Who should buy life insurance and who doesn’t even need that? Let’s take a hypothetical example.
Assume Rupesh is a healthy person doing his job, he thinks that if chance he dies in the future, his family doesn’t have to compromise on their lifestyles, their financial situation doesn’t get bad, for this, he wants to by the insurance and this is the main purpose of insurance, so now a question arises that whether Rupesh should buy life insurance or not? It depends. Mainly on 2 factors that are related to his financial situation, how can his financial situation be assessed? It can be done with 2 factors, First, what is the income of Rupesh? With that, what is his family income? He might have his parents, wife, and 2 kids, his wife and parents might be working on his family income might be good, and what are their expense? So, the family income (excluding Rupesh’s income) is more than expenses, The they aren’t depended on Rupesh ant they are independent.
Let’s come to 2nd financial situation, i.e., assets and liabilities, that means if the family assets are more than the liabilities, liabilities like home loan, car loan, or other loans, and the future liabilities such as education, marriages.
if we include those expenses as well, then If the assets more than the liabilities then there net worth is positive, so the people whose family income is more than their monthly expenses (excluding Rupesh’s income) and the net worth is positive (including current and future liabilities)
such people don’t need to buy life insurance, because the family is financially independent, but on the other hand, if your members are depended on your main income.
with that, if your net worth is negative, i.e., current + future liabilities are more than your asset values, then you definitely need to buy life insurance, and generally, people starting their careers in their 20s or 30s don’t have many assets,
that’s way they mostly require life insurance, we should buy health and life insurance before planning any other investments, with that, we get tax benefit on the premium of the life insurance under section 80C, so this was about whether we should buy life insurance or not. A term plan is pure insurance plan without any investment. The monthly, annual, or quarterly premium paid by you (whichever you chose). All that money is to give a death benefit, i.e., your family will get that money after that death, and you’ll not get that money back.
