LIFE INSURANCE - BASIC

Life is full of uncertainties. A family becomes incomes less in the event of its sole breadwinner’s sudden demise. Therefore it is essential to protect family’s income from such risks. This can be done by having adequate life insurance on the life of family’s sole breadwinner.

The best way to do this is by buying pure TERM LIFE insurance. This is cheapest form of all Life Insurance products. This is available with practically all the Insurance companies. There are no monetary benefits attached to such insurance on surviving the term of the policy. The benefit is only to the nominee in the event of insured’s death.

The approximate annual premium for 50 Lakhs sum assured policy for a 30 year male should range between 9000 to Rs. 15000/- for 20 year period that translates into Rs. 750 to 1250/- per month. This is worth paying for the security of family’s income in the event of breadwinner’s untimely death.

The adequacy of the insurance should be judged from the fact that how much safe income the money that would be received by the nominee can generate by keeping it in banks or post offices. . Sum assured is the money that is likely to be received by nominee in the event of unforeseen causality.

For example, assuming an interest rate of 5% p.a., Rs. 50 Lakhs would earn an annual income of Rs. 2,50,000/-. This translated into monthly income comes to Rs. 20,800/-. Therefore family’s monthly income need should be kept in mind while choosing the sum assured for such insurance.