What Are the Consequences of Not Having Life Insurance?
Life is uncertain; one never knows the turns it will take. Things might be going smoothly today, but one unfortunate event can turn everything upside down. For those who have other people depending on them financially and otherwise, such worries are quite common. Therefore, it is important to safeguard the future of one’s family with a life insurance policy. Despite the immense significance of life insurance, a large number of people do not consider it an important investment. Life insurance penetration continues to be relatively low in India. For instance, it stood at the rate of 3.2% in the year 2020. When people do not insure their life, they miss out on a ton of benefits and risk undergoing several consequences. Let’s take a detailed look at the same.
But first, let us understand what life insurance is.
A life insurance policy is essentially a contract, created to provide financial protection to the beneficiaries of the policyholder. A premium has to be paid in return for this protection. When the policyholder passes away in a condition/manner covered in the policy, the insurer pays a pre-decided amount to the nominees of the policy. As a policyholder, you must choose this amount as per your needs and budget limitations. The amount chosen should be sufficient enough to meet the needs of your family when you are no more present to take care of them. A life insurance premium calculator can help you figure out the right balance between the life cover amount you want and your budget for the premium.
What could happen in the absence of a life insurance policy
Daily expenses may be difficult to meet after a certain point
Many people underestimate the costs that go into managing a household and meeting the daily needs of a family. As long as the earning member is there, these costs may run smoothly. However, in the absence of the primary earning person, things can get a bit difficult. Savings may dry up easily and the family may have to resort to dipping into their emergency funds to ensure a flow of funds. This can be avoided by opting for a life insurance policy with a good sum assured amount.
Your children may not get to pursue their dreams
Life insurance is especially more important to buy once you have had children. After all, the responsibility of ensuring their present and near future lies on your shoulders. You should try to ensure this responsibility gets fulfilled even in your absence. The sum assured amount from life insurance can help them continue their education and give them the confidence to pursue their dreams without worrying about lack of funds.
Outstanding debt may hamper your family’s future
If the primary earning member passes away while their debts are uncleared to a large extent, it can cause a huge strain on the remaining family members. They would be responsible to clear the liabilities of the person. If they are not at the earning stage yet, the situation may become even direr. For instance, if car loan repayment has defaulted, the car may be seized. You can prevent the chance of this from occurring by opting for a life insurance policy. The life cover amount can help your family repay the loan with dignity.
Therefore, when you are adding the life cover amount to the life insurance premium calculator, remember to keep in mind your liabilities as well.
You lose out on several other aspects that come with life insurance
Today, the answer to what is considered life insurance has widened greatly, since there are so many types of life policies available. If you are looking to create long-term savings, then you can opt for an endowment life insurance plan. Or if wealth creation via market investment is more your cup of tea, then a Unit-linked life insurance plan would be a good option. Similarly, retirement-oriented annuity plans, child education and insurance plans also exist for a more varied life insurance portfolio. As per your requirements, you can select a suitable policy to secure the future of your loved ones.
One must also note here that life insurance also offers tax benefits via deductions against the premiums. You can save up to Rs 1.5 lakhs on your taxes in this manner. To ensure that you get to enjoy these benefits, you must consider buying a life insurance policy.