Why the Poor, Not the Rich Need Insurance?

Most middle-class people think that insurance is not meant for them. They assume insurance as an unnecessary spending by which they will not benefit. They hesitate to take insurance, even if the premiums are small and put their family in a vulnerable situation when unexpected events occur. This is largely due to lack of awareness on the importance of insurance among the middle class. This article aims to help them understand that insurance is not for wealthy, but it is for poor or not so rich.

One thing very common among Indian middle class is that they look for savings options the moment they start getting some steady income/surplus. They will manage to set aside some amount of money to put in chit funds, savings accounts, recurring deposits, etc. (some will even go for mutual funds) to save money for financial emergencies. These initiatives are fine, but will they really help in the long run?

These small savings may not help you, when you get hospitalised or may not help you in reducing your family’s financial burden, when you meet an unforeseen death.

Poor or middle class need insurance
In such a case, insurance helps to protect your family financially when you are no longer in this world. Insurance will not help in emotional stress mitigation but it will surely look after your family’s financial needs in the long-run.

Insurance is for those people whose death would mean a financial risk to their dependants. It is taken to protect the family of the bread winner by providing salary replacement in case he is no more around them. Insurance helps in many ways:

  • Provides financial security to the family
  • Replaces the loss of income
  • Provides living expenses of the family
  • Helps in paying off the debt
  • Provides a kind of education, that you would like to provide to your children
  • Provides financial assistance for children’s marriage
  • Helps pay the medical bills of your parents

Thus, all the financial needs of your family can be taken care by insurance.

Rich and wealthy don’t need insurance
If you have enough money to cover the risk, then you need no insurance. Rich and wealthy have enough money (wealth) to pay for their risks. It doesn’t make any sense if a person having Rs 50 crore and goes for buying insurance. It is even stupidity to take insurance if they have saved enough money to cover the risk of their life for their dependant.

Real sense of taking insurance
Insurance affords peace of mind and eliminates dependency. A person with uninsured or no savings is actually putting his/her family at high risk. If you leave your dependants at risk, then someone from the family has to take up a job and start working which may not be possible for them.

Life insurance will help your family continue the same standard of living in case of your untimely death. It helps maintain financial stability of your family. Simply, we can say that, insurance is a good choice for long-term financial planning. If you are the sole bread-winner, then insurance is an extremely perfect product that helps you take care of the needs of your kids, spouse and elderly parents when you are not around them.

You can get life insurance (term insurance) at a price as cheap as only Rs 150 per month for a large cover of Rs 10 lakhs. Hence, take care of your family by purchasing an affordable insurance cover.

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