Outlining the Importance of Life Insurance in the Current Pandemic

The outbreak of the COVID-19 pandemic has brought us face-to-face with unprecedented challenges. Financial planning that had been neglected for a long time owing to everyday commitments took a front seat, as did health concerns. All these factors combined, highlighted the importance of insurance during the pandemic. However, the Handbook of Indian Insurance and Statistics (2016-17, released by the IRDA) revealed that more than 75% of Indians do not have life insurance. This seems particularly problematic as amid a pandemic an average patient in Delhi who is hospitalised without a ventilator for two weeks pays up to ₹2 lakhs. Coping with the financial burden without insurance can completely throw your planning off guard and recovering from this blow requires a tremendous effort that is best prevented. The need for pandemic insurance becomes evident, considering the baggage that the crisis brings along. Some reasons why purchasing life insurance is critical during a pandemic are listed below.

 

Importance of Life Insurance during the Pandemic
 

1. It Helps Battle the Uncertain

 

At the outbreak of a life-threatening pandemic, several things get compromised both at an individual as well as a national level. A work-from-home scenario that was unimaginable a few years ago was forced upon the working population while several others were left jobless. In the wake of the pandemic, the savings of Indian working professionals have shrunk to 32% compared to last year’s 38% revealed the second edition of the BankBazaar Savings Quotient. The onslaught of the recession and the lockdown combined with the cost of hospitalisation and medical treatments further burned a hole into the financial planning. In such a scenario, the importance of life insurance is particularly reinforced.

 

2. It Offers a Benefit in Tax#

 

Consult any financial expert, and they will have you convinced why life insurance is a critical part of a financial plan. Apart from the financial security it offers at unstable times, ensuring that your loved ones can carry on with dignity and comfort, life insurance premiums and the final death or maturity benefit are both exempted from taxes#. As per applicable tax# laws, the Indian Government, seeking to promote life insurance, states that you can claim up to ₹1.5 lakh annually under Section 80C of the Income Tax Act, 1961. During the pandemic, several discretionary expenses had been put on hold to stay prepared for the lockdown considering the pay cuts and the furloughs. In such a situation, saving up on taxes# is a great monetary benefit in the long run.

 

3. It Offers Peace of Mind

 

It was not possible to foresee the outbreak of a pandemic. However, that is true for most of our problems. The key is to be prepared to deal with these unfortunate events well in advance so that our health is not compromised when we need it most. The outbreak of the COVID-19 pandemic took a heavy toll on the mental health of many. According to the National Institute of Mental Health and Neuro-Sciences (NIMHANS), the initial months during the lockdown were ridden with anxiety and stress over the uncertainty of the situation of loved ones and other personal concerns. A steady financial footing, especially in situations like these, can offer a great deal of comfort as the individual does not have to worry about the financial well-being of the family and loved ones in case of any eventualities.

 

What are the things you should consider before purchasing life insurance? 

 

 

As we established the importance of life insurance, there is still a lot of thought and analysis that has to be invested before choosing one. When opting for life insurance consider the following:

 

  • Assess your financial standing: As insurance is essentially an investment, you ought to consider how your finances play out before setting aside an amount for insurance. While opting for insurance, consider how many members of your family are financially dependent on you, if you have undertaken any loans, what is your contribution to the family income, etc. 
  • Analyse the types of insurance: To determine which insurance policy suits you best, you must be aware of the two basic types of insurance policies available to choose from:
    • Term life insurance: This is a risk cover policy offering a financial cover to the insured for a pre-defined term period. The  products are available upto age of 85 years and promises death benefit if an unfortunate event occurs when the policy is in force. If you still need another reason why a term plan is important and beneficial, the premiums paid within this category are the lowest among others, particularly for young buyers, and are also exempt from tax#.
    • Whole life insurance: As the name suggests, whole life insurance offers financial protection for life, so long as the premiums are paid in time. It is a hybrid between investment and insurance as it generally comes with a cash value benefit that allows a portion of your money to earn interest. For this policy, the premiums and death benefits, as well as the maturity payouts(in case of Return of Premium), provides exemption from income tax#.
  • Choose a cover that you can afford: If you are concerned about the cost of premiums to be paid, it is more feasible to opt for a term life insurance policy as it can be more affordable.
  • Carefully evaluate the future of your insurance policy: It is crucial to know what circumstances are not covered by your insurance policy to avoid unpleasant surprises in the event the unfortunate happens.
  • Ensure that the insurance company has a high claim settlement ratio: Claim settlement ratio (CSR) shows the ratio of claims settled by the insurance company against the total claims they received. A high CSR guarantees that your claim will be seamlessly settled by the company. Usually, insurance companies include this information on their websites if not, the IRDA provides claims-related information on its website.

 

Final Words
 

Tata AIA understands the uncertainties of life and to meet its unfailing demands offers long-term savings combined with financial protection. It has a range of products and services including life insurance, accident and health insurance, and savings plans while boasting of more than 99% of individual death claim settlement^.

 

The Tata AIA Life Insurance Sampoorna Raksha+ Plan (UIN:110N130V05) shields your loved ones from unforeseeable events and also promises the return of premiums paid on survival till the maturity of the policy. With life cover for the policy term of up to 40 years or up to the age of 100 years, the insurer can also customise the benefit to suit their needs from the options available@.

 

Tata AIA Life Insurance Sampoorna Raksha+ is the best way to shield your family and ensure their comfort and happiness.

 

L&C/Advt/2021/Apr/0512

 

Disclaimer:

 

#Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

 

^ Individual death claim settlement ratio of 99.06% for FY 2019-20 as per audited financial statements.

 

The products are underwritten by Tata AIA Life Insurance Company Limited. The plans are not guaranteed issuance plans and it will be subject to the Company’s underwriting and acceptance.

 

  • Insurance cover is available under the products.
  • For more details on risk factors, terms and conditions please read the Sales Brochure carefully before concluding a sale.
  • This document is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. This document is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.
  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.
  • Every effort is made to ensure that all information contained in this document is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

 

Tata AIA Life Insurance Company Limited (IRDAI Regn. No.110 • CIN: U66010MH2000PLC128403). Registered & Corporate Office: 14th Floor, Tower A, Peninsula Business Park, Senapati Bapat Marg, Lower Parel, Mumbai - 400013. Trade logo displayed above belongs to Tata Sons Ltd and AIA Group Ltd. and is used by Tata AIA Life Insurance Company Ltd under a license. For any information including cancellation, claims and complaints, please contact our Insurance Advisor / Intermediary or visit Tata AIA Life’s nearest branch office or call 1-860-266-9966 (local charges apply) or write to us at customercare@tataaia.com. Visit us at: www.tataaia.com.

 

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