Interestingly, insuring one’s life costs is half of what it costs to insure a car. Yet, under-insurance in life coverage exists. Get high-cover term insurance at low-cost to be properly insured. For most of us, owning a car has been a dream that we all have developed since our childhood. However once it is a way we protect ourselves financially in case of any damages caused by accidents or theft. While people insure a car for Rs 10 lakhs at an annual premium of Rs 35,000, many are still insured for as low as Rs 1-5 lakh, when it comes to our life cover. This need to be addressed and getting adequate life coverage should become a priority.
Why adequate coverage is important?
As a sole earner of the family, one has financial responsibilities to take care of. In case of any unforeseen crisis, one has to not only provide enough financial support to the family to enable it but to maintain the same standard of living as before and also ensure that the long-term goals of dependants are not jeopardised. Life insurance acts as an income replacement tool. Without it, one’s investments or assets will have liquidated to meet the financial obligations. However, buying insurance without properly estimating the amount required is of no use. One must adequately cover their family to provide a sizeable amount to the surviving members.
Start with an example:
How much does it cost to insure one’s car and one’s own life? Car insurance has a cap and cannot be more than its ex-showroom price. In reality, Insured Declared Value (IDV) denotes the amount of car insurance. The premium calculated on IDV keeps reducing each year. On the other hand, there is no insurance cap put on human life value and the actual amount of coverage would largely depend on one’s income.
Assuming an IDV of Rs 10 lakh for a car, the annual premium in the first year comes to about Rs 35,000. For the same amount of annual premium, a 40-year-old can get life insurance cover for 30 years through a pure term insurance plan for a sum assured of about Rs 1.75 crores. Else, by paying half of what one pays for car cover, i.e. Rs 14,000, the same individual can get a life cover of Rs 70 lakhs.
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