- Date : 06/07/2018
- Read: 5 mins
Here are 5 good reasons why life insurance should go hand-in-hand with the wedding rings on your fingers.
Love and marriage, love and marriage
They go together like a horse and carriage
So sang Frank Sinatra in days of yore when love was more innocent and marriage was a lifelong event for most couples.
It’s easy to get carried away when you’re planning your wedding, but the harsh truth is that life is full of uncertainties. If an emotional or financial setback affects you or your spouse, you wouldn’t want to be in a situation where money worries become a permanent fixture. A life insurance plan – along with health insurance – is more critical than your choice of honeymoon location and must be an integral part of your annual financial planning.
So here are 5 good reasons why life insurance should go hand-in-hand with the wedding rings on your fingers.
1. Increased expenses
Unfortunately, a lack of awareness about the importance of insurance cover affects a large number of Indians. The difference between living a single life and being married is significant. Saving for the future suddenly becomes a real concern, and while many wait until they have a family before thinking about insurance, bear in mind that you’ve already begun to share your life – and your debts – with another person.
2. Better be early than be sorry
The cost of life insurance increases with age, as the mortality rate among young adults is lower when compared to mature or older people. Young people are also less susceptible to lifestyle diseases and critical illnesses, making them less of a risk for insurance companies. Lower premiums make acquiring insurance cover – and by extension, financial protection – more affordable.
3. Debt obligations
A change to your single status also means a change in your relationship with finances. You start thinking about savings, and perhaps loans for big-ticket items such as car loans, mortgages, or children’s education. As they say, better safe than sorry. In case of sudden demise or permanent incapacity of one partner, the entire debt obligation will fall on the other. It will be almost impossible to sustain EMI payments for long on a single income and to lose your home because you didn’t plan effectively is plain short-sightedness. The right kind of insurance cover brings you peace of mind from such devastating eventualities.
4. Lifestyle protection
If you or your spouse is struck with a long-term illness or permanent disability and cannot contribute to the family finances as before, will you still be financially secure? Chances are the answer is ‘no’. In such a case, while it may seem like you’re tempting fate; any insurance cover you opt for should ideally include disability cover. Sometimes your employer may offer such a cover, but it is unlikely to be at a level that covers your monthly expenses, let alone affords your lifestyle, so it is best for you to also opt for private protection to reduce the stress associated with paying your monthly bills.
5. Life insurance for two
Most couples do recognise the importance of insurance protection prior to getting married, but it’s usually put off for another day. Life insurance helps in protecting your family via death benefit paid out to the surviving spouse, and there are two product options for married couples:
Term plans – These are ideal for starter couples as they offer long-term protection for low premiums for a fixed period, say 10 or 20 years. If the policyholder is still alive at the end of the plan period, it lapses with no payments made to the policyholder or the nominee. A payout is only made to the nominee on the demise of the policyholder while the policy is still in force.
While these offer joint cover under a single plan, it is better to opt for individual plans if both of you are working. Term plans also offer useful riders that can be attached to the base plan for an extra premium.
Traditional plans – Also known as whole life policies, these plans cover an individual's whole life and are suitable for building savings over time. Such policies can be used to meet short and long-term financial goals. Although these policies are more expensive than term plans, they offer a guaranteed amount at the end of the term.
When deciding on the kind of policy to invest in or coverage amount, consider factors like your current expenses, the rate of inflation, any existing loans you may have, future expenses (new car, child's education), etc. Add up all your debt – present and anticipated – and then structure a policy that ensures all these are covered. This assessment must include the cost of raising and educating your children, so it does not come as a shock to the surviving spouse. To know how much cover would you need to protect your family after you, use this life insurance calculator that will give you the result in 3 easy steps.
Why buy insurance this year?
Apart from extending the scope and scale of healthcare provisions to less advantaged citizens, Finance Minister Arun Jaitley also extended micro-insurance and pension schemes to Jan Dhan Yojana accounts. However, the 2018 Budget also introduced long-term capital gains tax (LTCG) on investments in equity and mutual funds, making unit-linked life insurance products (ULIPs) relatively attractive in the medium to long-term. With this, life insurance and wealth creation as a by-product should gain a stronger foothold among existing and future investors and policyholders.