BQ Big Decisions: How Much Is Your Life Worth?
You don’t buy life insurance for yourself, or to save tax. You buy it for your dependents.
In the 1975 iconic movie Deewar, Vijay Verma, played by Amitabh Bachchan, asks his younger brother Ravi, “Aaj mere paas building hai, property hai, bank balance hai, bangla hai, gaadi hai... kya hai tumhare pass?” To which, Ravi, played by Shashi Kapoor, answers, “Mere paas maa hai.”
In the context of the movie, Vijay’s question was rhetorical, drawing attention to the fact that he was more successful than his brother. But to Ravi, his mother’s life was worth more than all the wealth in the world.
The value of a life, then, is not so easily defined. To your loved ones, yours is priceless. But, there is also another perspective you must consider. If you were to lose your life, your family and dependents would be bereft of not just your presence, but also the income you would have earned.
Life insurance is meant to transfer the risk of the loss of that future income to an insurance company. The premium you pay is to compensate the insurer for taking up that risk.
On this episode of BQ Big Decisions, BloombergQuint spoke to Harshvardhan Roongta, certified financial planner and founder of Roongta Securities, about life insurance— when it needs to be bought, and how much your cover should be.
Listen in...