shielding your family from financial hardship during trying times.
In recent years, life insurance has seen a resurgence in India, with the industry growing steadily. According to the most recent Economic Survey (2022-23), India is poised to become one of the leading emerging insurance markets by 2032. However, the survey also highlights some challenges. It has been reported that many customers opt for life insurance coverage that is not sufficient to support their families in the event of their absence. Furthermore, the returns from a life insurance plan are often given more importance than protection, due to various factors, including the perception of life insurance as a luxury product rather than a necessity. Despite these challenges, life insurance remains an essential component of a comprehensive financial plan.
It is important to understand the key role life insurance plays in your life. It is crucial for your family and affects all close relationships. Your financial worries whether it is for your children or your parents or even your own, life insurance has the solution to cater to all your worries.
Here we go and explore how life insurance plays a significant role in your life, even if you are unaware of it.
- Children: You can protect your children’s education with Life insurance investments. You can secure your children’s future with a suitable policy which covers the death of an earning member. Education costs can add up quickly and can be a significant financial burden for your loved ones. Life insurance can help to cover these costs and provide peace of mind for your loved ones.
- Spouse: This is significant. The initial objective of the life insurance companies was to support the spouse of an earning member in the event of the death of the earning member. The earning member usually was a male member until a few years ago. The female spouse would get financial support in the form of a policy sum assured amount. This lump sum amount would come handy for her survival. Even today, for a non-earning spouse, life insurance is a major source of support post the death of her husband.
- Parents: Your dependent parents are your responsibility. To protect their lifestyle and medical needs, having a policy which makes them the beneficiary is another social responsibility of an earning member.
This is more so today when the young deaths due to the lifestyle diseases are on the rise. On the other hand, there is an increase in the average life span of people on the whole.
Life insurance policy favouring parents are important need of the family.
- Retirement: Life insurance policy is a vital source of your retirement corpus. These policies are long-term in nature. The funds accumulated in the policies are available to you when you need the most i.e. when your earning stops post the retirement. Life insurance annuity plans are best suited for investment as a Pension plan.
- Whether it is a regular life insurance policy maturity benefit corpus or an investment in an annuity plan for regular monthly income, both are useful retirement tools.
- Wealth: Life insurance companies also offer plans which not only manage your risks, but also built wealth for you. ULIP come with two in one benefits. It offers death benefits and also generates wealth for you.
Choosing the Right Life Insurance Policy
It is critical to evaluate your needs and goals before purchasing a life insurance policy. There are various types of life insurance policies, including term life insurance, whole life insurance, Unit linked insurance plans, and endowment plans. Each type of policy has its own unique features and benefits.
It is also important to consider factors such as the coverage amount, premium, and length of the policy when choosing a life insurance policy. These factors are crucial in determining the best policy for your specific needs and budget.
- Coverage: The coverage amount, also known as the death benefit, is the amount of money that will be paid to your beneficiaries in the event of your death. It's important to consider how much financial support your loved ones will need in the event of your death and choose a coverage amount that will provide them with the necessary financial support.
- Policy Premium: The premium is the amount of money you will need to pay to keep the policy in force. Premiums for life insurance can vary depending on the type of policy, the coverage amount, and other factors such as your age, health, and occupation. It's important to compare the premium of different policies and choose one that fits your budget and provides the coverage you need.
- Length of the Policy: The length of the policy, also known as the term, is the period of time during which the policy is in force. For example, a 10-year term life insurance policy will provide coverage for ten years. Therefore, it's important to consider how long you need coverage and choose a term that will provide the necessary coverage for your loved ones.
- Policy Riders: Many insurance companies also offer riders, which are additional options that can be added to a policy to provide additional coverage. Some common riders include Waiver of Premium, Accidental Death Benefit, and Critical Illness, among others. It's important to remember that riders come with an additional cost and can increase the premium of the policy. However, they can provide added protection and peace of mind for policyholders. Therefore, it's important to carefully review the riders available and consider your specific needs and goals before purchasing any of them. Reviewing the policy regularly and making changes per your changing needs and goals is also recommended.
- Sabse Pehle Life Insurance – A Government Initiative: Sabse Pehle Life Insurance is a government initiative aimed at increasing the awareness and adoption of life insurance among the citizens of India. The initiative was launched by Sabse Pehle Life Insurance is a government initiative by the Insurance Regulatory and Development Authority of India (IRDAI) with the goal of making life insurance accessible to all segments of society.
This initiative helps individuals in choosing the right life insurance policy by educating and raising awareness about the importance of life insurance and the different types of policies available. The initiative provides information about the various features and benefits of different policies, and how these policies can meet different financial needs. This information helps individuals make an informed decision when choosing a life insurance policy that is best suited to their specific requirements. The initiative also provides guidance on how to compare policies and select the right one based on factors such as premium, sum assured, policy term, and the coverage offered. The goal of the initiative is to help individuals make informed choices when it comes to securing their financial future through life insurance.
Life insurance caters many aspects of your financial planning. Life insurance touches many aspects of your risk management. Life insurance touches many of your close relations.
“Life is 10% what happens to you and 90% how you react to it” Charles R. Swindoll
Be ready with your proactive response to deal with anything that happens in your life.
Siddhant Dubey - Writer & Photographer
Siddhant works as a freelance content writer who is interested in a wide range of spheres from photography and personal finance to cooking. He is also an aspiring photographer striving to showcase life around him through his vision.