Why you need to buy insurance: Explained with example

I am 34, married, and have a five-year-old child. I am a businessman with a lot of savings and have taken a housing loan which helps me save tax. Do I need insurance? - Kunal Parikh

Businesses sometimes are unpredictable and have unforeseen risks, which may affect or lower the anticipated profits and if need be we might as well have to induce further capital and here your savings may help for the shorter duration, since you have not quantified how much savings you have accumulated till now.

While it is a good thing that you have a lot of savings it is important to continue with it. However, it is better to have an objective so as to create a discipline around your savings. Insurance is an avenue which helps you to do that. Insurance helps you to save or invest for your child, retirement, or any other goals in a disciplined manner in various solutions based on your needs and risk appetite.

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However to begin with and since you have already taken a loan, it is imperative for you that you first need to safeguard your family against these obligations and you may begin with covering yourself with a term plan. Aside to all these benefits, insurance also helps in savings your taxes.

By: Sumit Rai
(The writer is MD and CEO- Edelweiss Tokio Life Insurance)

(Clear your doubts with regard to life insurance. Send your queries topersonalfinance@dnaindia.net)

Source: DNA Money