Life insurance: Key to protection and legacy

Sujoy Manna

India as a country is extremely emotional and family oriented. Our predecessors used to always save up and postpone their wishes so they could plan well for their loved ones' future.

Life insurance also has a lot of sentimental value because it is an effort by the life assured to ensure that his loved ones don't have to suffer after his demise. The financial benefit is reaped only by the family.

However, due to definite coverage term of term plans in India, there still remains a risk of the benefits not being transferred to the family in case the life assured outlives the policy term.

In such a case, their wish to pass on the planned amount i.e sum assured to the loved ones remains unfulfilled.

This gap can be filled by products that offer life-long protection.

Such a feature would ensure that the family benefits from the deceased's financial planning after he is not around. Moreover, there would be no term of protection. Even if a person dies at an age of 100, the family would receive this sum, hence making it a part of the legacy left behind.

Such a product would be apt for people who not only want to compensate for their income after they're gone but also want to leave a lump sum as a legacy for the comfortable living of the beneficiaries.

Legacy protection

Wealth preservation has gained precedence over asset management in recent times, especially taking into account the economic volatility that is prevalent currently in the global market. This creates a greater emphasis on legacy planning in order to transfer wealth to the next generation.

This is what most financial advisers don't tell you when they talk about life insurance - legacy planning. It is a financial tool we ideally don't associate with wealth transference, since most of the time it is only viewed as a tool to secure funds for financial obligations or to replace the family's income. But, inherently, life insurance is a legacy. You leave behind wealth for the generations to come, so that they are financially secure. And you can do all of this without compromising your current lifestyle. In a way, we can call it 'legacy protection'.

Conclusion

Finally, as we mentioned earlier, life insurance gives you 'legacy protection'. In many ways, it protects the legacy that you wish to leave for your loved ones, while at the same time makes sure you don't compromise on your present. It not only protects their financial future, but also makes sure they have enough to leave a legacy of their own.

The writer is Vice President -Products, HDFC Life. The views expressed in this article are his own