Nikki Lauda: The Dark Side of the Sporting World

During the third test match between Australia and Pakistan that was played in the first week of January 2017 at Sydney Cricket Ground, Australia's opening batsman, Matt Renshaw, had to leave the field as he was diagnosed with a concussion after being hit on the helmet multiple times. These blows on the 20-year-old youngster from Queensland has once again brought into the spotlight the risk of injuries in the sporting world and the question is, should players opt for a term insurance policy before taking on a career in sports?

Renshaw's injury might not be severe but what the world witnessed in 1976, certainly was. On August 1, 1976, Niki Lauda, the Austrian Formula 1 racer, met with probably the worst on-field incident in the history of sports and scripted an inspirational comeback that is still used as the best example to explain the importance of term insurance in sporting careers.

The Nightmare of Nurburgring

Niki Lauda was the biggest name in the driving circuit during the mid-1970s. He shared an intense rivalry with fellow driver James Hunt. After winning the first six races and drawing the next two of the 1976 season, Lauda looked set to win his second consecutive title. By the time the German Grand Prix was to be held in Nurburgring, he had almost double the points that Hunt had.

However, things went ugly during the second lap of the Nurburgring race. Niki Lauda's Ferrari met with a horrific accident in the second lap. He lost control of the car, crashed into the wall and burst into flames. The car drifted into the middle of the track, where another car smashed into it. During the accident, Lauda’s helmet came off.

He was trapped inside the vehicle, where temperatures rose to 800^oF, for nearly one minute before other drivers dragged him out. Despite almost losing his right ear, hair on the right side of the head, eyebrows and eyelids, he made a return to the truck within 6 weeks.

Lesson to be Learned

In the final race of the season, Lauda retired after just two laps, as Hunt won the title by one point. The reason he gave was that he was worried about his family. That's the other side of a glorious career no one tells you about.

On November 27, 2014, Australian opening batsman Phillip Hughes lost his life on the field after being hit by a bouncer, while 19 players and staff members of the Brazilian football team Chapecoense were killed in a plane crash on November 30, 2016. This is why, in the modern day, it is important to have an online term insurance plan before taking to the field, given how uncertain life is and how much an accident can cost you and your family.

People Living in Tier 2 Cities in India Should Consider Term Insurance

According to a recent study, Ahmedabad, Bhubaneshwar, Chandigarh, Coimbatore, Jaipur, Kochi, Indore, Nagpur, Vadodara and Visakhapatnam were identified as the top 10 emerging cities of India. While Coimbatore has over 25,000 small and medium enterprises, Visakhapatnam was found suitable for industries such as mining, heavy manufacturing, etc.

Jaipur was counted as a significant service sector investment, while Ahmedabad was hailed as an attractive investment for the manufacturing sector. Another study by Cushman and Wakefield revealed that the growth in tier II cities is being aided by increasing disposable income of people, which has created immense opportunities for the companies looking to grow.

This is positive news for the insurance market as well, which is still trying to break into the tier II cities. If you are planning the financial future of your family, products like term insurance might be the right option to begin with.

Benefits of Term Insurance

• Low Premium: One of the reasons why rural insurance or tier II insurance is low in India is that people believe they are unable to afford it. However, the advantage with term insurance is that it is the least expensive form of insurance and provides coverage for the lowest premium. The cost does increase during renewal but it is still an affordable option. Since most term policies are structurally similar, they can be easily compared to choose the best possible option.
• Best Alternate Available: It is the best alternative for temporary life insurance needs. If you want protection for a fixed term of 10 to 15 years, then it is your best investment option. The policy holder gets similar benefits to that of a traditional policy.
• Flexibility: It is much easier to opt out of a term plan than a traditional policy. If you stop paying the premium, the policy is terminated automatically and the cover ceases. This is particularly beneficial in the context of rural insurance, where people may not have a fixed income.
• Tax Benefits: Although the premium paid is lower, it is still eligible for tax benefits under Section 80C of the Income Tax Act, just like endowment policies. The savings you get in the premium can also be invested in other tax efficient schemes.

A term policy can also be purchased to meet a specific financial obligation, like the repayment of a loan. Also, if your financial goals change, it can be converted into a traditional policy. It is undoubtedly the cheapest way to protect your family and requires minimum effort and money on your part.

What is the difference between term and life insurance?

Though both are life insurance products, there are some significant departures between term and life insurance policies. Let’s take a look at these differences.

The main purpose of any person’s existence is to create a stable life for himself and his loved ones. To this end, he gets an education, a good job and tries to grow his wealth by picking up extra shifts at work and making timely investments. For any responsible family person, his loved one’s comforts and the realisation of their dreams are the biggest priorities and to this end, he works hard all day to create a peaceful and worry-free life.

A major step in this direction is also taken with life insurance. Taking insurance helps protect our loved ones from future financial setbacks in our absence. However, those taking insurance are often faced with the prospect of taking term insurance over whole life insurance policies. This decision is influenced partly by the affordable premiums entailed in term insurance, as also the higher sum assured. But life insurance policies also have their own benefits – so which one should you choose?

We help you decide. Take a look at this chart below:

Parameter	Term insurance	Whole life insurance
Tenure of the insurance policy	A fixed term of time (say 10, 15, 20 years)	Valid for life time of the policy holder
Benefits offered	Death benefit only	Maturity benefits
Returns	No returns offered	Low returns offered
Affordability of the plan	Very affordable, with low premium payments	Expensive, with high premium payments
Good investment?	Not an investment policy	Yes, especially when timed with major life events
Market-linked?	No	Yes, especially with ULIPs
Bonus potential	NIL	Good, especially with claim-free policies
Tax benefits?	The premiums are not taxed	Premiums may be taxed
Surrender value	NIL. Policy is terminated when premiums are not paid	There may be a surrender value based on when the policy is surrendered
Revision option	NIL	Yes

Does this explain the essential differences between term insurance and whole life insurance? We hope the above comparison helps you decide whether you need to take term insurance or whole life insurance. Whatever you decide, it is a step in the right direction – after all, isn’t it your job to protect your loved ones, even in your absence?