Let’s face this. We actually don’t want to buy Life Insurance. Do we?

In fact, even if someone is very much aware of the problems of not having the Life Insurance they postpone it for no reason. Most surprisingly, people working in the life insurance sector also have not protected their families by having proper life insurance Policies. It is very common in our country to talk more and do less. Some people for the sake of showing off themselves as a true well-wisher they will confuse their friends and relatives to that level where they will never purchase the life insurance. It is not the mistake of the person who confuses others, but it is the mistake of the person who is confused in every situation of life and the irony is that they always seek suggestions from “Gyani Babas” who confuses us more than to suggest. We have still not developed the habit of study to have the genuine information available abundantly in books and very easy on the internet nowadays.

We have many reasons to delay the purchase of Life insurance policies for the protection of our loved ones. We have a tendency to ignore the important issues of life because we are so much under pressure to provide for the of the luxuries of life, we have so much craved for the Swaggers that we belittle the Risks and threats of Life.

There are many surveys across many countries on ignorance of Life insurance purchase, which shows that people are aware of the importance of Life Insurance in case of miss-happenings, but still, postpone it without any reason.

Let’s see a few of the common reasons for not buying the Life insurance Plans:

Very complicated at the time buying it: Most of us are actually not able to understand it and many of us just assume it as very complicated. However, like in any of simple purchase you only need to know about your objective and eligibility for purchasing. For example, a man of age 35 years should purchase a sum assured of 20 times of his annual income for the purpose of Income protection as a thumb rule for the purchase of life insurance. Here, you need to be very clear that if you want to add the return of the investment element in it, you may get good returns, but in this case, you need to invest more per year to get good returns and coverage.

I will take next year. It’s not a priority: The day to day cost of living has increased so much that we are not able to keep the family protection of Priority. On the other hand, we have priorities of EMIs of all depreciating purchases i.e. LED TV, Luxury Car, Costly Mobiles etc. The basic rule of financial planning says you must pay to yourself first, i.e. saving and second, you must pay to protect your family i.e. by having adequate Life insurance Coverage from your earning.

My company provides me the insurance: This is true with employees of various sectors. The organizations with whom they work provide them Life Insurance cover as employee benefits. However, the type and quantum of insurance may not be adequate for the family. For example, in some cases, the insurance may be accidental insurance only, which does not cover the death of an employee due to reasons other than an accident. An employee needs to check that the insurance type must be on Term Insurance and the sum assured should be equal 20 times of your annual income. One very important point here is that these facilities immediately stop when employees leave the Job for any reason and taking life insurance at that time may cost more.

I am not going to die so early: No one, even I myself can’t think of dying soon. We all have a Long Term Plan without any Risk. Is there any guarantee of survival as desired? The answer is “NO”. Life is full of Hazards. It is only when someone near us died recently, makes us very sincere towards Life Insurance Plans and Many people still forget after some time. We pray for long life for everyone we know. Nevertheless, suggesting a life insurance cover is really the best wish in the true sense for them.

It is sold only because of high commission for agents: This is a very common disbelief with regard to Life Insurance Sales. Most often, salespersons are perceived that they only suggest because they get a very high commission. The commission rates are very much under the strict preview of the Regulator of Insurance Industry. No Insurance company can offer undue benefit to any of the sales agent or employee to sell any particular Insurance Plan. Insurance sale should always need-based. Anyone selling a plan which does not satisfy your financial need is doing Miss-selling which warrants for severe penalties to the Sales Person.

Reasons may be more, but the fact is that in our country the penetration of insurance is only 5.2% of GDP, whereas the world average is 7.0 %. Some of the countries like Japan and South Korea are having a penetration of 9.9% and 10.4% respectively. (Data Source-Survey Report on Insurance awareness campaign IRDA 2009.)

Not Buying a Life Insurance Plan is Just a complacency and nothing else because if you really calculate the cost, it’s nothing in case of Term Plan. If you go for the return based plan you may have very good returns in Long-term along with life insurance cover. So every time you think of long life also think about Life Risks and you and your family is financially protected by having the Life Insurance Plan

Happy Investing…

Thanks,

Anand Kumar
Insurance Expert