Life Insurance not an Investment Option

Life insurance is not just an investment option

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Life insurance is perceived more as a way to get tax benefits than a necessary component of one’s life. This is a fallacy that needs urgent correction.
Life is extremely stressful for everyone today. Even youngsters are under tremendous pressure to excel at school, while adults are caught up in a perpetual race for success. In the midst of this come unexpected emergencies. These can bring life to a standstill and cause huge financial despair.
The people most affected are those who go through life without life insurance policies. The lack of adequate life insurance takes a heavy toll on the family’s finances. When the earning member of the family suddenly passes away or is confined to bed for recuperation, the family can suffer untold misery without an income. At such times, life insurance offers a safety net till such time that the family’s finances come back on track. Read More

Looking at life insurance differently
It is a challenge to get life insurance after an actual emergency has struck. Precious moments are lost filling out paperwork and looking for adequate coverage while the clock ticks on. Instead, life insurance should be purchased when one is young, healthy and without immediate fear of future disasters.
Most people look at life insurance policies as instruments that yield tax benefits in every financial year. But the crucial fact to remember is this: life insurance is not just an investment option. It offers benefits on the basis of a future requirement; hence people do not view it as seriously as other investments. However, there is a need to correct this thinking. Insurance is a security net for your family’s future that comes into play when your current circumstances change.
One must do more than merely leave a sum of money as savings for the family. The questions to ask are: What happens when the sole breadwinner of the family is unable to work or passes away? How long will the savings last?
The answer lies in taking life insurance.

Making insurance work for you
* Term plans are extremely beneficial because at a low premium, a person may get very high returns on the plan. The younger one is when purchasing the plan, the lower is the premium to be paid. Also, there is the flexibility of choosing the coverage and tenure of the plan.
* Life insurance needs to be viewed from the lens of ‘disciplined savings’ and asset allocation rather than ‘investment’. When one is young and able to pay even high premiums, one is creating a notable fund of money for the family in case an emergency strikes. It is also a means of creating a corpus for one’s retirement.
* Savings also occur in the form of tax benefits on the premiums one pays for life insurance.
To put it quite simply, life insurance is an intangible investment and as important as one’s material possessions.

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