If you are a healthy professional in your 20s or 30s, buying life insurance can seem like a thing you don’t really need to consider. After all, you are fit, things are looking good, you have more assets than liabilities, and there aren’t too many family members who depend on you financially. And even if they did, you think your current investments will grow in time to take care of the same. Well, you aren’t the first one to dismiss life insurance as a financial product designed for those who don’t have the funds to invest towards wealth creation, or for those are burdened by life’s responsibilities. However, you are still wrong.
This is because life insurance isn’t for a select few; it’s for everyone. Depending on your life stage, dependents, investment corpus, and other factors, it’s role can change. Let us look at some of the reasons why life insurance can help protect what you’ve got – family, finances, ambitions.
Protect your family’s lifestyle
Your family is used to a lifestyle owing to your collective income. Now, imagine a scenario where they have to continue living despite your income coming to a stop. Do you think it will make financial sense for them to continue maintaining the same lifestyle? In fact, will they able to upgrade like the rest of your friends and family as technology and the economy advances every few years?
Though they may not be compelled to stop enjoying life’s pleasures since their income and your family wealth may serve as good support, there is good chance that they will have more financial concerns than before.
On the other hand, if you purchase life insurance, they stand to receive a substantial, tax-free corpus, which they can consider as your income substitute. This will reduce their feeling or guilt or anxiety while maintaining or upgrading their lifestyle.
Protect your family’s wealth creation
Whether it is family inheritance or wealth that you are creating currently with your family, it is natural that you want to protect this wealth for the long-term. Now, imagine unforeseen circumstances where this might get reduced or wiped out. It would be a great source of concern to your family since they would depend on this wealth as a back-up.
When you don’t have life insurance, your family ends up depending on goal-specific wealth or long-term wealth to help them tide through major unexpected expenses. These could be the need for a new home or car, filling shortfalls in annual expenses due to loss of job or pay cuts, a handicap and change in income owing to an accident, and so on. On the other hand, when you opt for life insurance, you are protecting your family wealth from unplanned redemption/ withdrawal and erosion of your family’s safety net.
Protect your family’s health and medical needs
One of the biggest unplanned expenses for middle-class Indians are medical costs. Often, the treatment costs can run into lakhs. Health insurance may not be able to provide for all of it; you need to have additional savings or corpus to avoid delays in surgeries and treatments. A wealth corpus may or may not be adequate for the same. However, the maturity benefit received from life insurance can prove to be substantial and help your family make a medical decision with more confidence and ease. This is because they will still have the wealth corpus to fall back on for their other needs such as retirement etc. despite going ahead with major health-related expenses.
Final words
Buying life insurance isn’t about ensuring a lumpsum corpus for your family. It is about giving them a source of income that replaces yours. Hence, irrespective of your health, assets, and income levels of dependents, it makes sense to buy life insurance.