How one can fail to plan for the only thing that is inevitable (death) after one is born in this world, leaves me mystified. Leave alone a clear cut Will that details the assets they hold and whom they wish to bequeath it to, most do not even have any Life Insurance. Those who have it, rarely bother to top-up their cover, thus allowing time to render their initial cover insignificant.
As it is, Life Insurance penetration in India is dismally low at less than 5% and what is more disappointing is that more than half among those, are under-insured.
Life insurance not an investment
A primary reason for underinsurance among the few that have Life Insurance is the Indian obsession with deriving ‘returns’ for any money expended. Many just cannot reconcile to the fact that after their term of Life Cover ends at a specified age, they will not get any pecuniary benefit or returns for the premium paid.
Now, if one starts looking at pure (term) Life Insurance as an ‘Investment’, then the only way to maximise returns would be to hope to die soon after taking a policy, before the next premium becomes payable. The Return on Investment in such a case would be extraordinary !!!
Dreams crashing down
On a more serious note, while many recognize the emotional turmoil and void left behind by a death in a family, most still prefer to turn a blind eye to the huge financial void too that it often also leaves behind.
I have seen far too many cases of families used to leading a very comfortable, if not luxurious life, suddenly finding their world turning upside down following the death of an uninsured or under-insured bread-winner.
It is quite heart-breaking even from a distance, to see the way the dreams and aspirations of the children especially, in such families come crashing down. It is thus prudent for everyone who has even a single financial dependent to not just insure, but adequately insure themselves.
Adequate figure
How one arrives at the figure of ‘adequate’ insurance to ensure that every dream one has for one’s loved ones is fulfilled, is not something that can be captured merely with an arithmetical calculation as many websites and ‘experts’ would like to profess but needs more than that.
It requires a detailed evaluation session with one’s Advisor who can take a comprehensive view of where exactly one stands with their current investments and what it would cost ‘financially’ to replace one, in the event of an untimely exit.
No-frills insurance
A no-frills Insurance Term Plan will usually serve the objective of pure Life Insurance, most cost-effectively. And for those that live in the big metro cities and towns in the country especially, it is worth looking at a Critical Illness cover top up as well.
Rest assured, if one remains healthy and stays on after adequately insuring oneself, nobody will complain.
But, do not make the mistake of not insuring or under-insuring yourself. It could make all the difference to not just the lifestyle, but also the dreams and aspirations of one’s loved ones.
Ashok Kumar
Head of LKW-India.
He can be reached at ceolotus@hotmail.com