You must have often heard people advise others to buy a life insurance policy. But what is life insurance? It is essentially a financial product that offers financial security to you and your loved ones in case the worst happens. Since life is full of uncertainty and contingencies, a life insurance policy allows you to take care of your family even when you are not around. In case of the policyholder’s demise during the policy term, their family receives the sum assured, which comes in extremely handy in times of need. For this, you need to pay a premium amount regularly over the term of the policy. 

If you are wondering whether getting a life insurance policy would really help your family, then the answer is YES. If you are the breadwinner, wholly or partially, then it’s crucial that you buy a policy to safeguard your family’s financial future. Here’s why life insurance is important for your family:

  • Allows your family to meet expenses 

No matter what happens in life, expenses never stop. Whether that’s utility bills, school fees, groceries, medical bills, or more, there are several financial expenses to be met regularly. Having a life insurance policy in place ensures that your family has the financial security it needs to meet these expenses even when you are not around. 

  • Prevents debt burden from falling on your family 

It is very natural to have taken out loans such as long-term loans like a home loan, an education loan for your children’s higher studies, a business loan, etc. A life insurance policy ensures that the debt burden does not fall on your family in case you are not around. The life insurance sum assured can be used to pay off the outstanding debt so that your family is not distressed by EMI (Equated Monthly Instalment) obligations. 

  • Helps maintain the standard of living 

A life insurance policy allows your family to maintain their standard of living even if you are not around. The sum assured gives them enough time to figure out additional sources of income and in the meantime, they do not have to compromise on the way they live. This is important because when one is already going through emotional and mental trauma, what is important is for everything else to remain stable in their life. 

  • Allows your family to meet their goals

The sum assured from your life insurance policy can help your family’s goals remain on track. Whether it is your child’s higher education or wedding, or your spouse’s retirement plans, having a life insurance policy ensures that your family’s savings and investments don’t get wiped away in order to meet living expenses or pay off any outstanding debt. Hence, a life insurance policy looks after your family’s financial needs and future even when you won’t be around. 

  • Works as a savings tool

Several types of life insurance policies also come with a maturity or survival benefit. This means that if you survive the policy term, you still receive the sum assured. In such a case, the life insurance policy becomes a saving tool too. Say you got a life insurance policy at the age of 35 for 30 years. At the age of 65, when you receive the sum assured, you can use this chunk of money to meet certain big-ticket financial goals such as starting your own business, adding to your retirement corpus, buying a vacation home, etc. 

Experts recommend that your life insurance coverage amount should be at least 10 times your annual income. You should also look into your family’s annual expenses, current debt, future goals, assets, etc., when making this decision. You can make use of a life insurance premium calculator online to determine what the policy would cost you. Using a life insurance premium calculator, you will receive an instant quote from the insurer that will help you get a better idea of how the policy fits into your financial plan. Remember, the best life insurance policy is not the one with the lowest premium. Instead, it is that policy that offers enough coverage, has flexible premium payment terms, an insurer that offers good service, and has a high claim settlement ratio.