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How Can Life Insurance Secure Family’s Business and Future?

Inderpal Ahluwalia 30 October 2017

Worried about your family's business and future? Find out how a life insurance can be a saviour for your business and family in your absence.

Life Insurance a smart investment

A person running a business has to make key business decisions without much room for error to keep his income growing. When making personal financial decisions buying life insurance should be on top of the list. Unfortunately, still many Indians do not believe in the value of having a life insurance policy. But the question to ask here is why it is so important? Well, irrespective of how much your income is from your business today, you are not sure what lies in the store for you tomorrow, unless you are lucky enough to have a crystal ball that shows your future! But that too exists only in the fictional world, so for the real world, you need an assurance for financial protection that comes in form of a life insurance product.

We hear the sad news of people dying prematurely every year from accident or life-threatening diseases like cancer or even deadly viral. If that happens to a person solely running the family business and is also the sole bread winner in the family, it would leave devastating consequences for the near and dear ones. They won’t be able to carry the burden of paying for household expenses, loans or even be able to maintain their lifestyle, dare I say they might even find it hard to get access to the basic everyday needs.

This is the time a life insurance policy comes to the rescue of your family and its future. Here is a list of some reasons which might make you realise the true worth of life insurance for your family’s business and future.

1. Taking care of your near and dear ones in your absence

Any person who is the head of the family has one most important goal and duty to keep his family safe irrespective of what trouble comes in life. Life insurance will be your saviour and will help replace lost income, paying any debts, children education expenses or making sure that your family has the much needed good financial security. For example – Karan, a businessman takes a wise decision to get a term plan of INR 1 crore for a period of 30 years to get financial stability for his family in his absence. On his premature death during the term of the plan, the family will get INR 1 crore.

2. Business liabilities, house loans or credit card bill

It is a cruel reality that loans are never excused no matter what tragedy happens. You don’t want to leave your family in dire stress with financial liabilities after you are gone.

Continuing with our previous example, Karan, unfortunately meets with an accident and passes away. The family finds out Karan had INR 30 lakhs of business loans. The family can clear the business debts from proceeds received from term insurance policy. This leaves the family with INR 70 lakhs (1 crore – 30 lakhs)

3. Help in building family’s business again

You can’t expect anyone from your family to replace you straight-away and take the business responsibilities. It will take some time and a strong financial backing can help to build the business again. As discussed above, if any family member wishes to continue the business started by Karan, they will still have INR 70 lakhs out of which they can use a small portion to re-start the business and make it grow again.

4. Family’s future and long term financial goals

Since life insurance is a financial instrument that keeps you invested for long term, the lump-sum pay-out will help achieve key milestones in life such as buying a house or even planning a good retirement. Life insurance also has the option of diverse investment options. Some policies have part investment component that pays dividend if the profit is made on those investments.

5. Life insurance for autumn of life

Everyone dreams of enjoying financial freedom until they breathe their last breath. Life insurance plan can help you have a regular stream of income every month. Investing money in a ULIP product regularly can help you enjoy a steady income in the later years of your life.

6. Peace of mind

Last but not the least, there is nothing that can replace the peace of mind. Death is inevitable. In an event of premature death, at least you will know your family future is secure with your Life Insurance. There is also a chance your family’s business might also survive and thrive with strong financial backing.

Life insurance can be seen as a great tool for both financial protection for the family as well as for savings. The Indian government also encourages people to buy life insurance by offering tax rebates on premium payment and benefit amount received from Life Insurance. Although, the need for life insurance changes at different stages of our life, having one is essential to tackle financial emergencies and dependencies.

Recommended Read: importance of Life Insurance for married couples