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LIFE INSURANCE

The Consequences of Not Buying a Life Insurance Policy

Sumit Asrani Sumit Asrani 04 December 2017
5.0 (4 votes)

If you are the only breadwinner, in case of an untimely death, without life insurance policy your family suffers financial crises.

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Yesterday, my friend asked me, “What if I die suddenly?”

“Just shut up,” I said.

“No, seriously, I’m serious.”

“Tell me, what possibly could go wrong or be the worst outcome?” he asked.

I said, “Did you hear the news about a chartered plan crashing in Mumbai's Ghatkopar suburbs on 28th June 2018?"

He said, "YES"

I asked, "Did the two Pilots and two aircraft maintenance engineers knew they were flying for the last time? Did the pedestrian who had walked out know this was the last day of his life? Did the occupants of that chartered plan knew they would crashing within 3 kms of the runway?"

"NO" he answered

Life Insurance is the only way of protecting the future of your loved one's in your absence. In the absence of a Life Insurance cover many problems can arise for you and your family like:

1. You leaving your family in the financial crisis

You buy life insurance to let your loved ones know that you care about them. To let them know, even when for some unfortunate reason you wouldn’t be there with them physically and to support them emotionally, but financially things will be taken care of.

Without life insurance policy, you leave your family in financial crunches. You wouldn’t know your family will not only suffer emotional grief but also, financial burden.

Unwanted and unfortunate incidents like road accident, train derailment, stampede, tsunami, earthquake, floods, plane crash, life-threatening diseases or terminal illness etc., are unpredictable especially in metro cities like Mumbai, Delhi, Chennai, Hyderabad, etc.

If you are a breadwinner of the family, and you lose your life due to any such unfortunate eventuality, how will your dependents overcome the loss of income?

Imagine, your surviving dependents struggling day in and day out to make ends meet.

What a terrible plight they will be forced to suffer! But…

With the help of a life insurance plan, for instance, a term plan, you can ensure your family doesn’t have to go through the financial crunch. A term plan comes with a high coverage at low premiums.

The best bet then, is to opt for a life insurance plan to safeguard your family from facing any financial crisis.

2. Leaving your family in a debt trap

You may have opted for car loan, personal loan, home loan, or a business loan. Or perhaps, might be thinking on the same line to fulfill your goals and dreams.

You may have planned to start a business. Or perhaps, already running one. Think about the repercussions on your family of not having a life insurance policy or on your business without a Keyman policy.

Do not forget - the debt doesn’t go away with your life.

Your family members may be asked to repay it. And until the repayment is done, your family may have to bear the repeated harassment by the money lenders or agents. And the company may see the downfall.

With the right type of life insurance plan, such outstanding loans can be paid off.

Related article - Why Life Insurance is Important For Entrepreneurs?

Okay, let’s say you don’t have a loan. Neither a personal nor a business loan. But that doesn’t imply your family wouldn’t have to suffer any financial burden. If you leave your loved ones without a source of income after your demise, chances are they would seek financial support, which means more burden.

What you must do is, plan a source of replacement to your income or cash flow to your family, after your death. As your family still have to carry out finances such as monthly expenses, child’s education, marriage, etc. In this case, you can look for an income replacement term insurance plan.

Moreover, many Insurance companies do offer loan insurance policies as well. This means you can insure the loan amount opted for. These plans could be the saviour for your loved ones in case of your untimely demise.

3. The possibility of not letting your child live his dream

Long live your children and their dreams. But to make sure your child’s dream doesn’t remain just a dream, you have to make financial arrangements to turn those dreams into a reality.

You are very well aware, the cost of educating a kid has skyrocketed. And higher education from a reputed and well-known institution is nothing less than a nightmare. It is a challenge for a middle-class family to afford. But, as a parent, you would do everything for them.

This is where life insurance plan is useful. A child plan, which is a type of life insurance plan helps in building funds for your child’s education, more importantly, it will take care of your child’s financial needs, when you are not around.

Don’t wait. The stakes are too high - Don’t leave your child’s future to chances.

Also, read - Why is it Crucial for Parents to Have a Term Insurance?

4. You leaving your family with no proper finances or retirement planning

The old age is your golden age. The age to be a sage. Do not get yourself tied up without money until you want to live in a financial dependent cage.

What’s your take on financially independent retirement?

No running around the bushes, here’s what I have to convey to you - A quick say.

If you are a person with self-respect, want to be financially independent when you retire, then you must opt for a retirement or a pension plan. Because the fact is, all your hard earned savings does break for one or the other reason - be it a child’s education, marriage, life uncertain events causing financial instability, or medical emergencies. These expenses are unavoidable. And are time bounded.

One is not sure if such events will occur or not. Neither will someone know if their savings will remain intact. Thus, it is advisable to invest money in a retirement plan. Check out all the possible options. Pick up an economical, feasible and beneficial retirement plan. And then retire.

Now, listen. Carefully. Even if you do not plan your retirement, think about your surviving partner. In case, you pass away, the coverage will be paid to the nominee, which will help in the old age. Help your partner too in the retirement planning.

5. You will be a person with a missed opportunity

Did you know, the added benefit that comes with life insurance?

Consider this point, as an added benefit for being a good reader - as you have come so far.

Let me disclose something about life insurance plan, which you may not be knowing.

All the premiums you pay towards any type of a life insurance policy is tax deductible from taxation, as per the Section 80C of the Income Tax Act, 1961. However, the maximum tax benefit one can enjoy is of Rs.1.5 lakh per year. Moreover, the maturity benefit and the death benefit under any life insurance, is non-taxable under section 10 (10D).

There is a plethora of life insurance products like - a Term plan, a Whole life plan, a ULIP, an Endowment plan, a Child plan and a Pension plan.

I told him –‘my friend, just opt for life insurance'.

You can assess your requirements. And learn about various types of life insurance plans. Then, as per your needs, select the most suitable life insurance policy to secure your family. Because family comes first.

Happy living.

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Sumit Asrani
Written by Sumit Asrani
He's a writer. His blood cells are woven with Hypergraphia, as he breathes in books, he exhales words and sneezes poetry. Captivated by the web-of-words he's trying to escape miraculously as a content writer at Coverfox.com.