Importance of Life Insurance in our lives
Saturday,09 October 2021 05:31 PM IST
What the pandemic of 2020 has taught me is that “Uncertainty is a part of our lives” and you need to think of Life Insurance as a way to lead our lives from darkness to light. As it is said
“Asathoma Sath Gamaya
Tamosama Jyothir Gamaya
Mrityoma Amritham Gamaya
Om Shanti Shanti Shanti hi”.
This saying is true when the world is held hostage by a ‘mere virus’ and never in my lifetime have I seen human beings so helpless, not knowing what to do. In such a time life insurance is a boon, a life saver. What is life insurance? Life insurance is mere “a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium or payment, upon the death of an insured person or after a set period of time”. Why do you need life insurance? I would say you need life insurance to ensure that your immediate family has some financial support in the event of your death, to finance your children’s education and other needs, to have a savings plan for the future so that you have a constant source of income after retirement, to ensure that you have extra income when your earnings are reduced due to serious illness or accident and lastly to provide for other financial contingencies and lifestyle requirements.
Life insurance in other words is a financial cover for any contingency linked with human life -- death, disability, accident, retirement, etc. A human’s life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is a loss of income to the family. Though we cannot value human life, a monetary sum could be determined based on the loss of income in future years. Hence, in life insurance, the sum assured is really a ‘benefit’. Life insurance products provide a definite amount of money in case the life insured dies during the term of the policy or becomes disabled on account of an accident.
I am going to write about some common terms in life insurance vocabulary. They are: