Your monthly income helps you to meet regular expenses such as groceries, household utility bills, children’s school fees and even an annual family vacation.
Aside from your budgeted expenses, you save a part of your monthly income for unforeseen expenditures like a medical emergency, or for long-term major requirements like buying a home, children’s higher education, and eventually, your retirement.
While trying to secure your family’s future, you need to ensure two things:
One, you have enough savings for major requirements over the span of your life so that you eventually don’t outlive your money.
Second, you have adequate financial protection for your family so that even in the case of your untimely demise, your family’s regular expenses and major requirements in the future are taken care of without any hitch.
Life insurance meets both these major needs for a family’s financial protection. Ironically, people are not fully aware of this aspect of life insurance. Let’s take a closer look at how life insurance plans provide you with lifelong financial protection.
Financial protection for your family
In case of the unfortunate demise of the main income earner, your family needs financial protection so that it continues getting the same benefits it is used to from your regular pay. This also helps keep the accumulated savings intact for major needs in the future and cushions it from commitments such as outstanding loans. Life insurance plans provide the ideal financial protection that your family needs.
How life insurance helps – Life insurance payouts not only help the family of the insured person meet regular expenses, including outstanding loan repayments, but also future financial goals like the children’s higher education. Thus, it secures the family from the financial risk of the income earner which many experts term as the risk of “dying too young”.
Saving for long-term requirements
You have beautiful dreams for your family like sending your child abroad to study, buying a home or building a nest-egg for medical emergencies. You save and invest regularly to help turn these dreams into reality. But what would happen to these dreams if something unfortunate were to happen to you?
How life insurance helps – Savings plans offered by life insurance companies provide the dual benefit of both financial protection and wealth growth. They are designed in such a way that the premiums help you save enough by the time the plan matures, so that you have enough savings after the policy term to meet your goals and milestones.
Protection from outliving your money
In India, life expectancy* has gone up from 63 years in 2000 to 70 years in 2020. Since Indians typically retire at 58-60 years, retired life is increasing, a trend that is expected to continue.
Consequently, Indians will need substantial retirement savings in order to lead comfortable retired lives. This throws up a few financial challenges.
The first major challenge is the impact of increasing annual inflation on regular retirement income which progressively allows you to buy less for the same amount of money. So, in a little more than 10 years, Rs 15,000 will be able to buy only half of what it can today, if the annual inflation is 7%. Second, as you age, you encounter health emergencies that can severely dent your retirement savings.
Clearly, there is a need for financial protection against running out of money during one’s retirement years.
How life insurance helps – Life insurance companies provide plans that not only provide financial protection to families on the untimely demise of the insured person but also allow investments for future needs like retirement. Thus, on surviving the term of the plan, you have adequate savings for your retirement needs. Life insurance companies offer regular retirement income options called annuities. You can choose among various annuity options such as regular income for a fixed period, the continuation of income for your spouse after death, return of the principal amount, and so on.
To conclude, it is abundantly clear that you need financial protection throughout your life. The good news is that like a lifelong loyal companion, life insurance plans shield your family from many risks and ensure that all your family’s dreams are fulfilled.
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