My tryst with Life Insurance dates back 20 years ago when I bought my first policy from a reputed Insurance Company. One day, I complained to my uncle that I had to pay Income Tax on such a meager salary. He told me not to worry and advised me to buy an Insurance policy instead, which would help me save tax and force me to put aside some money as savings. After some calculations of my salary and the corresponding tax amount, he made me invest in life insurance with a committed investment of Rs 2500/- per quarter for the next 20 years. This decision was supposed to help me save some money & at the same time get some Tax rebate.
This investment experience was like buying a helmet from a roadside vendor for Rs 100/-. I rode a bike back then. Non-compliance would lead to a fine, and you want to avoid that hassle. While the bigger purpose of that law is to save your life – a helmet protects you from dying if the accident is fatal. Some people understand this, and hence they invest Rs 1000/- to buy an ISISI marked helmet from a showroom.
Insurance has mostly been undersold in India by positioning it as just a tax planning tool. Yes, it saves you tax, yes, it is a wise financial investment, but it also covers up your financial absence when life doesn’t. Tax Saving surely is a Unique Selling Proposition but not the only one & definitely not the major one.
Life Insurance does a lot more than just offering a tax rebate. In one of my previous articles, I mentioned the three big risks we all are exposed to. The second one – ‘Risk of living too long,’ is a big one and deserves some serious attention for sure. There are 94% – 96% chances that we will live long. Retirement hence becomes an inevitable financial responsibility, which can become a burden if not planned for well. If retirement is an inevitable event of our life, what are the long-term investment options available in the financial market to take care of this need?
Let me help you with an answer here – Except for Insurance, NONE. There is no financial product available in the market that can give you a commitment or a guarantee for the next 30 – 40 years except for Insurance. But people don’t like to invest in Insurance. It’s not a popular option, and hence it has to be pushed.
The point is, ‘someone’ has to make you think about your retirement today & help you plan well for that. It’s such a long inning that its planning has to start when you are young. It needs an optimistic approach (that you will live long for sure), but at the same time, you can’t leave it just on optimism. You need some serious thought & planning to go behind it. One needs some good advice and guidance for it. Who’s doing that for you?
A Life Insurance policy, apart from offering tax rebate, can help you do that and that too very effectively. It may not offer you the promise of the moon and the stars like other investment options offer, but it very diligently does what it is supposed to do – help you live a life of dignity when everyone else expects you to be on your own. Unfortunately, it’s in old age when you need help and support, and it is then when life gets busy for people who matter to us. Money in these times helps solve many issues arising out of loneliness. Most importantly, it protects your dignity and comes to your help when everyone turns their back on you.
But in my last 15 years in the Life Insurance business, I have come across multiple customers objecting to the product’s long-term nature. They want money to grow fast and want it back quickly. They need money in the short term to meet their financial responsibilities and obligations. Well, my answer to them is very simple. All their short-term financial obligations can be planned as per a budget, and there is funding also available in the market.
For example, a child’s education, marriage, home, car, world travel etc – One can plan for it as per their budget and take respective loans to fund it. Some of these events may not happen in one’s life. But we will retire for sure. This is one big risk that we all carry with a probability of 96% – 98%. And well, this responsibility can’t be planned as per your budget, and unfortunately, there is no funding available in the market to cover your expenses during your retirement. So, don’t touch this investment of Life Insurance, which is meant for a bigger and a stronger purpose.
I always recommend one thing to my team: Believe in what you do and clearly understand what your product or solution can do & what it can’t. Life becomes easier with this clarity, and this also helps you become more confident. Life Insurance does help you plan for your long-term need of Retirement very effectively, so trust it for this and go for it.
I wish you all a very safe and happy life ahead!!
Sandeep Mishra
Twitter: @_SandeepMishra_
Instagram: @_sandeepkumarmishra_