Why Should Even the Wealthiest People Have Term Insurance?

What you have today you might not have tomorrow; this is a fact of life. In this uncertain universe, we can never be sure of anything. All of us work hard to make a living. Some of us get one step ahead and make an empire. Their sheer hard work and a little bit of luck place them at a reputed position where they sit comfortably and keep doing the hard work to maintain the wealth for them and their family.

Here’s a story of one such man who beat all the odds and touched all the roofs a man in his lifetime can.

Suraj Bootwala; the man, the entrepreneur, the definition of success! Suraj started his Vada Pav shop near a private college in Mumbai. The shop was earning him a decent living as Vada Pav is THE FOOD of Mumbaikars, especially students. But that was the extent of it, a decent earning. The competition was too much, and everyone was offering the same thing at the same price. Suraj decided to experiment with his product and added homemade Bhujia in Vada Pav. The experiment worked, and soon there were queues outside his shop. After giving them the taste, he increased the price which people didn’t mind as the taste was different from what others were offering. He invested the profit in another shop at a different location, then another, and then another. Within a span of 5 years, he had his own Vada Pav chain in Mumbai.

Things were going well for Suraj and his family until all of a sudden; he was diagnosed with stage III cancer. There was nothing doctors could do, as cancer surfaced too late. Suraj died young leaving his wife and two children of age 18 and 16 all alone. After Suraj’s sudden demise, the Bootwala family got under the weather; personally, and financially. When you get hit on both the fronts, it becomes hard to manage the living. No one in the family was involved in the business, so they didn’t know how to run it, let alone running it successfully. Soon the business started sulking because of improper management, and the Bootwalas became bankrupt. It took one year from being one of the wealthiest family to come to the ground like they didn’t even matter.

Apart from not involving his family in business, Suraj made one more blunder – he didn’t have term insurance. A term plan would have given his family a cushion to bear this heavy loss. What his family went through, and how their life would have been different if he had bought a term plan should be a lesson for all of us.

1. The Much-Needed Liquidity

After Suraj’s demise, what his family needed the most was liquid money which could be used to take care of the daily expenses. Since the family members didn’t have the aptitude to run the business, it started declining. Whatever little profit they were earning, was going straight to their daily expenses and they weren’t able to invest more in business to make it stable. The business could have been saved had Suraj opted for a good term plan.

2. Saving Family Assets

When the business started declining, the family had no option but to sell family assets in order to survive in the already tough economy. It started with luxury cars, then flats, then land, and even their own house. Suraj was the only earner of the family, and after him, there was no one who could pay the bills. Term insurance money would have given them some time to run the business and meanwhile, they could have found an investor who could take over the business as a partner. But time was one of the luxuries they didn’t have, and which resulted in Bootwalas losing their assets.

3. The Charity They Couldn’t Afford

Once the organisers of many charity events and donating money to every good cause, the Bootwalas had become the charity cause themselves. Their own charity foundation closed soon after Suraj’s demise. They were no longer wealthy enough to take care of others. In fact, time made them so desperate that they themselves were looking for a financial miracle to take them out of this situation.

4. The Unplanned and Unequalised Estate

The second thing after term insurance which is important for a businessman is estate planning. This is the part where the head of Bootwala family failed. Suraj didn’t plan anything about the future of his business in case something were to happen to him. He became so busy in growing the business that he forgot to include his family in the process of running it. It resulted in Suraj having no kin to take care of the business.

5. The Debts and Its Repayments

Suraj had taken some loan from the bank in the name of the business. When his business boomed, he could have repaid the debt in on single payment, but he opted not to as the loan was giving him tax benefits. He opted to pay the loan in the least possible instalments. But after his demise, there was no income to pay the debt.

Term insurance money could have taken care of the loan too, but Suraj’s negligence put one more burden on his family. As the interest started accumulating, the bank gave his family a notice, and they had no other option but to declare the business bankrupt. This was the last nail in the coffin!

Two tiny mistakes of a successful businessman caused his family their reputation, their money, their assets, and their lifestyle. Once the posh family of Mumbai was now living in slums.

Concluding,

Wherever you reach in life, keep in mind that there’s no surety. So, plan ahead, look out for long-and short-term investment options, and do whatever it takes to make your and your family’s future safe.

That said, start comparing and get quotes for the best term plans available in the market today. Insurers like Max Life Insurance offer large life insurance cover to protect your loved ones from any unforeseen eventuality. Lastly, you also get tax benefits on premiums paid for your term plan.

Banner Image Credit: Pexels.com

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Nirmalya Ghosh

Nirmalya has done his post graduate in business administration and now working as digital marketing executive in a US based firm. He loves to share the trending news and incidents with his readers. Follow him in Facebook or Twitter.

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