Why Life Cover Is Important: Benefits of Life Insurance Products
Importance of Getting Life Cover
Those with enough assets do not require life insurance. For others, life cover is a must. People invest in various options such as provident funds, mutual funds, fixed deposits, stocks and commodities and on the other hand we have liabilities such as home loans, car loans, etc in the form of financial goals.
Sure, you’ll meet all those requirements and retire safely if everything goes according to the schedule. But what if things do not go as planned? Can we envisage a future where our family has to vacate the house because we are no more? Or, having the older child drop out of college to find a job and support the younger ones. If you know that assets are not enough for them to continue living as earlier. So, why not pay a small premium and get a life cover. At least, it ensures sound sleep.
Benefits of Having Life Cover
Life insurance products help you to channelise your savings systematically into various assets for generating returns over the long term. As wealth gets created over the long term, such disciplined savings go a long way in helping you meet your long term financial goals. On one end there are pure term insurance plans which cover the risk of dying. Nothing is paid back on maturity, i.e. on surviving the policy term. On death within the term, money from a life insurance policy is paid to the family members. Without life insurance, your assets will have to be liquidated to honour your financial obligations. Thus pure term plans work best as an income replacement tool.
Then there is a traditional insurance policy, including endowment and money-back plans, which are ideally suited for conservative individuals looking to bundle savings with protection, on the other hand there are market-linked investment-cum-protection plans called linked insurance plans (Ulips) which are suitable for those looking at bundling in equities with insurance for decent returns.