Life Insurance
Life Insurance
Everyone agrees human life is precious. Every body agrees. How precious it is, no body is aware. Human life is subject to the risks of 3 Ds – Death, Disability and Disease. Insurance plays a vital role in every human’s life. When a life is lost or a person is disabled, there is a lose to the household. In this scenario, Life Insurance gives a financial cover to meet any eventuality apart from 3 Ds, retirement, retrenchment etc. Human life is subject to risks of death and disability due to natural and accidental causes.
In general, a human’s life value cannot be measured. Emotional loss of the bread winner is a loss to the family, but, life insurance plays an important role in providing a monitory benefit to the bereaved family. This financial loss is compensated through a calculation of Human Life Value (HLV) thus, enabling the family to survie the sudden financial loss and enable them to maintain the current life style.
In life insurance, a guaranteed amount is paid to the nominated person in the event of a loss. This is known as Sum Assured. It is a ‘benefit’ and provides a definite amount of money in the happening of the event.
A question always lingers in the minds of people – Why should I buy Life Insurance: The reality is, all of us face the following risks:- Dying too early
- Living too long
Life Insurance is needed to protect the family security for the following reasons:
- To ensure that the family has financial support in the event of the bread winners’ demise
- To finance children’s education and other needs
- To have a savings plan for the future so that the bread winner has a constant source of income after retirement
- To provide for other financial contingencies and life style requirements
How much Life Insurance is needed:
The amount of Life Insurance coverage one needs will depend on many factors such as:- How many dependants are there
- What kind of lifestyle the bread winner wants to provide for his family
- How much is needed for children’s education
- What are the investment needs and affordability?
It is advisable for the bread winner to seek the help of a financial planner to understand family security needs and suggest the right type of cover.
