Is Life Insurance Only for The Rich?

On the one hand, those belonging to lower-income brackets often think of life insurance as something only the rich might need or be able to afford. On the other hand, people falling under the high-income category might believe that since they have a considerable amount of savings, they have no real use for life insurance. While both perspectives are understandable, they are also quite misguided.

Thankfully, this mindset is slowly and steadily changing. In fact, if planned well, anyone and everyone can manage the funds to purchase life insurance for themselves and their families. All it takes is some understanding of the subject and some time to select the right plan for you.

So, let's first ask the question, what is life insurance?

Simply put, life insurance is a signed undertaking between an individual and an insurance provider, wherein the provider guarantees to pay a sum of money in case of the insured party's demise, or after a set time period, whichever is earlier. In order to avail this type of insurance, the individual agrees to pay a certain amount regularly as their premium. The primary objective here is to solidify the financial interests of the insured's family. 

In addition to the tax benefits it offers, life insurance can help you secure a loan (by serving as security) and dispense the much-needed funds during a time of difficulty.

Now, let's look at how life insurance works for different segments of society:

• For the Lower Income Group:

  People from this group usually earn enough to meet their day-to-day expenses but find it difficult to manage any savings. This leaves them vulnerable at the time of a financial crisis.

  But, by paying a nominal sum, you can take an affordable life insurance plan, such as a term plan, that provides a good amount of coverage for a specified time period. For example, you might pay Rs. 1,000 per year for a life cover of Rs. 1 crore for the next 20 years. If something were to happen to you within 10 years, your family would be paid Rs. 1 crore.

• For the Middle Income Group:

  With most part of their income earmarked for regular expenses, they are left with limited savings on hand. Any unforeseen situation or added expense can instantly drive them to dip into their savings, leaving them with very little for the sustainable future.

  A smart decision here is to regularly invest a part of your savings in a good life insurance policy that can provide peace of mind. By paying affordable premiums on a regular basis, you should look at availing maximum benefits. This can help tide you over in the long run when money gets a little tight.

• For the Higher Income Group:

  Usually accustomed to a high standard of living, they typically tend to spend a lot more. And even though they may be in a more comfortable place moneywise, it is never easy to sustain that high cost of living. A sudden market crash or a job loss might leave them financially distraught. As such, it would be wise to be prepared.

  Here, with multiple life insurance plans to choose from, you can opt to pay a premium of your choice. A higher amount of premium will result in a higher sum assured and more comprehensive cover. You can even go for a single lump sum premium payment that will eliminate the hassle of paying again and again. Moreover, you can invest in plans to build a corpus of funds to meet your future needs.

  Life insurance is for everyone, irrespective of their financial status. Even though the extent of coverage may vary, based on one's age and premium amount, it is ultimately designed for anyone who would like to secure their family's financial future. If you're ready to get insured, click here, and we'll help you find a plan that suits your financial standing.