Life insurance in short is a line of defence that offers your dependents a supplementary income alternative in the event of your untimely demise. So, anyone in your family who needs your financial support for survival such as your children, spouse or parents can be covered through life insurance. However, what if you don’t have any dependents? Do you still need to include insurance in your portfolio. Let’s explore some scenarios wherein you need to have a life insurance plan even if you don’t have dependents.
You may not have any dependents at the moment, but at some point in future you may decide to get married and have children, and your parents will get older too with time. You will have to financially safeguard them from the possibility of your untimely demise. So, you cannot avoid buying insurance, you can only delay it. However, a delay is only going to cost you more premium, as the insurance premium goes up with age. For example, if you choose to buy insurance at 35 instead of 25, the same term plan can cost up to 100% more.
In the table below, we have compared premiums to be paid at the age of 25 years and 35 years for a life cover worth Rs 50 lakh.
If you have a home loan or some other long-term loan that’s your responsibility, you need to cover for it. You don’t want someone else to pick up the pieces after you. Neither do you want to lose the proceeds of the assets to recover from the loan. Instead opt for a term insurance, which is quite inexpensive to acquire, and can have your liabilities covered.
Other than offering a life cover, insurance policies come with additional benefits such as pension scheme, critical illness rider and accident rider.
For example, many insurance companies offer a pension plan to build a fund for retirement. The pension plan comes in variety. It can provide you with a lump sum amount along with annuity benefit.
While some loans are written off in case of your sudden demise, loans that you have co-signed with another person land squarely on the co-signer if it’s still unpaid. So, say you have a student loan that is co-signed by your parents, your parents will have to recover the loan amount in your absence. A life insurance can pay for your loan repayment in the event of your sudden demise.
(The writer is CEO, BankBazaar.com)