Do I Need to Buy a Life Insurance Policy?

What exactly is an insurance?

Insurance is a sort of compensation for an unpleasant event.

Events like a fire, accident, damage or even death.

If we have spent a bomb, building up a home or a workshop or a factory. Then you don’t want it damaged or spoilt. If an unfortunate event should happen, we will have to rebuild it which will cost us money and trauma.

Trauma can’t be helped.

But money can be arranged for which is what insurance is the answer.

There are different types of insurance. Medical, fire, car, life to name a few.

Car insurance is what everyone knows what is. If we buy a car and we bang it up then the insurance will pay for it within some limits.

Medical insurance is that if we fall sick and have to go to the hospital and run up a huge bill. The insurance company will cover it.

A fire or disaster insurance is when a disaster happens and you get compensated monetarily for the loss.

What is Life Insurance?

Can life be valued? One really cannot put a number to it. It’s priceless.

All you can do is put a number on the financial earnings or damage which will happen to the people who depend on your earnings.

Now the question which pops up next is here.

Do I need to buy life insurance?

If you are the breadwinner, of course, you should. How much depends on your age and earnings. As a thumb rule, you can insure for 10-12 times your annual earnings for the remaining of your earning life.

So, if you are 30 years old and earn 7 lacs p.a. then you insure your life for at least 85 lacs. If your income increases then you increase the insurance cover.

What does insurance do?

It takes some burden off the people who remain on earth to mourn your passing.

If I am a housewife should I need to take to life insurance?

You can, but it’s not necessary. The family will certainly miss you if you go but will not be left with gaping bills on your passing. They may have to hire someone to take over your responsibilities. So that’s the extent of financial loss for which you can take life insurance.

If I am very wealthy than do I need it?

Probably not. You may want to sit down with your family and discuss it. If your family can maintain their lifestyle even with you gone then you can think of skipping it.

What if I am still a student, then should I insure?

You can insure your life for your future earnings as your family may have spent a lot on educating you. In any case, the insuring company will do their assessment and only insure as much as they think your earning capacity in the future will be.

Can I increase my life insurance amount?

Generally, yes. Again the insurance company will review every case.

All in all, everyone who earns and has dependents should insure their life. It is the first thing one should do when a young man/ woman starts earning and starts contributing to the household income.