Why Does One Need Life Insurance?
"Life Insurance is essential, not only for an individual, but also for a business organization."
Life Insurance, in today’s world of uncertainties, is popularizing and is gaining much importance. Simply, it is a contract between Insurance Company and the policy holder, also called Insured. Though the policies vary from company to company, the basic concept is that the beneficiaries get lump-sum amount upon the insured's death.
A lot of people throughout the world are aware of Life Insurance’s importance; but, most of them choose to ignore the consequences and difficulties that come with one’s death, and don’t buy any policy at all. However, the pandemic of 2020 has made people keen about insurance.
In context of Nepal, several insurance companies and policies are evolving day-by-day. However, the penetration rate in Nepal is very low. About 90% of the citizens are living without any insurance policy even the educated ones who are well aware about the importance of life insurance.
Here, the major reasons to buy a Life Insurance Policy are shown:
Leave something for your family
Though the sum doesn’t compensate the loss of a person, it helps the family of the insured to solve their financial problems and provides financial security. Especially, for a family with children, the sum received can help in up-bringing of the children and cover their education expenses.
Pays off debt
The death of a person should not mean debt for their loved ones. The sum received after the death of insured can help to clear all the debts and free the loved ones from the burden of the insured’s financial problems.
Supplement to retirement plan
Life Insurance can also be a supplement to retirement plan. It helps the retirement savings to last till the end. One can invest on the insurance policy throughout their working years and can enjoy the monthly income from it after retirement.
Aids in business survival
Life Insurance is essential, not only for an individual, but also for a business organization. A business may face disastrous consequences due to the loss of its key employee or one of the owners. Policies to prevent such consequences such as key-employee insurance, buy-sell agreement, etc., prevail.
The insurance of key-employee helps to cover the loss a company has to bear from the death of the most competent employee. Similarly, buy-sell agreement aids in survival of the business even after the death of one of the partners/ owners by compensating for the loss. The sum received can kept by other owners for future use or can be used to buy the company shares from the family of the insured.
Peace of mind
The insured won’t have to stress about what will happen to their family once they are gone as the financial security of their family is ensured.
Life Insurance not only protect lives from death and accidents, but is also a lucrative investment tool that helps to save money for future.