We all go through our lives trying to plan in a way that is most desirable for ourselves and our families, but there are always unwanted or unknown incidents that can happen to anyone which cannot be seen.
Suppose you have bought a home for your family and have taken a loan for the same, what happens if you die? Who will pay for the same? What happens to your family, which is already going through a bad phase and they must deal with this debt monster?
Another example what if you were planning for your children higher education and was saving money monthly for the same, what happens if you die? How the corpus, which was planned for your daughter’s education will be achieved?
There is a list of other goals which can remain unfulfilled which you have planned for yourself and family in case of sudden death. There is no alternative to human replacement, but to mitigate the risk towards your planned goals, you should always buy an appropriate amount of insurance. It should at least cover all the financial liabilities. You should always consult your financial advisor on the amount of insurance you need to take care of your future goals.
There is no need to go for an endowment or ELSS plans for this, plain vanilla term insurance will be sufficient to take care of this with a minimum amount of premium per year.
We will talk about different types of insurance plan in some other post, but for the time being you need to be aware that you are just fine buying the term insurance plan.