Start investing early in life insurance

Santhosh, 28, (name changed) was employed with a leading software company and was earning a handsome package. He had a nine-month- old-child. An insurance sales man approached him and tried selling life insurance. 

The prospect rejected the offer and preferred to invest in Mutual Funds and a host of other tax-free return options available before him. His aim was to build a long-term wealth, establish a sound financial standing to meet the huge challenges of the future besides providing quality education and if need be even funding an overseas higher education of his child.

Six months later, as destiny would have it, the cruel hands of death snatched him in a tragic road accident as he was driving back home. It was all over….! Almost instantly, family, friends, relatives and well- wishers converged to offer their words of sympathy, comfort and consolation. 

As the ceremonies and rituals were completed, the harsh reality of life stared. Now, all that the wife needs is not words of sympathy but real money to move on. And that is the only time she would ask, what is that my husband has left for me…and sadly he will not be there to answer. The investment provision made other than insurance is grossly insufficient to meet the demands and challenges of the future.

Uncertainty: Two events are certain for a man or woman. Premature death and uncertainty of living long. In the event of a premature death the insurance proceeds reach the family to move on to meet the blue-print the bread winner had for the family. 

However, in the event of living long the accumulated maturity value of his policies will be available to secure his own future, financially hold him in good stead and to lead a life of dignity and honour without being a burden or dependant to the family in his old age.

Social structure: The current social structure has undergone a massive shift from the joint family system to a nucleus family.  Earlier in a joint family system, the loss of a earning member would hardly impact the family as other members would volunteer to shoulder the responsibility and the show would go on, but in an nucleus family, so much so, even before the boy and the girl come to be solemnised in their marriage, the challenge starts and they almost decide the size of the TV, brand of cooker, colour of fridge and et al...! 

It has its advantages, but all the more disadvantageous, particularly when the bread-winner is snatched away from their midst at a very young age.

Age and health: The deception in the argument that almost every other tax saving option is better than buying life insurance is often misleading and confusing to the young earners. Age and health of an individual at the time of taking a life insurance policy is an important factor to determine the premium for a given sum. 

The proposer can choose a longer term and increase the sum assured at a lower premium. As a result the bonus accumulation too will be proportionately higher. It is good to avail the best life insurance when one is pink in health. 

All other forms of investments can wait as it has no bearing on the age and health of an individual.  The fundamental feature of insurance is ‘lower the age lower the premium’ and ‘higher the age higher the premium’.

 Bread winner should be insured: It is strongly recommended that the bread winner of the family need to be insured adequately. Insurance on the life of an unearning house wife or a child should be avoided. 

Untimely departure of a house wife will only leave an emotional vacuum or a child’s tragic death, a terrible loss of a promising future cut short.  On the contrary, the loss of a bread winner inflicts multiple losses to the family.  As a father to the child, as an husband to his wife and as a bread winner to the whole family he is no more. Therefore, the bread winner should be adequately insured. If need be to nominate the child in lieu of a child’s policy.

No substitute: It may not be an overstatement if it is said that there is no substitute for life insurance. We are aware medical science has advanced to a great extent that even if almost a dying man is moved to hospital in time he could be revived.  Even the most debilitating disease could be reversed with timely medical intervention.  But, we have not heard the same medical science bringing a dead man to life.  Life insurance does….! The life insurance may not be able to bring the dead man to life, but restores the dead man’s financial loss to the
family.

Insurance is a symbol of love.  The volume of insurance one leaves behind is the reflection of one’s depth of love to his family. And remember: The sunshine of your decision to insure today could wipe the clouds from someone tomorrow.

 (The writer is Development Officer at L I C of India, Bengaluru)