A buying life insurance policy is a vital instrument for protecting a family’s finances in the event of a disaster. As a result, it is essential to be appropriately insured and to keep the family informed.
When a businessman died unexpectedly from a heart attack, his family was left with massive outstanding debts that he had taken out. They had no option but to sell their houses in order to pay off their bills. Sachin Kumar had a Rs 1 crore life insurance policy that would have covered all of his responsibilities, but his family was unaware of it since he had never notified them about the purchase.
Life insurance is a vital instrument for protecting one’s family financially in the event of a death, making it a must-have for everyone with dependents. However, while purchasing life insurance, many individuals overlook certain simple considerations, which may lead to issues later, particularly if a claim is filed.
Here are some crucial considerations to make when getting life insurance.
Are You Purchasing More Life Insurance?
Underinsurance is just as awful as not having any insurance. Ideally, your life insurance coverage should be sufficient to cover all of your responsibilities as well as provide financial assistance for your loved ones for at least 10 years or more, or until a specific objective is met, such as the completion of a child’s schooling.
As a general guideline, your life insurance should cover at least 15-20 times your yearly salary. So, if your yearly income is Rs. 5 lakh, your life insurance coverage should range between Rs. 75 lakh and Rs. 1 crore.
Are You Increasing Your Life Insurance Coverage at Different Stages of Your Life?
When you are single and/or have no dependents, you do not need a large amount of life insurance coverage. However, when you marry and have children, your financial duties grow. As a result, it is critical to maintaining your life insurance coverage up to date with changing obligations in life.
Have You Told Your Spouse/Dependants About Your Life Insurance Policy?
The goal of getting life insurance is to ensure financial stability for one’s family in the event of one’s death. This goal, however, is null and void if the family is unaware of the insurance coverage and so unable to file a claim.
According to media sources from July 2021, a significant amount of Rs 82,000 crore is languishing in unclaimed bank accounts, life insurance policies, mutual funds, and PF accounts throughout India. The primary cause of this is a lack of formal nomination, or a failure to inform the legal heir or successor about the investments.
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As a result, it is important to advise your spouse or loved ones about any investments you make, including life insurance, so that they do not lose out on what they are entitled to in your absence.
Concluding Thoughts
Life insurance is a must-have for everyone who has dependents. At the same time, it is critical to get appropriate life insurance and to continue updating your coverage as your financial obligations grow. It is also vital to keep your loved ones updated about your assets so that they may continue to live their current lifestyle.
