Simply put, life insurance is a medium of providing a financial backup for your family even after something goes wrong for your valuable life. Life insurance is an important part of a sound financial planning. Different types of life insurance plans will not only financially protect you and your loved ones incase of unfortunate event but, also help you save in a planned manner for important goals
As individuals it is inherent to differ. Each individual's insurance needs and requirements are different from that of the others. Life is full of surprises. Unexpected events that strike without warning can disrupt the smooth rhythm of life. You must be prepared at all times. As the primary earning member, you need to make sure that your family is never lacking in anything even if you are taken away from them forever. Do your best today to ensure that your family can always enjoy a comfortable lifestyle. In double income families, both spouses should get adequate life covers especially if there are dependent children involved.
Life risk cover i.e. financial protection to the family in case of an unforeseen event - say death, illness, disability on account of accident, etc. is the main purpose of insurance. But, it is also seen as a ‘compulsory savings’ leading to creation of wealth, which can be utilized for education/marriage of children; for old age provision; for construction of house; etc.
Life insurance companies charge you a regular premium for the cover it provides for chosen time period. Whereas, incase of ULIPs (Unit Linked Insurance Plans) part of the premium post deductions of charges is invested to earn returns.
Whether or not you need life insurance and how much, depends on whether or not you have dependent family members. But practical wisdom suggests that even if nobody relies on your income for daily living, you should still buy at least one life insurance plan, which serves as a means of personal investment and tax savings instrument.
On the other hand if your income is important to your family members and your salary contributes to paying bills and loans, then you must choose the best life insurance option that you can afford. Of all plans available, Term Plan is the pure protection plan and will be cheap life insurance as well. Be sure to compare life insurance companies and the plans they offer well before settling for one.
If your employer provides you with a life insurance policy, that's a bonus. These days’ large organizations do offer life insurance as one of the perks, but remember that often these cheap life insurance plans may not cover enough. So always ensure that you read the fine print and are aware of how much your employer's life insurance company promises you. And if this insurance is not adequate, it is advisable to invest in a new life
If you have dependent family members, then life insurance plans like Protection Plans which provide only life cover will help your family tide over financial losses in tough times.
If you are planning for your retirement, then special plans like Retirement Plans would be better life insurance schemes. If you don’t have dependent family members, then your life insurance plans can become your channel of investment. Earlier you start saving better it is because your investments get that much more time to grow in the long run.
For people who don’t have any other major investments, life insurance schemes are also ideal ways to save tax
In the unfortunate event of your demise, knowing the amount of monetary compensation that will be sufficient to honour your family’s financial commitments is important and must be considered while buying any life insurance schemes available.
If the plan is to achieve certain future goals then it is important to ascertain the future value to the goal and save for the same
After you know how much you need, assess how much you can save and invest in life insurance plans on an ongoing basis.
If you expect your income to grow in the near future, then you can opt for an increasing premium Plans where the premium increases gradually and also helps increase the sum assured.
After having assessed your life insurance requirements and the amount you can save, it is time for you to evaluate different products. It is also important to spend some time researching various plans available to look out for is the advantage each plan offers you over the other as per your need.
