Your financial needs change with the stages of your life and it is important that you protect the future of your loved ones with the correct sum insured when you are not around to care for them.
Since the start of the COVID-19 pandemic in the country, the term life insurance industry is experiencing something of a renaissance. In the past 8 months, clients have been buying term life insurance in large amounts, just as thousands of Indians began testing positive for the new coronavirus. The result seems logical given the central objective of term life insurance; financial support in the event of your sudden death. If the breadwinner dies unexpectedly due to COVID-19 infection, term life insurance will cover the immediate gap in household income.
“Panic Buying”: The New Trend?
Insurers report that the term life business has seen a 40 percent traction in the past 6 months as the pandemic has brought the importance of financial protection to consumers’ minds in ways like never before. before. In addition, media reports filled with stories of thousands of people infected with the pandemic and the tragic loss of life every day, people are increasingly aware that good health and a long life are no longer something they can give. for granted. While it’s a good thing that more and more people are buying term life insurance to financially protect their families, there is another side to the story. With an increase in the sale of term life insurance plans, Indians are believed to be moving towards ‘panic buying’ amid mounting concerns about the COVID-19 pandemic.
This is supported by a recent Swiss Re report which states that Indian consumers are the second most active in the Asia Pacific region in seeking insurance during COVID-19, driven by financial concerns. The report further explained that, ‘Indian consumers are among the most active and engaged when it comes to insurance, second only to China when it comes to researching new policies and satisfaction levels, demonstrating the potential and importance of insurance in this growing market ”.
Things can go wrong
Well, while it is important that you invest in the right term life insurance policy to financially protect the future of your loved ones, insurance “panic buying” can cause an unnecessary waste of money. Additionally, it can cause undue anxiety and stress if you find that you are unable to file a claim when the need arises, or there are delays in receiving your insurance proceeds just because you did not purchase the proper term life insurance policy. A few months ago, one of those incidents occurred with the family of 38-year-old Ramesh Mathur, who purchased a term life insurance plan in March, just as the pandemic hit India. Out of anxiety and stress to financially protect the future of his dependents, Mr. Mathur purchased a term life insurance plan with a sum of Rs 50 lakh quickly insured without assessing his actual financial needs. Unfortunately, Mr. Mathur died due to COVID-19 in the month of October and, upon his passing, his family received a sum of Rs 50 lakh.
However, this amount was not enough to cover the financial needs of the family, as Mr. Mathur had a 35 lakh rupee home loan to be repaid and he also had two children aged 9 and 5, and a wife. that everyone depended on him. With that lakh of Rs 50, his wife had to pay off the mortgage loan as well as taking care of the financial needs of the children which included their education, marriage and daily lifestyle expenses which was practically not possible without asking for financial help from another family. members. The point is that the main reason that Mr. Mathur bought the term life insurance plan (financial protection of dependents) could not be met. During the ongoing pandemic and the immediate need to protect your family under a strong financial protection plan, there are many people like Mr. Mathur who are making the same mistake: “panic buy” term life insurance.
Be careful what you plan to buy
Just like wearing a mask, frequent hand washing and social distancing are the best defenses against COVID-19, assessing your financial needs, purchasing necessary supplements, and taking coverage until the appropriate age are some of the best defenses against panic. purchase ”of term life insurance. During this period of heightened financial security anxiety, it’s important to set aside some time to review your financial worth and assess your financial needs for years to come.
This is because your financial needs change with the stages of your life and it is important that you protect the future of your loved ones with the correct sum insured when you are not around to care for them. To make sure that what you plan to buy to protect the financial future of your loved ones remains relevant after several years, it is important to invest in the right product. It should never be forgotten that financial protection for dependents who use term life insurance is the only key aspect of correct financial planning.
(The author is CBO-Life Insurance, Policybazaar.com)
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