If you really want to purchase a life insurance cover that is meaningful there is no alternative to Term Life Insurance.
Have you ever asked yourself the true purpose of purchasing a life insurance policy? We get many responses to this fundamental question – mostly incorrect. Invariably, the responses tend to be – “to save taxes” or “to invest and make the money grow”. These are noble objectives, but not for life insurance. The primary purpose of life insurance is to provide a financial cover to your dependents if you die early.
Let us assume that you are young, probably in your thirties and have a family comprising two young children. Professionally, you are doing and earning well. Your family is used to a high quality lifestyle. You have some financial liabilities such as a home loan, probably a car loan and some loans for durables. These financial commitments are under control because you have a good stable career. It feels as if nothing could go wrong. That assumption is normally true except that, sometimes, a sudden and unexpected death can derail everything.
Admittedly, early death is a rare event. Very few families go through this. But, the thing to remember is that for those that have the misfortune to go through this, the impact is cataclysmic. Such events set a family back by a decade or more. Many fail to recover. Look around in your family and friend circles and you will spot examples of how early death adversely transforms a family. The true purpose of life insurance is to fundamentally address this low probability but high impact event, because you do not want your family to go through this trauma.
The first question while insuring yourself should be “How much should I provision for and how much would it cost?” Everything else is secondary.
“Premature death is a low probability but high impact event, which you do not want your family to suffer from. This is the only reason for taking a life insurance policy”
2. “Premature death is a low
probability but high impact event,
which you do not want your
family to suffer from.
This is the key reason for taking a
life insurance policy”
3. As living standards rise When you
and cost of living are
relatively
escalates, there Older
(around
appears to be no respite 38-40)
Resources
Required to
When you are maintain
Resources relatively living
The Gap
Required to standards
Young (around
maintain and future
living 28-30) economic
standards prospects of Assets and
The Gap
and future investments Your
dependents
that you have liabilities –
economic built home loans,
prospects of (80 to 100 car loans,
Assets and other loans
dependents investments Lakhs)
Your
that you have liabilities –
built
(40 to 50 home loans, Your Savings
Your Savings car loans, so far
Lakhs)
so far other loans
4. What you need is far more than
what you have…..
You need to provide protection to the extent of 10 times your
annual income
You need an instrument that can deliver several times its cost in
terms of real cash for your survivors
You need to leverage your resources
5. Term Life Insurance is your only
real option
In your twenties you can get a leverage of
even 400 times your annual premium as
protection
6. Your Leverage Reduces with Age
Term Life Policy of a leading Insurer. SI – Rs 50 Lakhs. Term Period – 25 Years.
Leverage Defined as ratio of SI to annual premium.
By the time
Age Annual Leverage
Premium you reach
the age of
25 12,200 410 40 your
leverage
30 15,450 324 reduces by
a factor of
35 21,250 235 2.5 from
what it was
40 30,800 162
when you
were 25
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SecureNow Insurance Broker Private Limited
3rd Floor, 29 Hauz Khas Village, New Delhi 110016
Web – www.securenow.in
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