TomorrowMakers

Unsure whether you should take out a life insurance policy? Here are the pros of investing in life insurance.

How life insurance can support your long-term goals

There are only two situations in which having life insurance makes sense – if you die before your expected time, or if you live beyond it. 

In the event of one’s untimely demise, the insurance compensation comes as a much-needed financial support for the bereaved family. The other possibility – of living to a ripe old age – can seem daunting, but the endowment amount from a life insurance policy serves to support one financially in their old age. 

In other words, it doesn’t matter how long we live; life insurance will always come to our (or our loved ones’) rescue. However, if we do live long enough, a life insurance policy can help us achieve some of our long-term goals. Let us look into the long-term benefits of taking a life insurance policy.


1. Well-being of family members 

The first and the most important benefit of life insurance is that it takes cares of your family in your absence. A person’s absence can never be compensated with money, but very often a family is dependent on the earnings of one person. If the person dies, the family suffers not only emotionally but also financially. The person, during his or her lifetime, hopes that he/she can provide for the education of children, save sufficiently for their marriage and ensure a peaceful old age for the spouse. This desire or hope is the primary driver of life insurance, giving one the assurance that the financial side of things will be taken care of even if something untoward happens to the insured. A term insurance plan is best suited for this purpose as it assures substantial benefit in the event of death, but no benefit if the insured survives the term.


2. Saving for the future 

We continue to earn during the time we are gainfully employed, but old age eventually gets the better of us and forces us to stop. Most employees need to compulsorily retire by a certain age. So we are eventually bound to stop earning. It is for this period of life that savings made during the early years become vital. By depositing a certain amount regularly as a premium for an endowment policy, we make sure that a corpus is built for our later years. Along with various other saving and investment schemes, life insurance not only promises an assured amount in the event of death or accident but also provides us with a lump sum amount at the end of the policy period. 


3. Enjoying retirement 

If a person ensures that a good insurance policy is taken and premiums are paid diligently, it can give huge financial benefits at the end of the term. While the less prepared have to compromise on their lifestyle after retirement, the well-insured ones actually go on and enjoy their retired life with the money they receive out of the matured insurance policy. Known as money or cash plans, the survival benefit of these plans are paid on a periodical basis and enable retirees to fulfil post-retirement ambitions such as a foreign trip, a new car, or a new house. It enables them to take on the role of the favourite grandparent by gifting the grandchild with a new bike or a dollhouse, without worrying about their source of income. Annuity plan is another option that safeguards the income loss on retirement.


4. Fulfilling your children’s aspirations 

A well-planned insurance policy can be the timely support a person needs to meet certain important expenses in their life. For example, if you start a 20-year-long life insurance policy when your child is a year old, it will mature around the time they are planning to go for their higher studies. Commonly categorized as Children’s policies, these policies can be taken in the name of the parent or the child. However, the child is the beneficiary in either case. In fact, such well-timed savings and investments can be a big help for the next generation in meeting certain crucial expenses such as studying abroad, starting a business venture, planning a wedding, etc.


5. Health and safety benefits 

Life insurance policies can be taken with various additional benefits that fulfill our basic long-term goals of a healthy life. Depending on the policy chosen, the insured may get riders or additional benefits such as critical illness cover or personal accident cover. These help the insured tide over any financial difficulties caused by significant expenses associated with complicated and trauma-related treatments. Term insurance policies with riders, for example a disability rider, may provide partial and total disability benefits.

It goes without saying that having a life insurance policy not only safeguards a person’s survivors in the event of their passing; it can be also used to fulfil the long-term ambitions of the insured while ensuring their financial security.

How I did it

Rahila Khan
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