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The primary intention for buying life insurance Policy is to ensure the quality of life of your Dependants is not impacted due to financial distress in case of your early demise. The sum assured under an insurance plan should be enough so that your dependants can continue to maintain the same quality of life as they used to earlier. Hence, it is not only crucial to buy insurance but it is equally important to ensure that the same is adequate enough.
It is a notion among people about life insurance that only those who are earning and have dependants need to be insured, but this is only partially true. You need to buy an insurance if -
Those who are single (not married) need to buy insurance for two reasons -
1) If they have elderly parents, who are dependent on their earnings for living
2) To meet any liability (debt repayments) and funeral expenses after your demise
Probably a third reason, which not many people would appreciate, but you can buy it to fund a charitable cause after your demise.
It is a common tendency among people to either ignore or underestimate the need of buying life plan for a homemaker. The responsibilities handled by a homemaker are immense and if you try to work out a commercial value of the job she handles, you can hardly ignore the need for life policy. Early demise of the homemaker in a family obviously is an irreplaceable loss, but even if you try to replace the services that a homemaker offered, with professional, it will cost you a hefty amount, which either would not be affordable or will adversely impact the financial planning you would have had for your kids and future of the family. Hence, it is inevitable to buy life policy for a homemaker, even if she is not an earning member of the family.
When children start earning, most parents assume that there is no longer a need of a life insurance. But I would say there is still a need of a life plan, primarily for two reasons
1) You may have grandchildren or parents who would be getting some financial support from you
2) In case of your early demise, your spouse may outlive you by another 20–30 years, you may still need an insurance to support her expenses.
Retirees do not realize the need of insurance. The necessity is obviously not as grave, but it can make sense for retirees to have a policy as this should allow them to spend their savings heartily and in case of a demise they would be guilt free, as the life plan sum assured value can be received by their heirs as inheritance. An insurance plan would also help pay off any pending liabilities and funeral expenses.