If you have accumulated significant savings or have a legal inheritance you may question the need for a life insurance plan. The purpose of a life insurance plan is to offer a sense of financial security which already exists. However, savings are not the only deciding factor. Ample savings are valuable. Nevertheless, certain life events and risks warrant life insurance protection. This article explains the relationship between financial reserves and insurance. You will get valuable insights that will give a clear perspective on how to strike a balance between safeguarding your wealth and optimising your financial future.
Importance of a Life Insurance Plan
A recommended life insurance plan is for 10 times your annual salary. Do you think you can give this level of financial cushion to your family with savings? Even if you have a significant inheritance, a prudent decision to safeguard the wealth and pass it on to the next generation is necessary. The reasons you need a life insurance plan despite your financial status are explained below:
To Make Up for the Cost of Death
The sudden demise of a family member can have a great impact on the family’s financial security. More so, if the deceased was the sole earning member. Paying up outstanding debts like mortgage loans, credit bills, etc., will deplete the family’s resources and leave them in financial stress. Funding the education of children may become challenging and potentially affect the children’s future. The family may not be in a position to sustain basic maintenance expenses. The family might have to provide for immediate expenses from the savings eroding the financial safety net.
Having a life insurance plan will mitigate all these financial challenges and help fulfill your dream of financially securing your family even in your absence.
To Retain the Lifestyle
The family’s long-term financial security in the form of savings may be jeopardised to maintain the lifestyle. Eventually, they may land up in financial stress. With a life insurance plan in place, the family can retain the wealth created or inheritance without preceding their existing lifestyle.
Providing Additional Support for Accidental Injuries
A permanent disability may amount to the loss of regular income. By opting for riders like Accidental Total And Permanent Disability Benefit, you will have added advantages. In case of any eventuality, the sum assured will be paid in lumpsum and future premiums will be waived. This enables managing the expenses incurred on account of loss of income due to the accident. In addition, the life cover offer continues which will be a financial security for you and the family.
For Tax Benefits
Whatever wealth you have inherited or accumulated, saving on tax will be a further addition to your wealth. You can use a life insurance calculator and invest in a life insurance plan to derive maximum tax benefit. With the life insurance calculator, you can adjust the term and sum assured to align with your premium affordability and requirements.
To Make Up for Change in Your Financial Goals
Your existing savings may not warrant the need for a life insurance plan. But what if your financial goals change or you have children? The gap in the financial requirement cannot be filled with your savings alone. If you plan to own a house and incur a mortgage loan, a life insurance cover is necessary to meet the outstanding liability in the event of your death. Your savings may be good enough for short-term goals. But what happens when there is a change in your goals? You need additional support to provide financial security to your family in the form of life cover.
To Leave a Lasting Legacy
A life insurance plan is not just for those who have no savings. In the event of your untimely death, your family might have to dig into the savings or inheritance to secure your children’s financial future, pay off outstanding liabilities, and make up for the income loss. Investing in a life insurance plan will be a smart move if you intend to leave a lasting legacy.
Having substantial savings or inheritance should not stop you from investing in a life insurance plan. Investing in an insurance plan is a prudent decision to safeguard your inheritance or savings and pass it on to the next generation. Your savings while precious may not be enough to replace lost income, cover immediate expenses, or secure your family’s long-term financial stability.
The life insurance cover ensures that your family can maintain the existing lifestyle, pay off outstanding debts, provide quality education for your children, and secure your family’s long-term financial stability. Ponder on the reasons given above and buy a life insurance plan right away if you do not have one.