The universal fact is, Death is certain. It is only the when, where and how is uncertain. Investor Behavioural studies suggest that most respondents are not comfortable even discussing this very basic fact of life. 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.
Life Insurance penetration in India is dismally low at less than 5% and well more than half among those, are under-insured. A primary reason for underinsurance among the few that have Life Insurance is the Indian obsession with deriving ‘returns’ for any money expended. Many are disappointed to know 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.
The fact is that, if one looks at pure Life Insurance as an investment per se, the only way to maximize 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.
On a more serious note, while many recognise 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 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 turned upside down following the death of an uninsured bread-winner. It is 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. How one arrives at the figure of ‘adequate’ insurance to ensure that every dream one has for one’s loved ones is met, is not something that can be captured merely with an arithmetical calculation as many websites and ‘experts’ profess.
It requires a detailed evaluation session with one’s advisor who can take a holistic view of where exactly one stands with their current investments and what it would cost ‘financially’ to replace themselves, financially at least, in the event of an untimely demise. A no-frills Insurance Term Plan will usually serve the objective of pure Life Insurance, most cost-effectively. LIC’s e-Term Insurance Plan which offers pure term cover and ICICI Pru’s iProtect Smart which offers Life Insurance plus additional cover for 34 critical illnesses are popular options in this category and have a good claim settlement record.
Rest assured, if one stays on after adequately insuring oneself, one’s family members will not complain. But, do not make the mistake of under-insurance. It could make all the difference to not just the lifestyle, but also the dreams and aspirations of one’s loved ones.
So, have you secured your family’s future?
Ashok Kumar
Head of LKW-India.
He can be reached at ceolotus@hotmail.com
(Views expressed here are personal)