Is Life Insurance cover worth it?

The primary focus of this research report is to answer the basic yet important question whether to take life insurance or not. The goal of life Insurance is to give a financial benefit to dependents in the event of the insured person's early death. When the insured dies, the insurance pays a specific sum to the named beneficiary, known

as a "death benefit." This seems simple to approach but hard to analyses whether policy holder really get the benefit or not. There are thousands of questions arises when we talk about the term ‘Life Insurance’ because there are variety of reasons of taking life insurance, including providing an income to replace lost earning potential, funding business or partnership buyouts in the event of the death of one of the business owners, funding retirement plans, indemnifying a loan in the event of premature death, paying for college educations, providing dependency income for the family, and protecting future insurability.

About Life Insurance


In theory, life insurance works on a simple basis. In comparison to other financial services, it's also morbid. You make regular monthly payments so that when you die, a beneficiary of your choice receives a sum of money equal to what you would have earned if you had lived longer. That is the harsh reality, which many life insurance clients are unaware of: the service is supposed to be nothing more than a replacement plan. The idea is that if your family faces a crisis that isn't related to money, their finances will be minimally impacted. Your husband and children will not have to work numerous jobs, beg for alms, or lose their home and

car if you die.

Hedging the Life Bets

It's vital to keep in mind that life insurance isn't "insurance" in the traditional sense. You're not "insuring" anything when you buy life insurance. Ameriprise can't save you from death no matter how much money you give them. Life insurance isn't about hedging your bets; it's about hedging your bets. While you would like to live, if fate has other plans for you, you can spend money now to help your family escape multiple disasters in the future.

However, because it's termed insurance, some people are extremely cautious and assume that if "insurance" coverage of any kind is good, then more coverage must be better.

In theory, it seems terrific, unless you consider that children do not make any money. Or at the very least, none that would be difficult to replace. Which further adds to the morbidity of life insurance: losing a child is such a huge tragedy that it's the one thing that needs to be planned for. Some parents believe that they wouldn't be able to function if their child died, and that having a policy in place for that child helps them sleep at night. However, if you say you won't be able to work anyhow, why not save the money you'd have spent on life insurance for someone who barely makes a living?

Who really need Life Insurance cover?

Those with Dependent

If you're a parent, life insurance is nearly always a must, unless you have a lot of money in the

bank or in your retirement funds (in which case, it's still a good idea).

Children are costly and raising them on one person's pay can be difficult. There are far too

many tragic stories out there of families who had it all until one of their parents passed away,

causing them to downsize to make ends meet.

If you're not concerned about dying young, consider how you'd feel if your children couldn't

afford to attend summer camp or after-school activities. That's why life insurance exists: to

ensure that your loved ones don't suffer any more than they already have when you pass


Who doesn’t need Life Insurance cover?

Those without Dependent

Life insurance is not recommended for those who do not have dependents, according to

experts. However, this varies from situation to case. Will you leave behind loved ones who will

need to make funeral preparations and tie up any financial loose ends if something happens

to you? A life insurance policy can help by selling your assets and paying off any unforgivable

debts, but only you can decide if it's essential. However, before you buy an insurance,

consider if there is another way to achieve the same outcomes. Instead of paying premiums

into an insurance that will pay out, you may choose to put some money into a trust and make

a will that directs where that trust's money should go.

Key Take away

- After a plan owner's death, life insurance plans provide financial funds to beneficiaries.

- Basic life insurance policies are meant to give replacement funds that are about equal to or a

percentage of the policy owner's previous earnings.

- It can be a waste of money to buy life insurance for someone who has no income and no dependent beneficiaries.

- Term life, whole life, and universal life insurance policies are all viable possibilities, each with its own set of benefits.

Factors to while taking Life Insurance

Cost of premium:

The cost of premiums varies depending on your age and the insurance you choose. For those under the age of 35, annual premiums are in the $300s, or roughly $30 per month. It is unquestionably higher if you smoke. To make sure you're receiving the greatest deal, shop around and get different quotations.

Length of Term:

The term length is important when signing up for term life insurance. The duration of most policies is between 10 and 30 years. The longer the duration, the greater the interest rate will most likely be. Insurers know that a policyholder is more likely to die over the course of a 30-year term than over the course of a 10-year term, therefore rates rise to compensate.

Research Report

Policy Adjustment Factors:

Most of the time, you'll find that once you buy a policy, you're stuck with it for the rest of your life. However, certain businesses give you more leeway. Some online insurers provide you the option to change your coverage at any time. You are also free to cancel at any time. This type of supplier could be able to provide you with the freedom you require.

Policy Requirements:

Before you can get a life insurance policy, life insurers will need some information about you. You'll very certainly be asked questions regarding your health and lifestyle. A quick medical exam has always been required; however, this might be done at your home with the help of a travelling medical expert. Some newer insurers employ data analytics to evaluate insurability, allowing you to avoid taking the exam entirely.

Key Take away

- Whether or whether life insurance is a wise investment for you is determined by your own financial situation and the length of time you will require coverage.

-If you only need coverage for a specific length of time, term life insurance makes sense, whereas permanent life insurance can protect you for the rest of your life.

- Permanent life insurance investment portion grows tax-free. You can also take out a tax-free loan against the cash worth to buy a home or pay for your children tuition expenses.

- Term life insurance, on the other hand, directs all your payments to your beneficiaries death benefits, with no cash value and hence no investment component; this means low premiums in exchange for a substantial death benefit.


Abhishek Bhatia

Growthway Investments

21 views0 comments