Before buying anything the first thing we ask ourselves is do we really need that thing. The same way before buying an insurance policy everyone thinks why we need to buy it. This topic explains the real reasons why we need to buy an insurance policy i.e Importance of Insurance
Provide security for our loved ones
As human beings, we care for our family. Everyone would like to see their children grow in a secure environment and achieve what they want to achieve in their lives without fail.
We all want to create a “free from worries” environment for our loved ones. Each individual try to work hard and provide what their family needs as long as they are in a good state.
But life is not always predictable it gives surprises when we face those bad surprises from life what will happen to our goal of providing Security to our loved ones?
This is where exactly Insurance will help us achieve our goal. The insurance policy that we buy will give financial security to our family.
Income after retirement from insurance
As we grow older our requirements also increase which is nothing, but our expenses increase. When expenses are increased, and income is decreased it will be a mess.
On top of it, we become old and won’t be able to work that hard to match our expenses or our needs financially.
I know some of us will get pension after our retirement, but do you really think the pension amount will cover all the expenses that we face in our 60s and 70s? the answer is NO.
So, in this kind of situation, the insurance will cover you. As soon as you retire you start getting a steady income from your insurance company. You can lead life the same as you are working and getting a monthly salary.
Save on Tax payment from insurance
Another reason why we need insurance is tax savings, it is one of the best ways to save on your tax payment.
Life and Health insurances both are eligible for tax deductions as per Section 80D of Income Tax Act 1961
The more elaborate example of how much one can save on taxes by buying insurance is explained in this article below
Another example from HDFC how much tax can be saved
Loan on insurance
If qualified some companies to provide loans against insurance policies. When you need money it is the best option to acquire a loan against your life insurance policy. Interestingly most of the times the interest rates for loans against insurance policies are lower than the personal loans.
The Term insurance plans are exempted from this facility. I will explain more about this in our upcoming topics.
It is to acquire loans against insurance policies, there will not be much scrutiny or paperwork involved in this type of loan process, it is similar to acquiring a gold loan.
Now, is the right time to buy Insurance
If you do not have insurance already it is now the right time to buy one. Why now?
Earlier it was hard to understand the monthly payments, how much we are covered for, how to claim the insurance, how to get a loan against the insured money, how to get tax exemption/tax cut when we buy insurance.
Now there is enormous information on insurance policies is available online, and it is easy to buy insurance policies online in just a few clicks. All of these factors help insurance buyers.
Another factor why it is the time to buy insurance is increasing premium rates, if we look at the premiums paid now and premiums paid a couple of years ago for the same insured sum, it definitely higher. As our age increased insurance companies consider it as more risk to them so the premiums get higher as we get old. Some insurance policies do not even provide an option for senior citizens So it is good to buy insurance policies as young as possible.
Reduce stress in life by buying insurance
We all are stressed in life for different reasons, work, relationships, society, etc. But there is one common reason that we all are stressed about is when there is no certainty of what will happen in bad times.
Imagine the relief you get from the thought that the family’s future is secured even in your bad times.
As a prime member of the family, this is what exactly you want, right?
Quality of life improves after buying insurance
Once you gained relief it eventually shows the impact on your life. You will feel confident, you will not fear the experiment.
Here I can give you a live example of my own experience, I left India to work overseas and my family joined me later. So, when I stayed outside India without my family, I never thought of buying any Insurance but as soon as they joined me, I felt like I have the responsibility to secure them.
Before buying insurance I used to always think of saving money, and restrict myself and my family from buying things and restrict from going to places to visit and going to restaurants, but after I bought insurance I got some relief and I started spending on things that we wanted to spend since I know that we are covered.
So that is why I suggest all of you buy the insurance and get a good quality life that you and your family deserve.
Insurance is Necessity not Luxury
These days insurance has become an important necessity for everyone it is no more a luxury.
As there is an increasing trend in nuclear families, financial security became very important and only insurance policies provide the families with the required security.
In earlier days when something unexpected happens, the family used to have support from their elders and relatives but now it has become very difficult to get support from others, so it now necessary to get that support from an outside saver i.e. Insurance.
When we talk about “Why we need Insurance” or what is the Importance of Insurance, it all comes down to one thing that is “Prevention is better than cure”. So we need to get secured rather get burnt from all the insecurities and unexpected challenges the life throws at us.
I personally believe the reasons 1 Ensure security for our loved ones by buying Insurance and 5 Reduced stress in life by buying insurance are more important than any other reason in this list. After all, these are the two things, we all look for in our life.