Goal Based Investing

Risk Protection

While it is important for an individual to achieve his financial goal, it is equally important to protect the risk of loss of life. Loss of life can lead to loss of income and can jeopardize any financial objectives.

Term insurance is a tool that will protect your family against the uncertainty of life. In case of the death of the life insured, the life insurance company pays a predetermined sum of money to the beneficiary. This can ensure that the family can lead a comfortable life even when you are not around. It can also ensure that your financial objectives like your children’s education and marriage are not jeopardized.

We would like to share with you two important reasons as to why one should definitely have term insurance.

  • Protecting your Family – If you are the sole bread-winner in your family, a sudden death can result in loss of income to the family. Life insurance can help in protecting your family’s finances in case of such uncertainties.
  • Protection Against Liabilities – Most home purchases by salaried-class people are done through loans. There may also be other liabilities in life that are paid periodically and highly depend on your monthly income. Life insurance can help your family in repaying these loans even if you are not around.

So, how much of life insurance does an individual need?
It is based on

  • The amount required to fund monthly expenses for your family
  • The present value of the future financial objectives
  • Your liabilities (loans)

The need for life insurance reduces as you approach retirement or as your major financial objectives are achieved. If you have no dependents and enough wealth to manage your liabilities, the need for life insurance is very minimal and close to nil. However, if you have dependents and liabilities, it is important that you have sufficient life cover.

Life insurance