“I know these premiums would pinch us a bit, but both of us know that in case something happens to me in the next few years, our current savings are not enough to take care of Varun’s expenses for the rest of his life.” Madhavi could clearly recollect her late husband Rahul’s exact words while filling his life insurance claim form. Madhavi was glad that three years back she lost this argument and Rahul went on to buy this Rs 5 crore term plan. As a non-earning single parent of an autistic child, Madhavi knew how crucial these life insurance proceeds were going to be for planning Varun’s requirements, especially after her time. Just like in Madhavi’s case, life insurance can be a valuable element of an estate plan and can provide solutions to a wide range of objectives. Let’s look at some of them.
On demise, the legatees may be required to obtain certain court orders such as probate, letter of administration or succession certificate to claim assets. Assuming no dispute amongst legatees, this may take up as much as a year and in case of any legal dispute, the wait can really be a long one. In the meantime, assets within the estate are locked up and cannot be accessed by your family. But, in the case of life insurance, the insurer, after some basic paperwork, would be able release the insurance proceeds to the nominee within few weeks and would not insist on any of the above-mentioned documents. This immediate tax-free liquidity from life insurance can be a major respite for your loved ones and can be used to meet immediate family expenses and pay off pressing debts.