NEWS

Here’s why individuals and working couples need life insurance

Many youngsters are not inclined towards the idea of buying life insurance. Most financial planners suggest life insurance as the starting point of any financial planning.

Situations may differ but the need to get the risk cover may still exist.

Here are two such specific situations which may still require life insurance to provide protection to family members.

1.You are unmarried

The unmarried individuals could be correct when they talk of shunning any insurance cover. But they may be ignoring a crucial aspect.

The marital status should not be the basis to buy or not to buy insurance cover. Irrespective of that, life insurance is required only when there is a financial dependent.

Grown up children, with an independent income source, could have parents who are financially dependent on them. The necessity to own a life cover, therefore, becomes imminent. Make sure you stick to pure risk term insurance plans to fulfil this need. Insurance should not be purchased for any purpose besides risk transfer. Buying insurance for saving taxes or growing your corpus is an exercise in vanity.

Life insurance is basically an income replacement tool. Estimate how much would the parent’s household expenses be in one’s absence and accordingly keep the sum assured in a pure term insurance policy. Keep proper nominations done in the policy so that the claims settlement remains smooth.

2. Both you and your spouse are working

When both couples are working and there’s an eventuality with either of them, the surviving member may get burdened with all the liabilities and loss of a source of income.

Irrespective of a dual income household, it is important for the couple to be adequately insured as both are contributing financially towards the household expenses.

If loans are outstanding, adequate insurance cover must be taken to cover loan components.

This cover should be taken equally for both to cover the entire loan amount. This is to make sure that in the case of the demise of any one of the individuals the survivor should have no loans remaining.

In case the earnings vary a lot among both the spouses, the member with higher income should buy insurance so that family can survive in spite of the higher income being no longer available. Ideally, it should be at least 10 times of annual income.

Life is uncertain and protecting it financially even for working couples is best met through term insurance plan that is low-cost, high cover plan. Both members can buy protection covers preferably those plans that come with joint life option.

shortlink

Post Your Comments


Back to top button