The rising living costs and the availability of quality education for women have resulted in both spouses equally contributing to their household expenses. Dual-income households often have higher income; however, their expenses including necessities and luxuries are also more.
Often, most of the earnings in dual-income families are spent on various expenses; they are unable to save much. They may not be able to accumulate emergency funds to meet unexpected outflows or achieve financial stability after their retirement.
If you find yourself in a similar situation, you must not despair. There are ways to change the situation. One way to achieve this is to invest in life insurance where you and your spouse will be able to build decent wealth. You may use this amount to meet contingencies in the future.
Here are four reasons why investing in individual life policies is important.
- Financial safeguard against demise
Death is uncertain. It is crucial that you and your spouse prepare for this situation. One way to achieve this is through individual term plans that offer death benefit to the nominee in case of the demise of the insured during the policy period. The amount may be beneficial in providing financial stability in case of the sudden death of one of the spouses. In case both of you were to suddenly pass away, your children and other family members do not face financial distress as they deal with the emotional loss.
- Protection against ill-health
You or your spouse may suddenly be diagnosed with an illness. High levels of stress, unhealthy eating habits, and irregular lifestyles are increasingly resulting in critical illnesses, such as heart attack, hypertension, and diabetes. It is possible that your spouse or you may be disabled in an accident. In such situations, the financial burden of undergoing treatment will rest with the other spouse and may become a major point of distress. Including a critical illness rider to your insurance policy would safeguard you against such a situation.
- Pay off debt obligations
You may have taken a home and car loan. In addition, you may have outstanding credit card bills. Have you considered the financial distress your spouse may face to pay off these debt obligations in case of your sudden demise? An insurance policy is beneficial in paying off these debts through the policy benefits received in case of your demise. Therefore, availing of an individual insurance coverage is advisable to prevent huge financial burdens on your family members in your absence.
- Tax savings
Purchasing individual insurance plans will result in tax savings for both during the financial year. The premium paid on insurance has tax benefits under section 80C of the Income Tax Act, 1961. However, the availability of tax savings must not be the most important consideration while choosing insurance coverage.
Dual-income families have more benefits when compared to single-income homes. The former may be able to afford a better lifestyle and achieve their dreams. However, it is equally important to be financially stable through proper planning. As a couple, investing in the right kind of insurance coverage helps you build an emergency fund that may reduce financial burden in case of an unfortunate incident.