Therefore, it’s not enough if you have a life insurance cover. However, what’s important is whether your cover is sufficient enough to protect you against all the odds or not?
The following illustration will give you a better understanding of how good is your life insurance cover-
Mr. Amit Gupta who is 45 years old has bought a live insurance cover. Let’s have a look at his expenses against his cover’s offerings in detail-
- Total monthly salary (Mr. & Mrs. Gupta’s salary combined) – Rs. 1 lakh/month
- Expenses without EMIs- Rs. 40,000/month
- EMIs (home & car loan) – Rs. 40,000 /month
- Savings- Rs.20, 000/month
- Total cost of assets (this includes cost of house which is Rs. 55 lakhs): Rs. 80 lakhs
- Outstanding loan amount- Rs. 45 lakhs (40 lakhs home loan & 5 lakhs car loan)
- Life Insurance cover- Offers a savings plan with Rs. 15 lakhs as the total sum assured when Mr. Gupta dies.
Suppose it results in Mr. Gupta’s sudden demise. The total sum assured of Rs.15 lakhs is insufficient to clear the entire outstanding loan amount of Rs.45 lakhs. Therefore, Mr.Gupta’s wife may have to sell off the family’s biggest asset which is the house. Otherwise she may have to sell of other assets or pay higher EMIs. In every case, it can cause undue stress to be faced by his wife.
Therefore, it’s advisable to Mr.Gupta that he buys a life insurance cover of at least Rs.50 lakhs. He can easily get this cover for a small amount of less than Rs. 10, 000 per annum. This will ensure the complete financial security of Mr.Gupta and his family even during unanticipated events.
Hence, it’s crucial to understand the importance of the actual coverage of a life insurance cover and get a cover that will provide a sufficient financial coverage especially during unanticipated events.