5 types of people who need life insurance most

Five primary types of people who need life insurance the most:

1. Individuals with financial dependents
2. Individuals who have entered into joint financial obligations with others
3. Individuals who have financial plans in place for the benefit others
4. Individuals who have a predisposition to adverse health conditions (due to heredity or genetics)
5. Individuals with dangerous jobs

Individuals with financial dependents

The first category of people who absolutely need life insurance are those with dependents of any kind. This includes some of your usual actors — married couples where one spouse is the breadwinner, or a single parent.

Another typical but less known candidate includes homemakers, as their untimely death can create unforeseen costs for childcare. Other candidates can be married or single family members who support elderly parents or other loved ones.

Lastly, candidates can include benefactors who consistently and significantly support causes and organizations that are dear to them. 

Individuals with joint financial obligations

Joint debts entered into by spouses are a prime example here. If you and your partner own a home together, get life insurance — it will cover your housing costs in the event of your partner's untimely death.

Individuals in this category can also include unmarried couples who jointly enter into leases, car financing arrangements, and even mortgages on a home or income-generating rental property. This same type of arrangement can also exist between a parent and a child, siblings, or close friends.

You should also get life insurance if you've cosigned for some other types of debt, like a student loan or consumer credit debt, to protect your cosigner from having to foot the whole bill.

Lastly, business loans personally guaranteed by an individual or among business partners can create joint liabilities.

Individuals who have financial plans for the benefit of others

This is where the concept of life insurance being utilized to "complete the plan" comes into play.

For example, when I sit down with clients to discuss college planning for their children, we'll discuss amongst other things the types of schools that the family is considering, the funds available for college saving, the investment vehicles available to execute the strategy (i.e. 529 plans, after-tax investments, etc.), and the timeline for investment. Then, we'll evaluate scenarios to determine the efficacy of one strategy versus another and choose a course of action.

Just when the client thinks that we're all set, I will bring up life insurance mainly to ensure that there's adequate coverage in place to fund the plan. If one or both of my clients die next week, life insurance means there will be funds forthcoming to ensure that college is paid for — or, in other words, the plan is completed.

The same deal would be contemplated with respect to retirement planning between spouses. The point is that if you have a financial plan that is for the benefit of someone other than yourself, having adequate insurance to fulfill your contributions to that goal is prudent to ensure that the plan is executed in the event of your untimely death.

Individuals who have an adverse genetic predisposition

Not mentioned often, but with a genetic counselor for a wife, I am "gently nudged" to make inquiries about the general health profile of not only the client, but their immediate family within one degree (i.e. children, siblings, and parents).

If certain illnesses, such as certain cancers (e.g. breast, ovarian, prostate) or medical conditions (hypertension, high cholesterol, or diabetes) are raised, I initiate a discussion about life insurance not only to address need, but also for the purposes of securing the client's "insurability," or ability to get and keep affordable insurance while they are healthy or haven't manifested any potential symptoms that may be indicative of such illnesses or conditions being inherited.

Individuals who have an inherently risky occupation

It should seem obvious, but it is way too often that I walk into the homes of police officers, firefighters, corrections officers, and emergency responders only to find that many of them are sorely underinsured. They perform extremely dangerous jobs where the prospect of not coming home at the end of a shift is very real. Having adequate coverage brings more peace of mind to not only the client as he or she walks out the door, but their family as well.  

Top 5 reasons to buy Accidental Insurance policy now

Accidental Insurance Policy: It's easy to find people having a life insurance plan and a medical insurance plan but still, in India accidental insurance plan holders are very few. There are various reasons for this. One of the major reasons for this is lack of awareness amongst investors and insurance agents showing lesser interest in selling pure accidental insurance plans as commission in pure accidental plans are quite low in comparison to life insurance or medical or health insurance plans. Apart from this, the majority of the medical expenses are already covered under the medical or health plan. That's why people show lesser interest in buying a pure accidental plan and insurers also don't make people aware of the importance of a pure accidental plan.

On why insurance agents don't sell pure accidental plans, Jitendra Solanki, a SEBI registered investment guru said, "Premium for a pure accidental insurance plan is very low. For around Rs 5-10 lakh accidental cover, the premium is around Rs 1000 while for health insurance or medical insurance the premium is around 6-7 times higher. Since the commission of the insurance agent is the same in health, medical and pure accidental insurance agents either bundle accidental insurance with any of their health or medical plans or dump the idea of selling a pure accidental insurance plan." Solanki said that there are some other benefits that make pure accidental insurance a must.

Here are the following top 5 reasons that Solanki listed out that makes pure accident insurance plan an important investment of an individual:

1] Benefit post-disability: Under a pure accidental insurance plan, a policyholder can claim compensation for various kinds of disability, which neither his or her medical insurance or life insurance covers.

2] Hospitalisation expenses: Generally, people avoid a pure accidental insurance plan as hospitalisation expenses post-accident is already covered under medical insurance or health insurance plan. But, what in case the hospital bill shoots beyond the limit of their health insurance plan? An accidental insurance policy will be useful in such scenario.

3] Home/Vehicle adaptation: An accident may lead to a kind of disability that forced adaptation or alteration in your home and the vehicle that you use. For example, suppose you can't move your feet post-accident and you need a wheelchair to move. In such a case, you need to make some alteration at your home and some alterations in your vehicle. If one has a pure accidental insurance plan, these alterations at home and vehicle are covered.

4] Family transportation during hospitalisation: Post-accident, it's not necessary that one would be hospitalised in a hospital, which is at a walking distance from his or her home. The hospitalisation depends on various variables like the place of accident and type of accident and which hospital suits that kind of accident, etc. So, a policyholder's family may not be able to choose the hospital where the policyholder would be hospitalised, at least immediately post-accident. In that case, the family members of the policyholder will have to commute a long distance leading to a large amount being spent on transportation. But, these expenses can be claimed under a pure accidental insurance plan.

5] Death claim: In case the policyholder fails to survive the accident, the family members would be eligible for claiming the death cover in a pure accidental insurance plan. This would be in addition to the death cover under his or her life insurance plan and life cover.

Therefore, these top five reasons make pure accidental insurance a must for anybody's investment portfolio.