Get Life Insurance Coverage against Natural Disasters like Chennai Storm @ Aditya Birla Sun Life Insurance
Natural calamities wreak havoc on mankind. Countless lives are lost besides the loss of property. Chennai is the living example of the aftermath of such calamities. While flood rocked the city last year, this year Vardah wreaked havoc.
Take adequate Life Insurance coverage against natural disasters
~Key Take Away from the recent Chennai Cyclone called Vardah~
Chennai has been at the receiving end of nature's fury for two consecutive years in a row. While December 2015 was witness to the disastrous flood which grappled the city, in December 2016 the city was in the eye of the storm, quite literally. Cyclone Vardah hit Chennai and disrupted the otherwise busy life of the city. Besides the damage to property and loss thereof, Cyclone Vardah was also responsible for the death of many people. Was the city prepared?
We are all busy in planning for our future and the things that we would like to acquire with the savings we do. Whether it is a residential apartment, a luxury car, the latest mobile phone, a trip to an exotic foreign locale or planning for our life goals, we have a myopic vision when it comes to financial planning.
While we make elaborate plans for the future we somehow forget to include the very pertinent question – 'What if we are not around to fulfill the envisaged future?' Who will fulfill our financial goals then? Forget about the apartment, car, gadget or vacation, would there be sufficient provision for meeting the most important of life goals like meeting the day to day expenses and education for our children?
This is where our myopia sets in. We invest in bank fixed deposits, gold, shares, mutual funds, cars, gadgets, gold and what not but we never plan or invest for contingencies, which would come in handy in those rainy days. Do we?
We don't. It is not when a calamity strikes, like the cyclone Vardah that we become more vigilant but then it is too late. Prevention is always better than cure, isn't it?
What is the reason for lack of emergency planning? Is it lack of knowledge or ignorance? If it is lack of knowledge read on and get enlightened. Even if it is ignorance read on, you might actually see the folly of your myopia.
Life insurance and its importance
Natural calamities wreak havoc on mankind. Countless lives are lost besides the loss of property. Chennai is the living example of the aftermath of such calamities. While flood rocked the city last year, this year Vardah wreaked havoc. While Chennai can be and is being rehabilitated, what about the lives lost? Is there any rehabilitation or replacement program for the same? The Government is compensating bereaved families who have lost their loved ones in the cyclone but is the compensation enough?
Of course it isn't. Loss of life is emotionally irreplaceable. What about the financial aspect? Can't it be taken care of?
Of course it can be. Here is where a life insurance policy comes in the picture. A life insurance plan provides the much-needed financial compensation to families when a member dies prematurely. In this sense, life insurance creates the emergency fund which is required in case of a natural calamity.
What is life insurance?
Life insurance is a contract between the insurance company and the policyholder wherein the company promises to pay the policyholder a pre-defined benefit if the event against which insurance is taken occurs. The policyholder, in return, promises to pay a consideration called the premium to buy the insurance plan.
How is life insurance relevant?
There is a big 'if' smack in the middle of the word 'Life', isn't it? This 'if' depicts the uncertainties of human life. Death and disease are such uncertainties which threaten our life. While recuperating from diseases is possible, there is no coming back from death. Death of an individual causes greatest distress, both emotional and financial, to the family. If the family's bread-winner dies pre-maturely, the family suffers to meet their daily expenses. Life insurance creates an emergency fund which helps families to meet such expenses. Here is the importance of life insurance, especially in the face of a calamity:
- Life insurance is a source of funds in an emergency
Where do you invest your surplus funds? Is it in mutual funds, in stocks and shares or in the more conservative fixed deposits? Do these avenues provide funds in emergency (read on pre-mature death)? Investment avenues, like the one mentioned above, aim to create wealth. They are not applicable in funding emergency situations. A life insurance policy, on the contrary, works prominently on the concept of emergency funding. On pre-mature death, a lump sum benefit is paid to the family which can be used for meeting the family's everyday living expenses and any other liabilities.
Calamities, like the cyclone Vardah, do not come announced but when they do strike they could be life threatening. While the loss of life cannot be compensated, the financial loss can only be compensated through a life insurance policy.
- It helps in paying off liabilities
The lump sum amount which is paid by a life insurance policy not only helps in taking care of lifestyle expenses, it also helps in repaying off loans and other liabilities. By repaying the liabilities, a life insurance policy takes off the burden of such liabilities from the shoulders of a bereaved family. In this respect, a life insurance policy comes in handy.
- Life insurance plans can meet varied financial goals too
Not only providing income replacement life insurance plans also help individuals in meeting varied financial goals through varied plan choices. There are child insurance plans, retirement plans, saving plans and also wealth creation plans. These plans fit the varied financial goals of individuals whether it is retirement planning or planning for a child's secured future. Thus, life insurance plans have a multi-purpose fit and so they provide a solution for all life's needs.
- Life insurance gives peace of mind
If someone takes out the uncertainties of life what do you get? Peace of mind, isn't it? Life insurance serves this purpose. By ensuring payments in unforeseen events a life insurance policy provides financial security to individuals. And what ensures peace of mind if not financial security?
- Life insurance also saves taxes
Sensing the importance of life insurance in every individual's portfolio, the Government has also allowed tax exemption on the benefits payable under a life insurance policy to promote insurance sales. Premiums payable are exempted from tax under Section 80C of the Income Tax Act 1961, up to Rs.1.50Lakhs while the benefits received are also completely tax-free under Section 10(10D) of the Income Tax Act.
What does the Chennai Cyclone teaches us?
The Chennai cyclones proved two important facts.
- Nature's fury is uncertain and unforgiving
- Life insurance is the only way to protect against the financial repercussions of such calamities.
If you were not affected by the havoc wreaked by Vardah, count yourself lucky. But if you don't want to fall victim to any future calamities, insure yourself. Though you cannot stop any calamity from striking, you can at least prepare yourself financially to deal with the same. A life insurance plan, thus, is the solution in ensuring the desired financial security. So, you should,
- Invest in a life insurance plan at the earliest
A stitch in time saves nine. Remember this saying? The same principle applies in case of buying a life insurance policy. You should insure yourself at the earliest because you never know when tragedy might strike.
- Opt for an optimal Sum Assured
The mistake which most of us always commit when buying a life insurance policy is a low Sum Assured. A little knowledge is a dangerous thing. Remember? Similarly, a little Sum Assured is also a dangerous thing as it does not provide for optimal benefits of your life insurance plan. So, it is always advised to avail a Sum Assured, also called the insurance coverage level, of an amount sufficient and large enough to provide for your family's lifestyle expenses for years to come in your absence.
If affordability is a bone of contention, you can opt for term life insurance plans which provide high Sum Assured levels at very low rates of premiums upto the age of 70 – 75 years. These plans make the concept of high Sum Assured levels affordable too and are perfect for the income replacement need of individuals.
- Choose a longer tenure
Life insurance is a concept meant for protection over a longer tenure. Since the possibility of pre-mature death is uncertain, the coverage should be taken for the maximum possible tenure. In fact, experts recommend buying whole life insurance plans which cover individuals for their entire life span and provide the benefit only when the individual dies.
- Not confuse insurance with investment
Apart from Unit Linked Insurance Plans which are designed with the main aim of wealth maximization and capital appreciation, other life insurance policies are designed to cater to specific life goals. A term insurance policy is expected to replace your income in case of your pre-mature death and provide financial security to your family. A child plan is supposed to secure your child's future even when you are not around and pension plans create a retirement corpus. So, when you buy any of these plans, you would be fulfilling one of your financial goals which would not necessarily provide you returns on your premium payments. So, consider insurance plans to be vehicles of financial security and not investment avenues.
So, don't let a calamity, like Vardah, to teach you a lesson. Insure yourself and be prepared for any financial crisis you or your family might face.