Greetings,
The festival season has started and there is happiness, excitement, and energy
all around. You find immense satisfaction seeing the contentment on your loved
ones' faces as this is what you have been slogging for day-in, day-out. You love to spend time with them and cherish
these memories for a lifetime.
With you being the breadwinner, your family has little to
worry about when it comes to their financial expenses.
The sad reality, we all are unaware of what the future
holds. Lots of people die prematurely every year either by way of illness,
accident, etc.
And if you happen to be the only breadwinner for your
family and you were to pass away, it could lead to devastating consequences for
your loved ones.
Your absence could lead to their inability to manage
household expenses, pay debt and maintain the standard of living leading to financial
hardship for your loved ones.
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Can you and your
family survive if your monthly income decreases by 30%?
The
the answer is probably no. A 30% decrease in income can be a major financial hardship, and it can be difficult to make ends meet.
If 30% can play such havoc, how about 100% income stopping? This scenario is a definite possibility
if the breadwinner of the family dies.
The family would lose their entire source of income. They would have to find a way to pay for their housing, food, transportation, and other expenses on their own. This can be a daunting task, and it is not something that everyone is prepared for.
This is why it is so important to have life insurance. Life insurance provides financial security for your family in the event of your death. It helps them to pay for their expenses and maintain their standard of living.
Life insurance is not just for the wealthy. It is a basic need for every family. If you have dependents, you should have life insurance. It is the best way to protect your family's financial future.
Life Insurance is necessary. It is essential. It is a must-have for every family.
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The least you can do, therefore, is to secure your
family's financial future by buying a life insurance policy. When you get Life Insurance, you are buying a DEATH BENEFIT!
This benefit will be paid to your nominee (wife/children/nominee) in case of
your untimely death.
With the purchase of Life Insurance, your family’s
future is secure as they now have a FINANCIAL SAFETY NET that continues even in your absence.
Thus, ensuring that even in your absence, being the sole
breadwinner, your loved ones will not have to go through financial hardship.
True they will have to face the harsh emotional reality
of you not being there but at least their financial dreams are protected and
they can continue to have quality education and maintain the current standard
of living.
Life Insurance will help your family get a sense of
stability and comfort during what would undoubtedly be an emotionally
challenging time in spite of your absence.
HOW MUCH INSURANCE TO TAKE:
Determining how much life insurance you
need is an important decision you should be realistic and consider ALL
your present and expected future expenses. After all, this is the only financial security
your family will have if you were to pass away unexpectedly.
There are
many formulas for calculating HOW MUCH Life Insurance is to be taken and
the most popular one is to take 10 TIMES OF YOUR
ANNUAL INCOME.
But it would be prudent to consider your
financial goals like buying a house, provisioning for your needs like children’s
education, and of course, making sure that your loans/debts are taken care of. 
Your Life Insurance Coverage Amount should cover all the above and a bit more.
By Bit more, I mean to say that you are better off erring on a HIGHER amount
rather than lower. It's better to have more than less!
DON’T FORGET INFLATION:
The Term Insurance claim amount you might need today can be much lower than
what you'll need 30 years from now. Always account for inflation
when calculating your life insurance coverage.
Over
time, the cost of living rises, eroding the purchasing power of money. To
ensure your loved ones are well-protected, it's crucial to account for this
inflationary effect when calculating the coverage amount for your insurance
policy.
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TILL WHAT AGE SHOULD MY LIFE
INSURANCE COVER:
Normally, people take Insurance till their retirement
age.
A Typical Agent suggests taking Insurance till you are
80.
The decision of whether to take an insurance policy till
retirement age or beyond that depends on several factors, including your
individual needs and circumstances.
Retirement means Financial Independence. Ideally, when you
retire from active earning work, you would have sufficient retirement corpus
built up during your earning years, free of all your debts (including home
loan), and moreover your children too would be standing on their feet (earning
on their own) and thus you are free from any financial obligation.
REMEMBER, LIFE INSURANCE IS TAKEN
NOT FOR YOU TO BECOME RICH
BUT
LIFE INSURANCE IS TAKEN TO MAKE YOUR FAMILY DOES NOT BECOME POOR
REVIEW PERIODICALLY :
Buying life
insurance is not a one-time affair.
You should review your life insurance coverage periodically (say once every 5 years)
to ensure that it still meets your needs and goals. Life insurance needs can
change over time due to changes in income, expenses, and other factors.
Your
income may grow, you may make get into more debt obligations, your family size
may increase, and even your health could have undergone a change. Even Inflation
could have gone up significantly making your dream house that much more
expensive resulting in a higher EMI and thus a higher debt obligation.
If necessary, you may need to enhance your insurance coverage amount.
SPECIAL TIP
1. Premium for 60 lacs of term plan in an Insurance company is cheaper
than 40 lacs of premium - And this is true for a lot of term plans.
This is because 50+ lacs plans get
discounted premiums and medicals are also compulsory.
This is the reason why one should take a
term plan for more than 50 lacs even if your initial intent was for a lower
sum, as the premium difference is minimal and financially advantageous.
2.
Take Insurance under
the MWP ACT:
MARRIED WOMEN’S PROPERTY ACT:
Once you have taken
Life Insurance Policy, don’t be under the wrong impression, that the entire
proceeds of the Insurance policy will go to your wife, If you have any
outstanding loans when you die, your life insurance claim money will first be
used to pay off those loans. This is because loans are secured debts, which
means that they have priority and have to be settled first, and only then the
balance is given to your family.
However, there is a solution to this……
Hence, while taking a Life Insurance Policy, make sure you sign on the MWP clause and please note this benefit is FREE and doesn’t cost you anything extra.
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FINALLY,
If you are unsure
about how much life insurance you need or what type of policy is right for you,
it is a good idea to speak to a financial advisor. They can provide you with
personalized guidance based on your individual needs and circumstances. A
financial advisor can help you to assess your financial situation, your
dependents, and your financial goals. They can then help you to determine the
right amount of life insurance coverage for you.
AN EXAMPLE TO HELP YOU UNDERSTAND THE POWER OF WHY LIFE
INSURANCE IS REQUIRED
Imagine
that your income is a river that flows into a lake.
The lake represents your family's financial security.
If you were to pass away, the river would stop flowing, and the lake would
eventually dry up.
Life insurance is like a dam that keeps the river flowing into the lake, even
after you are gone.
The size of the dam (i.e., the amount of life insurance you have) should be big
enough to keep the lake full, even if the river flows a little slower (i.e. if
your income decreases after you retire).
It is better to have
Life Insurance cover 5 years early. rather than 1 day late!!!
And
I end this educative article with this evergreen quote
"
A man who dies without adequate life insurance should come back and see the mess
he has created"- Will Rogers
Regards
Srikanth
Matrubai
All the best,
Regards,
Srikanth Matrubai
https://t.me/joinchat/AAAAAELl4KUnaJzi-JJlDg/
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