Traditionally, Life insurance has always been a way to protect your survivors and dependents against financial hardship. Simply put, Life insurance offers financial protection to you and your loved ones when you retire, die or are unable to continue providing financially due to unforeseen incidents. While nothing can substitute your loss, insurance at least takes care of the financial gap created by your absence or the absence of an active income source. It thus tries to eliminate risk by substituting certainty for uncertainty
Life insurance therefore, in the traditional sense, helps an individual cope with the twin risks of:
Dying too early; or
Living too long
How does it work?
“The fortunate many, share the losses of the unfortunate few!”
Life Insurance is essentially a means of sharing financial risk amongst a large number of people who contribute individually to create a common pool of resources. This common pool acts as a security blanket for each member of this community should the event insured against occur in his / her life. Since the risk probability for an entire community is much lower than the risk of an individual, the individual contributions to this common pool are not very high. This way, the cost is minimized for those who suffer an unexpected misfortune and is shared by the fortunate ones.
However Life Insurance has evolved over time. Today it is a smart savings and investment option and can offer market linked returns. With the right life insurance policy you can be assured of maintaining your standard of living and even improve it. You can plan for your aspirations and time your policies to get you a lump sum amount just when you need it or you can simply make your money grow for the rainy day. It can help you meet your child’s educational needs, their marriage expenses or for purchasing that dream home that you’ve always wanted.
