Insurance, especially life insurance, is generally neglected by most people, even though it is of great importance to their financial well-being. The reason is that people treat it as an unproductive expense. But such thinking is not correct. Not only should you be insured, you should also make sure you are not under- or over-insured. If you are under-insured, you have not secured your family sufficiently against the risk of an eventuality. On the other hand, if you are over-insured, you are spending more money than is necessary on buying insurance. Those surplus funds, if invested properly, would enhance your wealth over the long term.
Technically, insurance means transferring risk and protecting the economic value of your assets. Life insurance protects your family against the risk of sudden loss of income due to the untimely death of the insured. To secure the family against this risk, it is important to buy sufficient life insurance cover on the life of the earning member.
Financial reasoning discourages buying insurance for non-earning family members, especially children, as the risk of loss of income stream is not involved in their case. But several insurance advisors, after selling policies in the name of earning members, i.e. the parents, suggest buying insurance in children’s name. Instead of buying insurance in children’s name, earning parents should buy the cover in their own names. Along with the main policy you should also
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