Life insurance policies in India have certainly evolved with the times. Nowadays, you are no longer restricted to whole life plans. The boom in the insurance sector has given birth to companies offering more choices with a wide range of plans and features. From plain life cover to a life insurance plan combined with a pension income, there are plenty to choose from. So, which one is the best for you? Here are some things to think about if you are in the market for a life insurance policy in India.
First of all, do you need life insurance?
The answer depends on how important your income is in supporting your family. If your loved ones are financially dependent on you, then the answer is yes—you need insurance. A good policy can provide financial support for the family you will leave behind in case of your demise.
Where do you begin?
The key to buying the right insurance is to understand your financial position and know what kind of coverage you need. List your requirements and priorities. Develop a clear picture of your current assets and liabilities. Sit down and ask yourself:
1. What is the total lifestyle expense of my family?
2. What expenses will they have to deal with in the future—such as education and marriage?
3. What debts will they inherit if I die?
By answering these questions, you will be able to determine the amount of coverage you require.
What types of insurance are available in India?
There are several basic kinds of life insurance policies in India.
• Term Plan – This type of life insurance covers you for a limited period. The proceeds are paid to your family if you (the ‘assured’) pass away within the term of the policy. It is a low cost option suitable for those seeking comprehensive risk cover for a specific term, with no savings or investment elements.
• Whole Life Plan – This type of coverage is for life, so that claims are paid to your beneficiaries when you pass on, irrespective of when this unfortunate event happens. Premiums are slightly more expensive than term plans.
• Endowment Plan – The sum assured is paid to your beneficiaries if you die during the term of the policy. If you survive the policy term, the sum assured is paid to you. The premiums are higher than other types of insurance. This type is best for those who want additional savings on top of the sum assured.
• ULIP – This is a combination of a mutual fund and life insurance. The maturity value may vary depending on the underlying fund’s performance. If you have a higher risk appetite and are interested in wealth creation combined with insurance cover, this might be a good choice for you.
When should you buy insurance?
Your insurance needs will change through the stages in your life. Having said that, it is always better to buy earlier so that premiums are cheaper.
About the Author
Suggestinsurance com is the online identity for IRDAapproved insurance broker – S B Insurance Brokers Pvt Ltd. On SuggestInsurance com we offer quotes from leading insurance companies and let the customer explore the insurance plans, get their details, view and study brochure and other documents, compare features and benefits of these plans side by side and then take a decision.
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