SECURING A LIFELINE

Life insurance is a way to protect your family should you unexpectedly die. It is a financial instrument to keep their dreams alive when you are no longer able to provide for them

- NARAYAN KRISHNAMURTHY

If you have seen video advertisements of life insurance products, they generally revolve around a happy family and contrast the message with a 'what if' context to stress the importance of life insurance. Some advertisements very clearly communicate how the family managed its financial affairs because of a life insurance policy taken by the primary income earner. Such stereotypes have created a strong association for life insurance with events leading to death of a family member. Indeed, life insurance is not just a financial protection tool; it is a financial solution for your peace of mind.

Yet, chances are that most people often buy life insurance for reasons other than financial protection. They buy it to save tax, as an investment option, or a savings option that also provides financial protection. There are people who view life insurance as an expense, since they do not receive any proceeds after surviving the term (in certain types of policies). There are some who view them as poor investment options, even as many swear that these are very complex products to understand.

Shopping for life insurance is an arduous task. You need to get familiarised with an alien lexicon-words such as premium, life cover, sum insured, death benefit, payouts and beneficial nominees among others. Then you need to be considered to be in good health to be offered a policy at standard rates; else, you land up paying more for the same. The deeper you dig, the less confident you are likely to feel about whether the policy you have taken is the right one.

But really, think of life insurance as placing a bet on when you will die. As absurd as this thought may sound, it is exactly what you do when you choose life insurance. When you buy life insurance, you only win if you die early-the insurance pays off your dependants, which, in turn, could help close any debts you had and allow them to maintain their lifestyle.