Importance of life insurance

Is Life Insurance Important When There are no Dependants?

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Raj is 38 years of age, and has no plans of marrying or even adopting a child. He lost his parents a few years ago and has practically no dependent left. Raj has a well paying job and he wishes to earn for another 10 years and then plans on early retirement. For him, life is fine just as it is, and he does not wish for anything else. His dream is to travel the world, see unseen places and take up hobbies that he's been longing for. 

He has a few investments, mostly in property, PPF, FD’s and mutual funds. Raj did purchase an insurance policy when he was young and raring to go at his profession. His savings are largely to help fund his retirement lifestyle and possibly help setup a business. He feels that the insurance policy he’s had for long will not serve him any purpose as he’s got no dependent. Surrendering his policy seems to be the best investment option out. 

Most single men and women in the country are in similar shoes as Raj. Insurance polices do not attract them, as there is no one to enjoy the sum assured after they are gone.

When people think of insurance policies, they do so generally to secure their families future even after they are no more. Single people with no dependents have no strings attached and hence feel that insurance policies are not helpful and serves them no purpose. 

Now that we’ve heard all about why Raj’s reason of not wanting an insurance policy, let’s take a look at some resounding reasons why he should. Contrary to what single people feel, insurance policy is a must for every individual; dependent or no dependants. 

The Advantage of Cheaper Premiums 

Raj has done his part of buying an insurance policy when he was young. This has helped him take advantage of paying cheaper premiums since he wasn't married and had no children then. Like Raj, taking advantage of buying  insurance when you are young is beneficial. Premium rates are affordable as there is not much expense on your young shoulders. With no ones income to depend on, and your earnings all for yourself, you need to make the best of this situation. 

Disability/Critical Illness

Singles can fall critically ill or can be disabled permanently or temporary. During such dire times being financially self reliant is important. Critical illness like heart diseases and cancer cause a huge financial impact. The average hospital costs for such critical illness can shoot over 10 lakh easily. Moreover, critical illnesses require you to continue with medication for a few more years or lifelong, which can prove expensive. Burning a hole in your pocket to cover up these costs is not a wise decision. A life insurance with adequate riders to help protect you from critical illness and disability expenses is a wise decision for singles as well. 

Tax Saving

Let’s take Raj’s e.g. again. Raj probably invested in an insurance policy in his early years, probably to save on taxes. For all these years, his premiums attracted tax benefits, and will continue to do so. Insurances like health and life insurances have sufficient tax benefits u/s 80 (C), 80 (D) and 10(10) as per the Income Tax Act of India. Even the maturity that you receive from your insurance policy is tax deductible unto a predefined amount. Purchasing an insurance policy is a tax saving investments and also builds in the habit of saving money for a rainy day. 

Assets and Self Protection

Raj plans to travel in the future, he even owns a property for himself as well as an investment. Buying an insurance policy against his home, travel and even car makes sense in this regard. These are assets that are prone to damage due to theft or even because of nature. An insurance policy will protect his assets and in case there is any damage to his asset the expense will not be borne by him entirely. His travel insurance will also help him in the future when he intends to begin his travel plans. 

The Future

Although Raj has planned to remain single to the end, there is no surety of it. Life can make its twists and turns, old age demands good company, and loneliness can really be a downer. Raj could even plan on adopting a child later on in his life, in such case the child becomes his dependant, and an insurance policy is perfect to ensure the child education is well looked after financially even after Raj’s death. 

Although these are hypothetical situations based on Raj, these are possibilities that he could face in the future. Having an adequate life insurance policy will ensure that he is well secured financially and there are no calamities that uproot him. 

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